South Dakota’s HB 1220- Nicotine Distribution

South Dakota’s HB 1220, which goes into effect on July 1, 2026, introduces licensing and regulatory obligations for anyone distributing nicotine products. Nicotine products under this law include vapor products (such as e-cigarettes and vape pens) and alternative nicotine products (such as nicotine pouches and nicotine dips), but do not include cigarettes and other tobacco products. Anyone distributing cigarettes or other tobacco products is already required to have a tobacco distributor or tobacco wholesaler license. See the full statutory definition of nicotine products in House Bill 1220.

Licensing and Fees 

• Mandatory state license: Anyone distributing nicotine products to retailers must apply for a nicotine distributor license through the South Dakota Department of Revenue. Businesses that currently hold a tobacco distributor or tobacco wholesaler license will not be required to also obtain a nicotine distributor license.
• Annual fee: The license costs $1,000 per location and operates on a July 1 to June 30 cycle. 
• Sales tax license required: Nicotine Distributors must also maintain a valid South Dakota sales tax license in order to conduct business in the state.

Retailer purchasing requirement: Effective July 1, 2026, retailers may only purchase nicotine products from licensed nicotine distributors, tobacco distributors, or tobacco wholesalers.

Direct-to-Consumer Sales

Distributors and wholesalers may only ship alternative nicotine products directly to consumers, and only if they are licensed and comply with age-verification, signed delivery, and sales tax remittance protocols. As a nicotine distributor, your next steps should be:  

Plan to apply for your nicotine distributor license before July 1, 2026, to avoid compliance gaps. Review shipping policies carefully to ensure operations don’t conflict with direct-to-consumer restrictions.