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How to Open a Smoke Shop

How to Open a Hookah Bar in NYC

These days, with smoking banned in nearly every public place, there still are people who smoke, and they want to acquire the instruments for their chosen vice. Cigarette smokers can go just about anywhere to get theirs, but cigar and pipe smokers generally have to seek out the illusive smoke shop. In high-traffic areas, opening a smoke shop can be a successful business, and they are welcome finds for smokers.

Get Licensed

Most states require licenses to sell tobacco products. This is much like setting up a business in that you have to file forms to explain what you intend to sell, where and how. In the United States, you can’t sell tobacco products to people younger than 18. Tobacco products are heavily taxed, so be aware of all the rules for collecting and turning over such taxes.

In the U.S., tobacco product sales are regulated, and a license or registration is required for retailers. Information on this can be found at your state’s website. For example, New York’s website will give you information about compliance, the laws and where to apply for a Certificate of Registration.

Select a Location

High-traffic areas are best but tend to cost more. Still, since fewer people are smoking, you need to attract the percentage who still are, and you have to attract enough of them to make a living. Take a drive and look for existing smoke shops for sale. Malls tend not to be as good as plazas or main streets. The once mighty Pipe Den, which had stores in many early malls, went out of business while its chief rivals, usually independent owners, survived.

Design Your Store

If you are catering to cigar connoisseurs, for example, you will attract more of them with a walk-in humidor. This is simply a room within your store that is sealed and has high humidity. The cigars, and pipe tobacco in some places, are kept at a constant humidity, keeping them fresh and preserving the flavor. Humidors are so good at this that some pre-embargo Cuban cigars — the kind that made Cuba famous for its cigars before President John F. Kennedy signed the embargo of all things Cuban from entering the United States in the early 1960s — are still fresh today.

Select Your Stock

Depending on where your store is, you’ll need to be very selective about what you keep on hand. A middle-class area, for example, probably won’t be a good market for high-end, expensive tobacco products. Some specialty shops choose cigars, pipe tobacco and non-mainstream cigarettes, while others have a wide variety of all types. You generally won’t find White Owl cigars in the humidor, and a place that sells Arturo Fuente may not carry Backwoods Smokes. A smoke shop operator needs to tailor to his customers over time.

Open the Doors and Advertise

Smokers will seek you out because they want a place they can go where they are comfortable. Some cigar and pipe smoke shops have comfortable chairs and “dens” where smokers can sit back, enjoy a cigar or pipe and have conversations. Smoke shops are about the only stores left where people can smoke indoors, so giving them a comfortable atmosphere will build customer loyalty.

Smoke Shop and Vape Shop Franchise Opportunities

Before making the investment in your own smoke shop, take a look at franchise opportunities. While there is an upfront cost in buying a franchise, you will have access to inventory, a proven store design and the training and support you may need as you’re just getting started. Franchises also have brand recognition that smokers often look for, since they already know what brands you sell and what your pricing will be like.

Franchise opportunities are also available for vape shops. Of course, vape shops have a different clientele and the two business models don’t normally go together well. If you are exploring the idea of a vape shop, make sure they are legal in your community. If they are legal, keep an eye on the news to see if upcoming legislation is being proposed that may damper or snuff out your business.

If you’re thinking of opening a smoke shop, first look for any existing businesses that may be for sale first and then take a look at possible franchise opportunities. Besides a good location, you will need to get a license and contact distributors for tobacco, pipes, cigars and smoking accessories.

How to Open a Smoke Shop

Related

If you plan to start a smoke shop soon or in the future, there are a lot of considerations you need to make first. A smoke shop is not like most other types of business: It sells age-restricted products and must comply with additional permit and license requirements that many other shops – like clothing stores and hobby shops – do not have to deal with. The specific permit requirements you will have to comply with depend on a few factors, including your city and state and the specific products you intend to sell.

Step 1: Create a Budget and Business Plan

The first step in launching any type of business is creating a business plan. Your business plan needs to include the following:

  • Who will lead your business
  • How the business will operate
  • The business’ marketing strategy
  • The business’ projected income and expenses
  • Analysis of the business’ target market
  • The business’ budget
  • The products and services the business will provide.

Within these sections, note details like which suppliers you will use and how you will finance the business. Will you secure a small business loan? Do you have cash on hand to fund certain aspects of the business? These are critical details that need to be part of your business plan.

Step 2: Determine the Licenses You Need

If you plan on selling tobacco products, regardless of whether you are an official smoke shop or simply a convenience store that sells cigarettes, you will need a specific tobacco sales permit from your city or state. Which permits you need depend on where you plan to open the shop. For example, an entrepreneur looking to start a smoke shop in New York City must obtain an NYC Tobacco Retail Dealer License from the New York City Department of Consumer Affairs.

The same is true if you intend to open a cannabis dispensary. In fact, you will most likely face more stringent licensing requirements to legally operate a cannabis dispensary than to start smoke shop. Find the requirements for prospective cannabis retailers from your state’s department of commerce. There may be different requirements in place for medical dispensaries as opposed to dispensaries that are open to all adult consumers.

Many cities and states also regulate the sale of e-cigarettes and liquid nicotine, known collectively as “vapes.” Find your city and state guidelines for retail vape sales on their respective department of commerce websites, because the requirements imposed on vape shops may be different from those imposed on tobacco shops.

Step 3: Create and Register a Name

Once you have a business plan and an understanding of the permits you need to have, the next step is to register the business. Determine which type of incorporation, such as a limited liability company or a partnership, makes the most sense for your smoke shop.

You will need to register your business with your state and with the Internal Revenue Service. Keep in mind that although you should know which permits you will need to launch an open smoke shop at this point, in most cases you cannot obtain these permits until you have a registered business. Once you have valid incorporation documents and a federal employer identification number, you can obtain the permits you need.

Step 4: Find the Ideal Location

The next step is to find the right location for your smoke shop. Keep in mind that because of the products you will be selling, your shop will likely face steeper zoning restrictions than other types of retailers. These restrictions may be set by the city or the state. For example, some cities restrict tobacco and vape shops from operating within 300 feet of a school and 500 feet of each other.

Beyond finding a location where you are allowed to open, you need to find one that is convenient for your clientele. An upscale cigar shop might do well in a trendy downtown area or a high-end mixed-use property, whereas a mid-range smoke shop that also sells coffee and newspapers would probably be most successful on the outskirts of a residential area.

Step 5: Hire Knowledgeable Staff

When you start a smoke shop, handling everything on your own is extremely challenging. Hire a knowledgeable, friendly staff to help you run the store and make the purchasing experience more enjoyable for customers.

Step 6: Market Your Smoke Stop

You cannot expect to make money by simply opening your cigarette shop. Potential consumers need to know about your newly open smoke shop, and your job as the owner is to let them know about it through effective marketing.

A few marketing strategies that could work for you include:

  • Coupons in local newspapers
  • Social media campaigns
  • Flyers
  • Vehicle wraps.

Step 7: Move In and Open

Once you have everything in place to create a functioning, open smoke shop, you are ready to launch. Spread the word about your newly open cigarette shop on social media, in print media and through any other channels you know will reach your target customers.

Warnings
  • Always ask for photo identification from customers, as it is illegal to sell tobacco products to anyone under the age of 18 in the United States. You could potentially lose your business license and be fined by law enforcement for breaking this law.
  • Advertise your business locally and online to attract customers.
References
  • Code Publishing: Chapter 17.61
  • Counter Tobacco: Licensing E-Cigarette Retailers and Vape Shops
  • Investopedia: Business Plan
  • BizFilings: What Are Business License Requirements for Cannabis Business
  • NYC Business: Tobacco Retail Dealer License
About the Author

Lindsay Kramer has been a small business owner since 2014. She’s no stranger to the wild ride that running a business can be, but that doesn’t mean she’s done learning. every day, it’s something different when you’re in the driver’s seat. Now, she’s focusing her writing on helping other small business owners and people planning to become small business owners navigate this crazy thing we call entrepreneurship.

How to Open a Smoke Shop. Despite growing health concerns related to smoking, many people in the United States still choose to smoke and consume other tobacco products. Opening a smoke shop to cater to tobacco customers can be a profitable business endeavor, as people who smoke may feel more comfortable and welcome …