TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Chris Burton
SUBJECT: See Below DATE: November 24, 2025
Approved
Date:
12/3/25
COUNCIL DISTRICT: Citywide
SUBJECT: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
RECOMMENDATION
Approve an ordinance extending the Urgency Interim Ordinance No. 31270 of the City of San José, establishing a temporary moratorium on the issuance of Tobacco Retail Licenses to businesses at new locations within San José, and setting forth findings to support such extension.
SUMMARY AND OUTCOME
Staff recommends that the City Council extend the Urgency Interim Ordinance No. 31270 establishing a temporary moratorium on new tobacco retailer, smoke shop, and smoking lounge permits under the San José Municipal Code Chapter 6.87 for an additional 22 months and 15 days, from December 19, 2025 to November 3, 2027. If the City Council wishes to extend the Urgency Interim Ordinance No. 31270, action is required by December 16, 2025, the last regular meeting before the moratorium expires.
An ordinance extending the Urgency Interim Ordinance No. 31270 for an additional 22 months and 15 days is provided for City Council consideration.
The extension of the Urgency Interim Ordinance No. 31270 will allow the City of San José (City) to complete efforts to strengthen its tobacco retail regulations and enforcement, including ceasing illegal business operations, amending applicable provisions of the San José Municipal Code to strengthen enforcement and close legal loopholes, aligning local rules with state and recent federal regulations, updating fines, and enhancing coordination among City departments and with other state and local agencies.
COUNCIL AGENDA: 12/16/25
FILE: 25-1327
ITEM: 7.3
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
As provided under the Urgency Interim Ordinance No. 31270, existing licensed retailers could continue operating and renew their permits, while new applications would be suspended. The outcome for San José would be a more comprehensive and effective regulatory framework for tobacco and vape retailers that better protects public health, prevents youth exposure, and ensures consistent enforcement across all retail establishments.
BACKGROUND
On June 11, 2025, the Rules and Open Government Committee directed staff to draft a temporary, citywide moratorium on new smoke shops in response to concerns about their overconcentration, particularly in East San José, and the associated public health, youth access, and neighborhood safety impacts. A May 22, 2025 City Council memorandum highlighted these issues and cited the 2025 Latino Health Assessment, 1 which documented disproportionately high densities of tobacco retailers in East San José and related risks for underserved communities.
On November 4, 2025, the City Council unanimously adopted the Urgency Interim Ordinance No. 31270, establishing a temporary moratorium on the issuance of Tobacco Retail Licenses (TRL) for new business locations within San José. Additionally, the City Council approved the October 31, 2025 joint memorandum which recommended accepting staff’s recommendations and approving the staff-recommended work plan.
This work plan, outlined on page 7 of the memorandum,
2 included direction to amend
the TRL fine schedule, increase penalties for violations related to licensing requirements (6.87.200), update tobacco business regulations and conditions (6.87.300), and place limits on new tobacco business retail locations (6.87.370). The moratorium took effect immediately, prohibiting acceptance of new applications while allowing existing TRL holders to continue operating and renewing their licenses. The short-term pause was intended to allow the City time to review and strengthen its tobacco retail regulations in response to increased complaints about unpermitted vape and smoke shop activity and growing concerns over youth access to nicotine and vaping products.
Under Government Code 65858 and Section 605(d) of the City Charter, the Urgency Interim Ordinance No. 31270 may be extended for up to 22 months and 15 days with at least eight affirmative votes by the City Council.
1 2025 Latino Health Assessment
2 25-1166 - Memorandum
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
ANALYSIS
Since the Urgency Interim Ordinance No. 31270 was adopted on November 4, 2025, staff has begun implementing the TRL Temporary Moratorium Work Plan to achieve the identified goals and objectives over the next two years (see Table 1). The following section provides an overview of the actions taken to date, anticipated next steps, and estimated completion timelines. Staff does not expect all work plan items to be completed until at least December 2026, with some activities continuing beyond that date. The proposed timeline is largely dependent on securing the additional resources needed to support this work, including expansion of the Department of Justice grant administered by the Santa Clara County Public Health Department, and the approval and onboarding of a rehire-retiree position. Once staffing and funding are in place, staff will advance enforcement efforts by issuing cease-and-desist letters to more than 80 unpermitted businesses, conducting license reviews to determine whether businesses must obtain a TRL or cease sales, and continuing inspections and complaint responses within required timelines. Staff will also implement the Memorandum of Understanding to clarify roles, responsibilities, and coordinated enforcement procedures between the City and partner agencies. In parallel, staff will begin the fine study with Guidehouse, Inc. in December 2025, complete ordinance research and benchmarking, and monitor recent federal changes related to hemp products containing THC to ensure ongoing compliance.
As staff advances the implementation of the work plan, an extension of the Urgency Interim Ordinance No. 31270 to November 3, 2027, for an additional 22 months and 15 days, is necessary to prevent new businesses from opening in already impacted neighborhoods and to ensure sufficient time to complete the work. This extension will support the development of a more comprehensive, effective, and sustainable regulatory framework.
Table 1: TRL Temporary Moratorium Work Plan
Work Plan Item Actions Taken Since
11/4/25
Next Steps Estimated
Completion
Secure Additional
Resources- Expand
Department of Justice (DOJ)
grant administered by County
Public Health Department
(PHD) to enforce on
unpermitted businesses
Submitted request to
County PHD to expand the
DOJ grant; drafted request
for retire-rehire to support
enforcement.
Obtain grant and retire-
rehire approvals;
onboard retire-rehire;
begin enforcement.
Jan 2026
Improve Enforcement
Coordination- Work with
Police, County, and State
agencies to develop a
coordinated enforcement
strategy
Identified pain points and
opportunities for better
coordination; drafted
proposed Memorandum of
Understanding (MOU)
procedures/workflow.
Implement MOU
clarifying roles and
responsibilities and
establishing coordinated
enforcement.
April 2026
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
Work Plan Item Actions Taken Since
11/4/25
Next Steps Estimated
Completion
Amend Fine Schedule-
Increase TRL fines per Council
direction
Finalized agreement with
Guidehouse for fine study
(Dec 2025- Mar 2026)
Begin fine study with
Guidehouse, Dec 2025
May/June
2026
Ordinance Updates-
Strengthen TRL regulations
and close loopholes
Began ordinance
research/peer agency
benchmarking
Complete ordinance
research/benchmarking
Dec 2026
Enhance Enforcement and
Compliance- License
revocation, cessation of sales,
or legal action
Drafted cease-and-desist
letter for 80+ unpermitted
businesses
Issue cease-and-desist
letters for 80+
unpermitted businesses;
begin enforcement
Ongoing
Business Licensing
Compliance- Ensure all
eligible businesses are
licensed
Completed first review and
reconciliation of City/State
business rosters
Conduct final review;
begin enforcement to
enroll businesses or
require cessation of
sales
Ongoing
Proactive Inspections and
Complaint Response
Completed 14 proactive
annual inspections
Continue inspections
and complaint
responses per required
timelines
Ongoing
Monitor State/Federal
Regulations
N/A
Review and monitor
recent federal changes
for hemp products
containing THC
Ongoing
Racial Equity Impact Analysis
This extension of the Urgency Interim Ordinance No. 31270 directly responds to community concerns over public health, youth exposure, and neighborhood safety in areas with high concentrations of smoke shops.
The primary beneficiaries of extending the Urgency Interim Ordinance are residents, particularly youth and families in East San José and other communities disproportionately impacted by tobacco and vape retail concentration. These neighborhoods, which tend to experience higher densities of smoke shops and related public health risks, will benefit from fewer tobacco retail businesses, reduced exposure to tobacco, vaping, or other illicit products, and stronger regulatory oversight.
Businesses and property owners seeking to open new tobacco or vape shops may experience economic burdens during the extended moratorium. Certain communities, such as immigrant or small business owners, may be disproportionately impacted by these restrictions. Licensed retailers may see a variation in their annual license fee as retailers are added or removed from the program, however, significant or long-term negative impacts are not anticipated.
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
Potential unintended consequences include an increase in unlicensed operators and businesses attempting to evade the extended moratorium. There could also be economic effects on business owners seeking to begin selling tobacco products.
EVALUATION AND FOLLOW-UP
Staff will provide a progress update on the implementation of the TRL Temporary Moratorium Work Plan, including outcomes of the efforts to regulate and reduce tobacco and vape retailers citywide as part of the Code Enforcement Annual Report scheduled for the Neighborhood Services and Education Committee meeting on April 9, 2026.
COST SUMMARY/IMPLICATIONS
If adopted, the ordinance would be enforced pursuant to routine Code Enforcement efforts, which is included within the City’s budget. The ordinance may affect the fee- funded TRL Program, as fluctuations in the number of licensed businesses will result in corresponding changes to license fee revenues. The ordinance is not expected to have any significant fiscal impact on the General Fund.
COORDINATION
This memorandum has been coordinated with the City Attorney's Office and the City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the December 16, 2025 City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-008, General Procedure and Policy Making resulting in no changes to the physical environment.
HONORABLE MAYOR AND CITY COUNCIL
November 24, 2025
Subject: Extension of the Urgency Interim Ordinance on the Temporary Moratorium on the Issuance of Tobacco Retail Licenses
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
Chris Burton
Director, Planning, Building, and Code
Enforcement Department
For questions, please contact Rachel Roberts, Deputy Director, Planning, Building, and Code Enforcement Department, at [email protected].