Clovis reconsiders $1,000 annual fees for tobacco businesses. Here’s why
Clovis City Council is reconsidering a $1,000 annual tobacco retailer’s license fee that went into effect last year after local business owners said it imposes an excessive financial burden.
The TRL fee, as it’s known, was approved by the council and took effect June 2024. Retailers who sell tobacco products in Clovis must pay a $400 application fee and $1,000 annual license fee, which funds the city’s tobacco enforcement programs.
The City Council directed staff to further review the necessity and reasonableness of this fee at its Nov. 10 meeting.
The Clovis Police Department has accumulated a backlog of 10,000 items containing hazardous material seized over the past two years, and faces a $500,000 funding gap for their disposal, according to police corporal Sean O’Brien.
O’Brien told the council that the state’s annual grant of $25,000 can only fund 24 retailer inspections, 20 operations targeted at minor decoys, and educate one-third of the officers in the department and partial retailer employees.
“There was a major deficit when it came to equal enforcement, equal treatment of all the retailers, because currently Clovis has about 70 tobacco licensed retailers,” O’Brien said. “So that state funds us for about a third of what we need for just the enforcement and the inspections.”
The estimate has not taken into account the expenses for subsequent inspections of businesses to ensure compliance, and the destruction of seized evidence, which is one of the primary costs, O’Brien said.
“We’ve taken more of an education over enforcement approach because of that,” O’Brien said. “Tobacco items are regularly changing in appearance, name, advertisement, and so many distributors are distributing products to retailers that are actually illegal. We prefer to educate the retailers in most instances, if we can give them an opportunity to return them to the distributor so that they’re getting some of their money back, as opposed to taking a more heavy-handed approach.”
Over the past two months, the police randomly selected 27 tobacco retailers for cursory inspections of their displayed products. A total of 23 retailers inspected were found to be in violation of the state law or Clovis’s ordinance, according to the report submitted to the council.
O’Brien said if the owners have businesses in multiple cities, the police would double-check on those businesses as well.
“Because what we’ve seen is some business owners, if they find out that we’re taking a proactive approach to enforcement and getting rid of the illegal products in their current stores in Clovis, they’ll move inventory to stores in Fresno,” O’Brien added. “We regularly work with other jurisdictions for training for universal enforcement as well, so they’re not getting two different stories.”
The average cost of TRL enforcement is approximately $700 in cities comparable to Clovis in population and number of retailers, according to the police department. However, cities that take an active approach to enforcement incur a higher cost of more than $800 annually. The department also found that these cities receive more state grants than Clovis to support their enforcement.
The most significant costs come from the evidence destruction or disposition, according to city officials.
“The proposed fee, though it doesn’t give us complete cost recovery, is a reasonable amount to allow some cost recovery, and is similar to other jurisdictions,” O’Brien said. “We’ll still look for additional grant funding to help fund the evidence destruction.”
Clovis business owners concerned with ‘red tape’
Balwinder Singh, president of the American Petroleum and Convenience Store Association Fresno Chapter, told the council at a recent meeting that the TRL fee places a huge burden on small businesses, and it’s unfair to the good actors.
“I want to have the distinction shared here. When you look at tobacco retailers, we are more the convenience store side of it, where we’re selling groceries to our communities as well. We also provide numerous restaurant items, like snacks and fast food as well,” Balwinder Singh said. “We talked about how it affects the stores when you’re paying a $400 license through the state and that’s already going to be increased next year, that’s regulated now. The city wants to put another one on top of it, just to regulate ourselves again. So the red tape there is what we’re concerned with.”
Balwinder Singh said the association supports the education efforts and the police enforcement if the state issues clear guidelines and a list of banned items, he said. But without available regulations from the state, Clovis should not pose extra violations against small business owners, he said.
“The guidelines were not clear. If you’re going to pick up on a flavored product, and then you’re going to expect them to pay for it, to destroy what they paid for already, that they already lost out on that, because they can’t get it back from the distributor,” Singh said.
Jasvinder Singh, a store owner, said he received inventory from the distributor and should not be held responsible for the distributor’s misconduct.
“I cannot go into a manufacturing facility or keep opening up those boxes, because I cannot afford that,” Jasvinder Singh told the council at the meeting. “That things are overseen by different departments, not by us. There are federal agencies and state agencies that oversee importers and manufacturers. If they do their job better than that, probably we as retailers don’t end up being penalized.”
Clovis City Council will revisit tobacco retail license fee
The city council voted 3:1, with councilmember Matt Basgall absent from the meeting, to maintain the fee for this year, but directed staff to work on a better solution.
Mayor Vong Mouanoutoua, the councilmember who had the sole dissent vote, said the city should not be taxing citizens for the state mandate, and it’s unfair to ask the good players to pay.
“I have to own up to my decision to vote on this in 2024 without reading it in detail. My issue is not with what we’re trying to do, is do we make you pay for it,” Mouanoutoua said. “If the government wants to do this, why are we punishing you? We want to do it. We got to find funding through it to do it.”
Other councilmembers said they recognized the struggles from both sides, and hoped staff to collaborate more closely with businesses to develop a comprehensive plan.
“I find myself more frustrated with our state partners for kind of dumping this on us and making us figure it out,” said Councilmember Diane Pearce. “I still had a problem with the $1,000 just in the sense that, again, it’s so complicated, a lot of them are trying to do the right thing, but the industry itself is making that difficult.”
The item will come back to the council, potentially with a new TRL rate, early next year.
