Sacramento moves to close tobacco 'healthy food' loophole, directs study of transfers and supports for small retailers

The Sacramento City Council voted to remove the city's "healthy food" exemption that had allowed some retailers to obtain tobacco-retailer licenses by offering limited healthy-food items, and adopted related updates to the tobacco-retailer ordinance intended to strengthen inspections and clarify flavored-tobacco prohibitions.

Public-health researchers and advocacy groups urged elimination of the exemption, presenting evidence that stores using the exemption rarely stocked meaningful produce. "Only six stores were in compliance with the healthy food requirements," said Dr. Ali Reimold of UC Davis, summarizing a February 2025 study of 33 exemption-based retailers. Health groups — including the American Heart Association and the American Lung Association — said the exemption had increased tobacco-retailer density and exposure to youth.

Small-business owners and industry groups, including the California Fuels and Convenience Alliance and several independent convenience-store operators, opposed an immediate repeal without transition safeguards. Retail representatives warned that current language could render stores unsellable and eliminate retirement value tied to a business sale. "If a license cannot transfer, our store becomes unsellable," said Rocky Malhi, a local market owner.

Council members debated compromise approaches. Vice Mayor Talamantes moved to remove the exemption while directing the city manager to work with small businesses on transferability options (including a potential one-time transfer cap), to explore waste-mitigation fees for tobacco product litter, and to study a longer-term pathway toward reducing tobacco sales in the city. Council members asked staff to return with options, a timeline, and potential supports to help owners transition their businesses.

The motion passed on a council voice vote; no recorded no votes were called when the mayor took the aye vote. Staff said the ordinance changes will take effect per standard timeline (30 days unless indicated otherwise), and that existing licensees would not be cited under the repeal; the change affects new license applicants and future licensing under proximity rules.

What’s next: City staff were directed to report back on transferability options, possible caps, waste mitigation strategies, and potential programs to support small businesses during transition. Councilmembers also discussed exploring a longer-term tobacco‑free jurisdiction plan.