Alabama: Gulf Shores Levies Local Vape Tax and $150 Annual Retailer Fee

The city of Gulf Shores has begun collecting an independent tax of 10 cents per milliliter on vapor products alongside an annual $150 municipal licensing fee. Local collections started October 1, following a decision by city officials to bypass the state distribution model to maximize local revenue.

Choosing Local Administration Over State Distribution

State legislation gave Alabama municipalities two options for collecting vape taxes. Under the state-administered route, the state collects 10 cents per milliliter, distributing 50% to state funds and 25% each to counties and 465 cities based on population.

Under that formula, Gulf Shores would receive just 0.49% of the municipal share. For example, from a statewide municipal pool of $500,000, Gulf Shores would receive approximately $2,500. By establishing its own tax system, the city retains 100% of local collections.

Option	Collection Method	Gulf Shores Revenue Share
State Option	State collects $0.10/ml	0.49% of 25% municipal pool (~$2,500 per $500k)
City Option (Adopted)	City collects $0.10/ml ($0.05 police zone)	100% of collections within city jurisdiction

Compliance Rules for Wholesalers and Retailers

“We do feel that we will receive more than we would’ve received had we accepted the state share,” said Financial Services Director Anna Franklin. “We will collect an additional $150 fee per wholesaler or retailer who sells vapor products.”

Either the wholesaler or the retailer can remit the tax. If a wholesaler remits on the retailer’s behalf, the retailer must submit a sworn statement by the 20th of each month verifying payment. City officials will track revenue trends through October 2026 to evaluate performance.

The measure adds to existing local tobacco taxes, which include 10 cents per cigarette pack and 6.25% on wholesale prices of other tobacco products.

Retailers Report Minimal Market Disruption

Local store owners do not expect sales declines. Sanford McLain, owner of CBD Pharma in Gulf Shores and OB Vapors in Orange Beach, noted that passing the milliliter tax to consumers has not disrupted operations.

“I don’t have a problem with the tax,” McLain said. “It’s really not a lot of money when you consider vapes are 20 or 30 milliliters and the tax is 10 cents per milliliter. It’s not going to affect our sales much. I wish they had done it years ago.”

Read more: Alabama Bans Indoor Vaping in Public Places Starting Oct. 1

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.