BLUE FOLDER ITEM
Blue folder items are additional back up material to administrative reports and/or public comments received after the printing and distribution of the agenda packet for receive and file.
CITY COUNCIL MEETING
FEBRUARY 24, 2026
K.1. PUBLIC HEARING FOR CONSIDERATION OF AN APPEAL OF THE REVOCATION OF THE BUSINESS LICENSE FOR THE MANHATTAN BEACH SMOKE SHOP INC. LOCATED AT 2205 ARTESIA BOULEVARD, UNIT A, REDONDO BEACH, CALIFORNIA 90278.
PROCEDURES:
1. Open Public Hearing, take testimony; and
2. Close Public Hearing; and
3. City Council Decision and Findings
CONTACT: JOY A. FORD, CITY ATTORNEY
• ADMINISTRATIVE APPEAL MEMORANDUM
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LAW OFFICES OF WHITBECK, KOOSHKI & ZREIK LLP
21515 Hawthorne Blvd. Suite #1065 Torrance, CA 90503
KAM KOOSHKI (SBN 232315)
SAMMY ZREIK (SBN 249020)
LAW OFFICES OF WHITBECK, KOOSHKI & ZREIK LLP
21515 Hawthorne Blvd., Suite #1065
Torrance, California 90503
Tel: (888) 972-9477
Fax: (310) 540-1112
Attorneys for Appellant,
CITY OF REDONDO BEACH ADMINISTRATIVE APPEAL
MANHATTAN BEACH SMOKE SHOP d/b/a
REDONDO BEACH SMOKE SHOP &
HOOKAH;
Appellant,
v.
ADMINISTRATIVE APPEAL RE BUSINESS
LICENSE #330177 PERMANENT
REVOCATION
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CASE NO:
ADMINISTRATIVE APPEAL
MEMORANDUM OF POINTS AND
AUTHORITIES IN OPPOSITION TO A
PERMANENT REVOCATION OF
BUSINESS LICENSE #330177
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF APPEAL AND IN
OPPOSITION TO PERMANENT REVOCATION
I. INTRODUCTION
This appeal concerns the permanent revocation of Business License No. 330177 issued to Manhattan Beach Smoke Shop, Inc., dba Redondo Smoke Shop & Hookah. The revocation arises from a March 18, 2025, inspection during which flavored tobacco products were seized from the premises. Following an administrative hearing on December 10, 2025, the Hearing Officer issued a Final Decision on December 19, 2025, permanently revoking the license.
The revocation order deprives Appellant not only of the ability to operate its business, but also of the economic viability of the commercial property purchased specifically for this licensed operation. Appellant acquired the property in reliance upon the continued validity of its municipal business license and secured financing tied to the operation of this retail business. Permanent revocation places Appellant at substantial risk of loan default, foreclosure, and severe financial harm that extends well beyond a regulatory penalty. The City’s action therefore affects a fundamental vested property interest of constitutional dimension.
Because this appeal is heard de novo, the City Council must independently determine whether the evidence establishes, by a preponderance of the evidence, that Appellant sold or possessed with intent to sell prohibited flavored tobacco products and whether permanent revocation is legally justified. The record does not support either conclusion. Moreover, the procedure employed and the penalty imposed violate constitutional guarantees of procedural due process and constitute an abuse of discretion.
For these reasons, the permanent revocation must be reversed, or at minimum substantially modified.
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II. STANDARD OF REVIEW
The City’s own Administrative Appeal Brief acknowledges that this matter is heard under a de novo standard before the City Council. Under de novo review, the Council is not bound by the Hearing Officer’s factual findings or legal conclusions. Instead, the Council must independently evaluate the credibility of witnesses, the reliability of documentary evidence, and the weight of the proof presented. The burden remains on the City to establish, by a preponderance of reliable and admissible evidence, that a violation occurred warranting revocation.
Where a business license constitutes a vested property right and is tied to ownership of commercial real property and secured financing, the deprivation of that license implicates heightened scrutiny and constitutional safeguards. Administrative action must therefore be supported by substantial evidence and must comply with the fundamental fairness requirements embodied in both the United States Constitution and the California Constitution.
III. THE CITY FAILED TO ESTABLISH POSSESSION WITH INTENT TO SELL The governing statute, Health and Safety Code section 104559.5(b)(1), prohibits selling, offering for sale, or possessing with intent to sell flavored tobacco products. The City’s case rests primarily upon the quantity of items seized and the opinion testimony of law enforcement personnel regarding alleged intent.
However, quantity alone does not establish intent. The record reveals no controlled purchase, no undercover transaction, no sales receipt demonstrating unlawful sale, no customer testimony, no evidence of pricing displays introduced at the hearing, and no live testimony from CDTFA inspectors during the original proceeding. The Hearing Officer’s decision relied substantially upon law enforcement inference rather than direct evidence of commercial offering.
Intent to sell is a factual determination that requires more than speculation. Possession of inventory, even if improperly retained, does not automatically equate to offering for sale. Without - 4 -
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evidence demonstrating that customers were able to purchase the products or that sales activity actually occurred, the City’s proof does not satisfy its burden. An administrative agency may not substitute conjecture for evidence.
Because the City has failed to demonstrate by competent proof that Appellant sold or possessed with intent to sell prohibited products, the revocation cannot stand.
IV. THE PROCEEDING VIOLATED PROCEDURAL DUE PROCESS
The administrative record reflects that at the December 10, 2025 hearing, critical evidentiary materials were not presented. CDTFA inspectors were unavailable for testimony. Photographs had not yet been released to the police department. Body camera footage was not introduced. Narrative inspection reports were not admitted. Following the hearing, the Hearing Officer requested additional materials by email, including invoices and photographic evidence, and a final decision was issued shortly thereafter.
Procedural due process under the Fourteenth Amendment and Article I, section 7 of the California Constitution requires that a party be afforded notice and a meaningful opportunity to be heard before being deprived of a protected property interest. The opportunity to be heard must include the ability to confront and rebut the evidence relied upon by the decision maker. A decision may not be based upon undisclosed, post-hearing supplementation of the record without affording the affected party the opportunity to challenge that evidence.
The California Supreme Court in Topanga Association for a Scenic Community v. County of Los Angeles (1974) 11 Cal.3d 506 held that administrative findings must bridge the analytic gap between evidence and ultimate decision. Where evidence is incomplete or introduced after the hearing without adversarial testing, that analytic bridge is absent.
Here, the deprivation imposed is not a minor regulatory fine but permanent termination of the business license. When government action results in such severe economic impact — including the - 5 -
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risk of default on secured commercial financing — procedural protections must be strictly observed.
The procedure employed did not satisfy those requirements.
V. THE PRODUCTS WERE STORED FROM A PREVIOUSLY CLOSED LOCATION,
WERE NOT PART OF ACTIVE INVENTORY, AND ANY LIMITED SALES WERE A
MISTAKE
The evidence establishes that the flavored tobacco products discovered during the March 18, 2025 inspection were not part of Manhattan Beach Smoke Shop’s active retail inventory. As reflected in the testimony of owner Feras Adamo, the products were transferred to the premises after the closure of another smoke shop location in Manhattan beach and were stored temporarily in a locked back storage room. The items were not displayed on the sales floor, were not stocked on retail shelves, and were not accessible to customers. Only the owner had access to the locked storage area.
Mr. Adamo confirms that the products were not offered for sale as part of the business’ ordinary retail operations and were not integrated into the store’s active inventory.
The business’s primary revenue derives from lawful tobacco products, cigars, and accessories purchased from licensed California wholesalers with all taxes paid. There is no evidence of signage, advertising, marketing, or open retail promotion of flavored tobacco products at this location.
To the extent any sales activity occurred, Appellant acknowledges that this was a mistake in judgment. Those limited transactions were not reflective of a systematic or deliberate effort to violate the law. Rather, they occurred during a period of regulatory transition and confusion following the implementation of Proposition 31. The volume of such transactions represented a very small fraction of overall business activity and did not constitute a core revenue stream.
Importantly, the products were maintained from a prior location and were not newly acquired inventory intended for commercial distribution. They were retained temporarily in storage, not stocked for public sale. The absence of public display, absence of open marketing, and restricted - 6 -
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access to the storage area substantially undermine any inference of broad commercial intent.
Administrative enforcement must distinguish between an active unlawful sales enterprise and a limited compliance error involving residual inventory transferred from a closed location.
Even if the Council were to conclude that a technical violation occurred, the circumstances demonstrate that the conduct was limited in scope, not part of an ongoing retail strategy, and not indicative of willful defiance. Permanent revocation — effectively extinguishing a business tied to substantial real property investment and secured financing — is disproportionate under these facts.
VI. PERMANENT REVOCATION IS AN ABUSE OF DISCRETION AND GROSSLY
DISPROPORTIONATE
Even assuming arguendo that a violation occurred, the penalty imposed is excessive and constitutes an abuse of discretion. Redondo Beach Municipal Code section 6-1.26 authorizes suspension, modification, or revocation of a license. It does not mandate permanent revocation as a first-line sanction.
The record does not demonstrate prior escalating discipline, repeated violations, youth sales, nuisance activity, fraud in the license application, or refusal to cooperate with enforcement.
Permanent revocation is the harshest penalty available and effectively extinguishes the business enterprise.
Administrative penalties must bear a reasonable relationship to the gravity of the offense and may not be arbitrary or shocking to the conscience. The California Court of Appeal in Kazensky v.
City of Merced (1998) 65 Cal.App.4th 44 recognized that disproportionate penalties constitute an abuse of discretion. When a business owner has invested substantial capital, purchased property, and secured financing in reliance on continued licensure, the permanent revocation of that license demands careful proportional analysis. The City skipped progressive enforcement mechanisms and imposed a business death sentence.
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VII. THE REVOCATION IMPAIRS A VESTED PROPERTY INTEREST
Appellant’s interest in the continued operation of its licensed business is not merely regulatory but proprietary. The business license forms an integral component of the value and use of the commercial property acquired for the smoke shop operation. Appellant purchased the property in reliance on the lawful continuation of its business license and secured financing based upon projected business income.
Revocation of the license directly undermines Appellant’s ability to service its loan obligations and exposes Appellant to default and potential foreclosure. When governmental action threatens to destroy the economic viability of real property and impair secured lending arrangements, constitutional protections are triggered. A business license tied to a specific property and substantial capital investment constitutes a vested right once substantial reliance has occurred.
Governmental deprivation of such an interest requires strict compliance with procedural safeguards and a rational, evidence-based justification. Absent clear and substantial evidence of wrongdoing and proportional penalty assessment, permanent revocation violates both substantive and procedural due process.
VIII. THE COUNCIL MUST EXERCISE INDEPENDENT JUDGMENT
Because this appeal is de novo, the Council must independently assess whether the City has carried its burden and whether the penalty imposed is justified. If uncertainty remains regarding accessibility, offering for sale, or intent, that uncertainty must weigh against permanent deprivation.
Administrative enforcement should aim at compliance, not annihilation of enterprise.
If the Council determines that some violation occurred, Appellant respectfully submits that the appropriate remedy would be a defined suspension period, compliance conditions, or administrative fine consistent with progressive enforcement principles. Permanent revocation is neither required nor supported by this record.
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IX. CONCLUSION
The City has not established by a preponderance of reliable evidence that Appellant sold or possessed with intent to sell prohibited flavored tobacco products. The proceedings failed to satisfy fundamental due process requirements, and the penalty imposed is grossly disproportionate to the alleged violation. The revocation further impairs a vested property interest and threatens substantial financial harm, including potential loan default.
For these reasons, Appellant respectfully requests that the City Council reverse the permanent revocation of Business License No. 330177 and reinstate the license, or alternatively modify the penalty to a proportionate administrative remedy consistent with constitutional safeguards and principles of fairness.
DATED: February 23, 2026, Respectfully Submitted,
WHITBECK, KOOSHKI & ZREIK LLP
___________________________
By: Sammy Zreik
Attorneys for Appellant