Vallejo council postpones new tobacco regulation after pleas by business owners

VALLEJO – The Vallejo City Council delayed a tobacco retail licensing ordinance on Tuesday after business owners argued it would threaten their livelihoods and reduce the resale value of businesses that they have worked for decades to build. 

The proposed ordinance would require all businesses owners selling tobacco products to obtain a license that is not transferable upon sale of a business. Existing businesses would receive a license from the city during an initial application period as long as they are in compliance with the city’s current regulations but the ordinance would effectively create a moratorium on any new tobacco retail businesses.

Several groups of business owners attended the council’s Tuesday meeting, some of whom had organized community leaders to speak on their behalf or to translate their comments due to a language barrier. 

David Hayer, a member of the Benicia Planning Commission, said that some business owners asked him to speak in their place because they were afraid to come to the meeting. He said that many are immigrants who have faced retaliation and subjugation in other countries.

“They're here from the Middle East, or they're here from India or Pakistan. And they've fled these countries because of that fear,” Hayer said. “The Yemeni community also reached out to speak to me about this, they also had the retaliation concern, and they had the language concern.” He said that many did not want to be seen in the building for fear that the city might take their business away.

“I think we need to do a better job of figuring out how not to pump fear into these communities, even though we may not think we're doing that, but somehow they're feeling that,” Hayer said.

Several of the business owners expressed concerns that the proposed ordinance would significantly reduce the value of their business because a new owner would no longer be able to sell tobacco. Some owners said tobacco sales account for as much as 40% of their revenue. 

“We essentially can never sell our businesses and retire,” said Balraj Dhami, who runs a store with his father. “Because, if we do sell, the license will not be transferred and the store value will have no value. My dad, who's worked at his store for 30 years, he can not retire if this ordinance is passed.”

The ordinance is designed to reduce the number of stores selling tobacco in Vallejo to one tobacco retailer per 2,500 people or 51 total stores. The city estimates that there are approximately 100 stores that currently sell tobacco in Vallejo. 

Under the proposed ordinance no new licenses would be issued until the number of stores declines to below the set density.

Solano Public Health senior health services manager Robin Cox said that many jurisdictions have implemented similar ordinances and follow up studies have shown reductions in youth access to tobacco products. Cox advocated for working with store owners to replace the profits they earn from tobacco products with the profits they could earn from selling healthy snacks and fresh produce.  

Many of the business owners said that they did not receive any notice about the proposed ordinance and only found out through other members of their community.

The City Council requested that staff bring forward a tobacco retail license ordinance for consideration over a year ago, after a presentation from the advocacy group LGBTQ Minus Tobacco. 

In February, the city held a presentation on the proposed ordinance for business owners. City Attorney Veronica Nebb said that the meeting was not well attended and that staff had missed the mark in their outreach efforts in part because the city does not have access to contact information for all retailers who sell tobacco in Vallejo.

Business owners also expressed concerns about a $10 minimum sale price and packaging requirements in the ordinance that would prevent the sale of single cigarillos, individual tobacco wraps or other products with low price points. Store owners claim that this means people have to buy larger packs and they are likely to smoke more. Some said it also makes people choose between buying tobacco and other products they might need like milk or bread.

“Over 100 Studies have shown that increasing tobacco prices reduces the high school age youth smoking rate and increases the number of adults that quit,” LGBTQ Minus Tobacco project director Brian Davis said.  He noted that cigarillo type cigars are the second most popular tobacco product among underage youth in California after electronic cigarettes and that several neighboring cities have implemented similar minimum pricing regulations.

The groups advocating for the Tobacco License Ordinance said that Vallejo stores have sold tobacco products to underage decoys at higher rates than the rest of the Bay Area and that the stores that sell these products are disproportionately located in lower income communities and communities of color.

Several business owners said that they are also concerned about underage youth getting access to tobacco products and that they would welcome more enforcement but they feel that store owners who follow the law will be penalized by the proposal. 

“Every day that passes without having this ordinance in place is a potential for a teen to lose their life to tobacco,” Councilmember Peter Bregenzer, who has been a major supporter of the ordinance, said. “But I have heard your plights and I do hear the issues with transferability.” 

Bregenzer suggested that existing businesses be allowed one transfer of the license within a specified period of time so those who may be retiring can sell their business and recoup the full value that they have invested. 

He also asked that the ordinance include stronger language that commits the city to performing inspections twice-a-year to ensure that stores are in compliance with the law.

Mayor Robert McConnell said that he is also sensitive to the plight of the business owners and would support a longer timeframe in which businesses would be allowed one license transfer. But he would like to see the single transfer allowed only for those store owners nearing retirement age, possibly 55 and older.

McConnell added that he would like to see stiffer penalties for violations of the ordinance including a one-year suspension on the second violation and permanent revocation of a license after the third violation. Current penalties are a 30 day suspension for the first violation, a 90-day suspension for the second violation, a year for the third and permanent revocation at the fourth violation.

Vice Mayor Mina Loera-Diaz said suggested that the council direct city staff to hold a separate meeting with the business owners, this time with adequate translation and noticing, so they could communicate all their concerns and then hold a second meeting with the advocates of the ordinance to negotiate possible amendments that could work for both groups. 

The application period for a California Department of Justice grant that supports enforcement and implementation of tobacco retail license ordinances closes this week and city staff had planned to submit the grant application with a copy of a fully introduced ordinance. 

Nebb said that the city may lose points in the recipient selection process for not having a fully introduced ordinance ready for review but the city can still apply.

The councilmembers supported Loera-Diaz’s suggestion and directed staff to hold additional community meetings prior to bringing an amended ordinance back in September for introduction. 

“I do hope that we can send this back for further discussions between staff and the community and the owners to resolve some of these concerns.” McConnell said. “Even though we may lose the grant opportunity for 2024, I think it's worth losing to get a better product.”