If you want to sell cigarettes or other tobacco products in the state of California, you need to purchase a California Cigarette and Tobacco Products Tax Bond.
What is a California Tax Bond?
A California Tax Bond guarantees your customers, suppliers, and government that you will follow all of the rules and regulations set about by the California Cigarette and Tobacco Products Law while conducting your business and that you will pay your taxes.
How the bond works is this: The bond protects the State of California. If you do not follow the law, or if you fail to pay your taxes, the State of California can make a claim against your bond.
When this happens, the surety company who issued your bond will start an investigation. If they determine the claim to be valid, they will give you the opportunity to satisfy the claim. If you fail to do so, the surety company will compensate the State of California. The surety company will then come to you for repayment.