How Ecommerce Regulations Are Reshaping Compliance for Online Businesses

Federal and state legislators target online sales, including tobacco and ammunition, creating new challenges for card not present businesses. With several sets of rules, merchants must now navigate state-by-state ecommerce regulations. Which drives up operational costs and the potential for penalties. While increasing risk across underwriting, approvals, and long-term account stability.

Ecommerce Regulations: Arizona Online Tobacco Sales Ban

On January 1, 2026, Arizona enacted a ban on the sale of online tobacco products.

Who and What is Impacted by this Ecommerce Regulation?

Prohibits card not present (CNP) sales, or transport of any CNP sales, into Arizona to consumers.
Only Arizona licensed retailers/businesses/individuals are allowed to order/receive tobacco products via CNP methods.
Arizona customers are only be able to purchase tobacco products in-person at licensed retailers.
It is considered a violation of the law to conduct payments, ship, deliver, and receive a tobacco product in Arizona.
For the entire law, check out: A.R.S. § 36-798.06

Are there Any Exceptions?

Recipient exceptions to the law exist for government employees conducting official duties, foreign trade zone designated areas, and educational universities for research-only purposes.
Product exceptions only apply to pipe tobacco (aka loose-leaf tobacco), and cigars.

Potential Penalties

Products found in violation of the law are subject to forfeiture and destruction by the State.
Violation of the law is considered a class 6 felony, with an applicable $5,000 penalty per violation.

Potential Underwriting Issues

This ban limits sales to B2B transactions between Arizona licensed businesses.
Non-Arizona online retailers will need to geo-block sales from Arizona delivery.

Ecommerce Regulations: Stop Online Ammunition Sales Act

This act requires face-to-face sales of ammunition to consumers.

Who and What could this Ecommerce Regulation Affect?

Face-to-face sales require physical presence of the customer, identity verification by “examining a valid identification document” which must include a photo of the purchasing person.
Non-face-to-face requirements do not apply to licensed businesses that import, ship, transport, or receive ammunition as part of their operations.
Requires licensed businesses to report bulk purchases involving ammunition.

This policy has not been finalized and is subject to further modifications.

How Could this Impact Merchant Underwriting?

Limits online ammo sales to B2B transactions. B2C would be prohibited.

Adapting to the New Era of Ecommerce Regulations

Ecommerce regulations are evolving quickly, requiring online businesses to adapt to a state-by-state compliance landscape. New restrictions on products like tobacco and ammunition are reshaping how merchants sell, fulfill orders, and process payments. This increases underwriting scrutiny and operational complexity, especially for card-not-present transactions. Businesses that proactively adjust to these changes will be better positioned to maintain account stability and avoid disruptions.

Make Your Voice Heard

Policymakers benefit from hearing how proposed changes may affect real businesses, employees, and communities.

Ways to take action:

Contact your state representatives
Share how the proposed changes could affect your business or community
Encourage others in the ecommerce industry to do the same

Engagement matters, especially before proposals are finalized.

Disclaimer

The information provided here is for informational purposes only and focuses solely on payment processing in the cannabis industry. We do not endorse explicit or illegal content and encourage compliance with applicable laws and regulations. Readers should seek professional advice and use legitimate payment solutions while operating in this sector. We disclaim liability for any consequences resulting from the use of this information.