PURPOSE

The purpose of this report is to provide information concerning local Tobacco Retailer Licensing Ordinances.  This information was requested by the City Council at their June 3, 2003 meeting.

BACKGROUND

During oral communications at the regular City Council meeting of June 3, 2003, Eileen Rogers, the Program Coordinator for Tobacco Education/Prevention for the Valley Community Clinic, requested the issue of Tobacco Retailer Licensing  be placed on the June 17, 2003 City Council agenda.  In response, Council requested staff to place this item on their agenda for an unspecified future date.

On March 18, 2003, Terre Hirsch met with Ms. Rogers and her associate, Mr. Kevin Weiler concerning how they could present the matter of Tobacco Retailer Licensing to the Burbank City Council for consideration.  A copy of a March 24, 2003 letter concerning this meeting is attached as Exhibit A.  Also on March 24, 2003, Ms. Rogers sent a follow-up information letter to Council Member Vander Borght concerning the issue of Tobacco Retailer Licensing (Exhibit B).  In addition, in April of 2003, Ms. Rogers met with Council Member Ramos concerning this subject.  Ms. Rogers had previously sent a letter dated February 25, 2003, concerning Tobacco Retailers Licensing, to City Manager, Bud Ovrom (Exhibit C).  It is unknown whether or not Mr. Ovrom responded to her letter.

INTENT OF TOBACCO RETAILERS LICENSING

Tobacco Retailers Licensing is designed to create a local regulatory system for the licensing of merchants who sell tobacco products.  This can be analogized to the relationship between Alcohol Beverage Retail Licensing administered through the State of California and regulated by the Alcohol Beverage Control Board.  In other words, local jurisdictions can be to the sale of tobacco products, as the State of California is to the sale of alcohol. 

It is the intent of local Tobacco Retailers Licensing ordinances to regulate tobacco retailers through licensing requirements.  The premise of these ordinances is to utilize licensing processes as leverage for tobacco retailers to be more cognizant and vigilant when selling tobacco products.   Particularly, when selling to younger persons who may not be of legal age to purchase tobacco products (persons younger than 18 years of age). The basic premise of Tobacco Licensing Ordinances is to prevent youth from becoming addicted to a life-long dependence on tobacco products, and thus help protract their lives.

It is theorized that if a regulatory retailers� license is required by local jurisdictions for the purpose of selling tobacco products, then any licensee who is successfully prosecuted for selling tobacco products to under aged juveniles, will be subject to loss of such licensing through a license revocation process.  The threat of license revocation or suspension can be a significant motivation for compliance with any law. 

Although tobacco products can be sold just about anywhere, the most prevalent retail sales locations are: liquor stores; convenience stores; markets; restaurants and bars; donut shops; lunch trucks and ice cream trucks; gas stations; gift shops: and workplaces.  Not counting workplaces, there are approximately four hundred (400) potential tobacco sales locations in Burbank.  Any of these businesses selling tobacco products retail would be responsible to secure a Tobacco Retailers License should Burbank adopt such an ordinance. 

If any of these businesses have their Tobacco Retailers License denied, revoked, or suspended, the tobacco retailer will be unable to continue selling tobacco products for a specified period of time.   Protracting this logic a bit, it can be summarized that ultimately if a Tobacco Retailers License is lost through revocation or suspension, the general business permit, which all businesses need to operate the other portions of their business, can be subject to revocation or suspension if tobacco sales continue without the

possession of a Tobacco Retailers License.  This is a worse case scenario which would not be a probability, but an unlikely possibility.

COSTS OF CONDUCTING A TOBACCO RETAILERS LICENSE PROGRAM

Inherent with the creation and implementation of a Tobacco Retailers License program are costs associated with conducting such a program.  These costs are directly related to:

1. Startup costs associated with initial implementation of the program which includes: targeting and identifying qualifying businesses; dissemination of information to qualifying licensees; and, education of program to licensees (License and Code Services Division);

2. Registration and billing of qualifying businesses (License and Code Services Division);

3. Processing of applications (License and Code Services Division and the Planning Division);

4. Follow through of business ownership changes (License and Code Services Division);

5. Enforcement (Police Department and License and Code Services Division); and,

6. Prosecution (City Attorney�s Office, Police Department, and License and Code Services Division).

7. Intangible cost � the cost of personnel resource reallocation from one priority to another.

Currently, each city which has adopted a Tobacco Retailers Licensing Ordinance has put their particular �spin� and uniqueness on their ordinances (see Exhibit D for sample ordinances of three (3) cities).  All these ordinances  require registration and annualized renewals.  None of the ordinances allow for transferability of licensing to accommodate changes of business ownership.  Some ordinances do not allow �mobile� sales (food preparation vehicles, ice cream trucks, etc.) of tobacco products.  Some ordinances even prohibit tobacco product advertising which is visible from public property within a prescribed distance from schools, playgrounds, or other traditional areas frequented by children.

The fees charged for regulatory licenses, such as a Tobacco Retailers License, may not exceed the cost of registering, processing, implementing and enforcing regulations.  Licensing agencies may not �make� money in this endeavor, they may only recover, through licensing fees, the costs associated with their programs.

Staff surveyed other cities to determine the license fees charged for these licenses and found that the fees vary from �no charge� to $283 annually.  It is important to note that in the jurisdictions where no fees are charged, adoption of a Tobacco Retailers License took place long before we were experiencing the current state and local fiscal issues.

Staff recommends that given the current fiscal situation, if Council ultimately adopts a Tobacco Retailers Ordinance, that there are cost-recovery fees associated with the ordinance.  In addition, if such an ordinance becomes a reality, then upon initial implementation, code enforcement priorities be readjusted temporarily (1 year) to accommodate the necessary resource reallocation to initiate and accomplish a successful Tobacco Retailers Licensing Program.

ALTERNATIVES TO CREATING A TOBACCO RETAILERS LICENSE ORDINANCE

If the City Council wants to make enforcement against illegal tobacco usage by juveniles a priority, and they don�t want to establish a Tobacco Retailers License Ordinance, there are other alternatives to consider, such as: 

• Intensified tobacco education programs for the Burbank Unified School District;

• Merchant education programs;

• Conditional Use Permit requirements to prohibit new tobacco retailers near and around schools and  parks;

• Attempt to counter pro-tobacco advertising and influences through Channel 6 public television ads created by the �Teens In Action� video production funding (BY4Y);

• Community cessation programs for juveniles and adults;

• Establish diversion programs for juveniles who are caught using or possessing tobacco products; and,

• Create a Citizen Action Committee involving youth, merchants, city staff, and health officials to make recommendations to Council concerning this matter.

RECOMMENDATION

It is staff�s recommendation to do additional research on drafting a Tobacco Retailers Ordinance including outreach with appropriate community interests and affected parties.

EXHIBITS:

A                 March 24, 2003 letter from the Valley Clinic to Terre Hirsch

B                 March 24, 2003 letter from the Valley Clinic to Council Member

                   Vander Borght

C                 February 25, 2003 letter from Valley Clinic to Bud Ovrom

D                 Sample ordinances from the cities of El Segundo, Berkeley, and Los Angeles

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