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ADOPT AN ORDINANCE AMENDING CHAPTER 5.104 TO THE STOCKTON MUNICIPAL CODE RELATED TO TOBACCO RETAILERS
recommended action
RECOMMENDATION
It is recommended that the City Council:
1. Adopt an ordinance amending Chapter 5.104 to the Stockton Municipal Code relating to tobacco retailers, creating additional exemptions to the Chapter 5.104 distancing restrictions.
2. Authorize the City Manager, or designee, to take all appropriate and necessary actions to carry out the purpose and intent of the ordinance.
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Summary
On June 20, 2023, the City Council approved the adoption of Ordinance 2023-06-20-1502, amending sections of Title 5 of the Stockton Municipal Code (“SMC”) concerning tobacco and the licensing of tobacco retailers (the “Ordinance”). Specifically, the Ordinance amended chapter 5.16.010, adding a required Tobacco Retailer License to the City’s approved business license schedule, and also added chapter 5.104 - Tobacco Retailers, which outlines the purpose, application, and requirements of the new Tobacco Retailers License.
Since the start of implementing this new business license, staff have been observing and taking note of the functionality of the established process and impacts and have worked with the Legislative and Environmental Committee to provide recommended revisions to the Ordinance, codified at SMC chapter 5.104.
DISCUSSION
Background
On July 20, 2022, the Council Legislation and Environmental Committee (“Committee”) directed the City Attorney’s Office to draft a proposed ordinance requiring tobacco retailers to obtain a license prior to conducting business within the City. The Committee expressed concern that the City cannot currently track the number or location of tobacco retailers in the City, and was particularly concerned with minors’ access to tobacco products. The Committee also expressed a desire to enact certain restrictions and requirements for tobacco retailers to operate within the City.
After the item was agendized for the November 15, 2022, City Council meeting, the item was pulled with reference to a number of public comments that had been delivered to the City in advance of that meeting. The proposed ordinance was brought back to the Committee for further input at its February 15, 2023, and March 15, 2023 meetings. The new permit type was approved by the full Council on June 20, 2023, requiring tobacco retailers to obtain a tobacco retailing license in addition to a standard business license.
Some portions of the new SMC chapter 5.104 could be summarized as follows:
Tobacco Retailer Defined
Defines tobacco retailers broadly, to include any person who sells tobacco, tobacco products, or tobacco paraphernalia, without regard to the quantity sold.
According to the California Department of Tax and Fee Administration, when the City last inquired, there were 272 State-licensed tobacco retailers within the City. This count would include business categories like gas stations, grocery stores, and smoke shops. Under the Ordinance, all 272 retailers are required to obtain a license.
Applying for a License
Provides for a license application process. The full list of information sought from an applicant can be found at SMC Section 5.104.040, which includes details on the retail location, information about all individuals who have ownership or managerial interest in an applicant business, and proof that the business is licensed by the State.
Distance Restrictions
Provides for the denial of a license application if the tobacco retailer is within 600 feet of a school, public park, public playground, public recreational area, youth facility, or a tobacco retailer. These distancing restrictions do not apply to a tobacco retailer operating lawfully on the day before the effective date of the ordinance. This exemption would cease to apply if a tobacco retailer fails to timely renew its tobacco retailer license, or if the retailer’s tobacco retailer license is revoked.
Non-transferability of License
A tobacco retailer license is non-transferable and is location specific. If a licensee desires to change its business location, it must obtain a new license for the new location. If a licensed business is sold or experiences a change in ownership, the business must obtain a new license before continuing its tobacco retailing.
Staff from the Administrative Services, Police, and Community Development departments collaborated to establish a comprehensive application process. This involved creating new application forms, developing GIS layers, and streamlining the internal application flow. During August 2023, all identified licensed businesses were sent an informational letter detailing the ordinance along with the tobacco retail license application. The Police Department also conducted outreach through social media to notify the public of the new ordinance and included links to the code and information on how to report suspected violations.
Present Situation
During the Legislative and Environmental Committee Meeting on January 18, 2024, the committee, staff, and constituents discussed the lack of a “grandfathering clause” that would consider certain projects that were already in development before the effective date of the Ordinance to be exempt from the Ordinance’s 600-foot distancing restrictions.
Since the Ordinance’s effective date in September 2023, staff have been tracking impacts of the Ordinance on pending projects and presented the following information, based on the location requirements of the ordinance:
- 1 Planning Entitlement (Convenience Store) failed to meet location requirements
§ This project was deemed complete prior to adoption of the ordinance
- 5 Proposed Convenience Stores, in the Building Permit stage, will fail to meet the location requirements of the new business license permit
§ 4 of the 5 permits were applied for prior to ordinance adoption
§ 2 of the 5 permits are currently under construction
Note, there may be additional projects beyond those listed above, which were already in development, and would satisfy the new exemption language in the proposed ordinance.
The SMC now prohibits a person from obtaining a tobacco retailer license if the retail location is within 600 feet of certain locations, including schools, parks, and other tobacco retailers. Businesses which pre-date the effective date of the Ordinance (which was September 17, 2023) are exempt from the 600-foot restriction. However, because tobacco licenses are non-transferable, if a business is sold (or franchised, or transferred in some other way), the new owner (or franchisee) would need to obtain their own tobacco retailer license. That new owner (or new franchisee) would not have been operating prior to September 17, 2023, so they would not be exempt from the 600-foot restriction. Thus, if the location in question is within 600 feet of a restricted location, the new owner (or franchisee) currently cannot obtain a license of their own for the location and would be unable to sell tobacco products there.
Since the Ordinance’s adoption, staff have knowledge of four existing convenience stores that desire, but are unable, to move to the franchise model (i.e., conduct an ownership change) due to the locations’ proximity to other tobacco retailers or sensitive uses.
Based on constituent feedback and direction from the Committee, there was a desire to create an exemption to the 600-foot distancing restriction for businesses that not only predate the Ordinance, but also businesses that subsequently obtain that business location from the prior license holder.
To address the negative impacts to projects already in progress at the time of the effective date, and to create an additional 600-foot restriction exemption for certain business locations, the Environmental and Legislative Committee and staff are recommending the following amendments to SMC Title 5, Chapter 5.104:
Development Projects which Predate the Ordinance
The proposed ordinance will permit a location that was in development before the effective date of Chapter 5.104, which satisfies specified criteria, to have a tobacco retailer obtain a license at that location without regard to the 600-foot distancing restrictions.
Locations with Tobacco Retailing which Predate the Ordinance.
The proposed ordinance will allow a location to be exempt from the 600-foot distancing restrictions if (A) a tobacco retailer was retailing there lawfully prior to the effective date of Chapter 5.104, and (B) the location has been continually licensed as a tobacco retail location (plus up to 6 months after the expiration of the most recent license). This will allow a retail location which predates the ordinance to sell its establishment to a new owner, who will be able to obtain their own license to continue retailing tobacco at the location. If a retail location predating the ordinance has not yet been required to obtain a tobacco retailer license due to the phased rollout of the license requirement, a sale or transfer of the business would not trigger the location requirements.
The Committee has also expressed interest in exploring additional inspection and enforcement mechanisms, which staff will continue to explore as we continue implementation and adjustment of this new business license permit type.
FINANCIAL SUMMARY
There are no General Fund costs associated with the adoption of the ordinance as drafted.
Attachment A - Proposed Ordinance Red-lined Version