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Home My WebLink About06 01 2026 - Items 8.2 & 9.1 - Bryan Lam 2520 Venture Oaks Way, Suite 100, Sacramento, CA 95833 | (916)646-5999 | cfca.energy May 29, 2026 Gilroy City Council 7351 Rosanna Street Gilroy, CA 95020 RE: Concerns Regarding Smoke Shop Ordinance and Draft Ordinance Relating to Tobacco Retailer Permits Honorable Mayor and City Councilmembers, On behalf of the California Fuels and Convenience Alliance (CFCA), a statewide trade association representing independent gas stations and convenience stores throughout California, we appreciate the opportunity to share our perspective as the City considers potential policy options related to tobacco regulations. CFCA represents member businesses that operate in Gilroy and the surrounding area – many of which are small, family-owned establishments that are pillars of the communities which they serve. We value the City’s willingness to seek input and respectfully request the opportunity to be a part of the conversation to help inform a balanced and effective approach. Being stakeholders in the local community, we stand behind efforts to prioritize public health. However, we believe that the language in both ordinances reaches beyond its intended audience and may potentially bring significant undue hardship to many of Gilroy’s small “mom-and-pop” businesses. Occupying a section of the market where a majority of businesses are family-owned and operated, gas stations and convenience stores are cornerstone establishments often with deep ties within the communities they’re in. These small businesses are more than just one-product retailers, and they supply neighborhoods with more than just fuel or tobacco. Everything from ready-to-eat meals to common grocery items like flour or sugar, to even convenient ATM’s when you’re in a pinch, can be found on the shelves of these stores. Their community contributions don’t just stop on the retail side either; gas stations and convenience stores support their localities in more ways than one. These sites are high-revenue generators that help bring in vital sales and tax dollars in the city that, contrary to popular belief, present razor-thin margins for their operators. The large amounts of tax revenue brought in by these local businesses directly help fund critical federal, state, and local programs, including tobacco-use education programs that have proven effective at furthering public health objectives. It is also not uncommon for site operators to take a more active role, often participating in local drives and charity events that benefit the underserved members of the community. 2520 Venture Oaks Way, Suite 100, Sacramento, CA 95833 | (916)646-5999 | cfca.energy With that in mind, it is clear why a targeted approach during the policymaking process is paramount to protect these small businesses from any unintended consequences. One such unintended consequence presents itself within the definition of “smoke shop” in the City’s proposed ordinance to address the proliferation of unregulated smoke shops. The definition included in the ordinance defines “smoke shop” as “any business devoting more than 15 percent of either its gross floor space or display area to the retail sale, marketing, bartering, trading or exchange” of tobacco products and paraphernalia. While this may initially seem like a satisfactory definition, there are three areas of concern that may loop in non-smoke shop retailers. The first is that the definition fails to adequately define “display area” and leaves much room for ambiguity. Instead, we recommend amending the definition in the ordinance from “… gross floor space or display area…” to “the sales area or customer area of a retailer, including register areas, bar areas, waiting areas, and display area that may not be directly accessible to customers, but does not include hallways, offices, restrooms, courtyards, breaks areas, the forecourt of a service station, or a kiosk service station”. Secondly, we believe that the fifteen (15) percent threshold for display area is too low and may inadvertently include certain gas stations and convenience stores, particularly those with a smaller store footprint. Instead, we recommend a threshold of twenty-five (25) percent or more as the qualifying threshold, to avoid any unintended inclusions. Third, we would strongly recommend the addition of language exempting “kiosk service stations” from the definition. Operating with a store footprint that is significantly smaller than a traditional convenience store, kiosk service stations’ tobacco display areas may exceed even the twenty-five (25) percent threshold. In order to avert inadvertent inclusions of gas stations and convenience stores, we respectfully urge City Council to consider amending the ordinance to include these recommendations. Furthermore, we have significant concerns regarding the restrictions on tobacco retailing near youth-oriented facilities and the transferability of tobacco retailer permits proposed in the draft ordinance related to tobacco retailer permits. The provisions in the ordinance that seek to establish excessive 1000 ft. buffer zones around youth-oriented facilities, in addition to the existing 1000 ft. buffer zones around schools, utilize arbitrary regulations that serve only to penalize compliant businesses while failing to address the issue at hand. Tobacco sales may only be an ancillary revenue source for gas stations and convenience stores, but they can account for up to 35% of in-store revenue. That is a significant portion of income that aids business owners in keeping their doors open and workers employed. The provisions in this ordinance will effectively impose considerable hardship on local businesses, some with decades-long relationships with the communities they reside in and diminish local business owners’ retirement prospects. For an industry in which most operators’ sole retirement asset lies within their business valuation, prohibiting a store from obtaining a tobacco retailer permit will significantly depreciate a store’s value; inadvertently punishing all tobacco retailer permit holders, regardless of their history of compliance. Additionally, reducing the number of legal tobacco retailers will 2520 Venture Oaks Way, Suite 100, Sacramento, CA 95833 | (916)646-5999 | cfca.energy simply reduce competition for unregulated sellers, enabling the very illicit market that this ordinance sets out to curb. In accordance with state and federal law, it is already illegal to sell tobacco to anyone under 21 years of age, and the implementation of this ordinance will penalize compliant, law-abiding retailers, while the bad actors are allowed to continue operating unabated. We strongly urge City Council to consider emphasizing enforcement of existing laws and omitting these restrictions in the draft ordinance that may only prove to punish compliant local businesses. If the Council insists on implementing further restrictions on tobacco retailer permit holders, we respectfully recommend that distancing requirements are limited to no more than 250 feet in length from youth-oriented facilities for new sites, and that tobacco retailer permits be deemed transferable for all legal transfers of ownership given that the business location does not change, instead of exclusively for arm’s length transactions. We appreciate the opportunity to provide input and look forward to working with the City of Gilroy on effective policy solutions that protect public health, while preserving economic opportunities for the small businesses that serve your communities. Sincerely, Bryan Lam, Policy & Engagement Analyst California Fuels & Convenience Alliance