Enforcing Tobacco Sales Permit Ordinance (2007)

A baseline tobacco permit compliance check conducted in August 2005 revealed an extremely low compliance rate of only 17.2%.

THE PROBLEM: How To Document & Increase Compliance with San Francisco’s New Tobacco Permit Ordinance

With advocacy from San Francisco’s Tobacco-Free Coalition, a tobacco permitordinance passed the San Francisco Board of Supervisors on October 20, 2003. The ordinance amended the San Francisco Health Code by adding article 19H, which required a permit for tobacco sales and also, amended the San FranciscoBusiness and Tax Regulations. The ordinance required that anyone engaging inor allowing tobacco sales must obtain a valid permit from the Department of Public Health. Permits must be renewed annually and permitted establishments must comply with other tobacco control laws, as well as the California Smoke-Free Workplace Law to maintain their permit. The cost of the one time tobacco permit application is $50 and the annual permit fee is $175.

Passage of the ordinance was celebratedby tobacco advocates acrossthe city, however the Tobacco-Free Project identified several issues relatedto enforcing the new ordinance,including:

How to determine an accurate number of tobacco retail outlets in the City since the tobacco permit was anew requirement and therefore any retail establishment could be selling tobacco.
How would the new ordinance been forced, and what would be there action of business establishments to the ordinance that required them to have a license to sell tobacco, something they had never needed before.
What would it take to get 90% compliancewith the new law.

The Solution: What the Tobacco-Free Project Did to Address Non-Compliance

The Objective in the Tobacco-Free Project’s Scope of Work stated that “90% of known tobacco retailers will comply with the San Francisco Tobacco Retailers Permit Policy by having obtained a tobacco permit, as measured by a random sample survey of self-identified tobacco retail establishments.” A baseline tobacco permit compliance check conducted in August 05 revealed an extremely low compliance rate of only 17.2%%.

After the multi-pronged intervention carried out by the Tobacco-Free Project, a year later the compliance rate had risen to over 80% (very close to the Tobacco Free Project’s desired goal of a 90% compliance rate).

How The Tobacco-Free Project Achieved Success:

Aware that enforcing the new ordinance might be problematic for the reasons stated earlier, Tobacco-Free Project staff included enforcement as one of their primary objectives in the Prop. 99 funded Scope of Work with the California Department of Health Services, Tobacco Control Section. The exact language in their Scope of Work stated: Tobacco-Free Project staff undertook five major strategies to identify all of the City’s tobacco retailers, and ensure compliance with the City’s new tobacco permit ordinance, including:

Multiple mailings to all of the City’s potential tobacco retailers informing them of the need for a local permit to sell tobacco in the City and how to comply with
the tobacco permit ordinance.
Development of an up to date database which included all of the permitted tobacco retailers in San Francisco.
Conducting compliance checks of a random sample of known tobacco retailers to measure compliance with the new law.
Ongoing decoy sting operations conducted by the San Francisco Police

Department (funded with monies from the Master Settlement Agreement). The decoy sting operations were conducted by selecting a Health District and going to all the known tobacco retail outlets in that District. Starting December 2006, the decoy operation will be based on a random sample of retailers generated from the existing tobacco retailers database and then sorted by Health District. The decoy sting operations will visit stores based on the random sample rather than a convenience sample to measure compliance with Sales to Minor laws (one of the reasons for passing the tobacco permit ordinance). 4 Attendance by Tobacco-Free Project staff at Director’s Hearings and Board of Appeals hearings for establishments cited for selling to minors with or without a tobacco permit to identify enforcement related issues and track outcomes. While many of these strategies sound fairly straight forward, a variety of techniques and constant vigilance on the part of Tobacco-Free Project staff were necessary to achieve the dramatic increase in the compliance rates.

Actions Taken:

The actions taken by the Tobacco-Free Project are described in two ways. First is a chronology of key events. Second, each of the strategy types referred to above is discussed in more detail.

Chronology of Activities

November 1 2003	San Francisco tobacco permit ordinance becomes effective.
February 2004 (before current SOW)	Initial mailing to 6,361 establishments informing them that the Health Code had been amended and a permit was required to sell tobacco products. Applications and application fee were due by April 1, 2004. All mailings done in English, Chinese, Spanish, and Arabic.
June 2004	AB 71 passed requiring tobacco retailers to obtain a state tobacco license and pay a one-time tobacco licensing fee to the State. That law went into affect in June 2004.
September/October 2004	Informational mailing sent to 1001 establishments as part of Tax Collectors regular mailing to business establishments. This mailing informed establishments how to apply for San Francisco’s Tobacco Permit. The flyer stated that the San Francisco permit was different than the State Board of Equalization license. This mailing did not include an application.
January 2005	First list of 1063 known retailers compiled.
March 2005	Second mailing sent to 4,292 establishments (see details below). This mailing informed establishments that enforcement of the SF Tobacco Permit Ordinance had begun. It required those establishments that would not be selling tobacco to send in a postcard stating so. The requirement to return a postcard was not part of the February 2004 mailing.
July 2005 (Baseline)	Youth Leadership Institute was subcontracted to conduct a purchase survey and tobacco permit compliance survey of 338 randomly selected stores.
September 2005	Letter sent to establishments in which a red tobacco permit (see cover of Case Study) was not observed during the compliance check. The letter referred the establishment to the Bureau of Environmental Health to obtain an application.
September/October 2005	Third mailing sent to 552 establishments that were believed to be selling tobacco without a permit. This mailing stated that the establishment was being sent this notice because no response has been received from previous mailings. It noted that if the establishment had a State license, it still needed a San Francisco tobacco permit. The mailing required that if the establishment did not sell tobacco products, the enclosed postcard must be returned stating so.
February/March 2006	A site visit of 294 establishments was conducted to determine whether or not the establishment had a valid tobacco permit. The list was generated from a list of stores that had a State tobacco license but did not have a City tobacco permit as well as stores that had sent back a postcard stating they would not be selling tobacco but seemed likely to (i.e.: convenience stores, tobacco shops, etc.).
August 2006 (Follow-up compliance survey)	Site visit of 266 stores from random sample.
June 2006	Additional mailing to retailers at request of Board of Appeals on how to avoid Sales to Minors Violations
On-going	While decoy sting operations have been conducted on a routine basis by the S.F. Police Department (with funds from the Master Settlement Agreement), these operations were conducted more at the convenience of the Police Department rather than using any scientific methodology to ensure a random sample of tobacco retailers would receive a visit in a given year. Starting December 2006, establishments visited will be based on a random sample of retailers generated from the existing tobacco retailers database and then sorted by Health District. The decoy sting operations will visit stores based on the random sample rather than a convenience sample to measure compliance with Sales to Minor laws.

DEVELOPMENT OF DATA BASE:

One of the more challenging tasks taken on by the Tobacco-Free Project was creating an up to date and accurate database of tobacco retail establishments since no such list existed prior to the ordinance going into effect. Such a list was critical to ensuring compliance with the new law. The Tobacco-Free Project staff reviewed a listing of “Types of Establishment codes” from the Bureau of Environmental Health. Based on that listing, TFP staff identified the types of establishments that would most likely sell tobacco. The types of establishments included: 1) retail food outlets, 2) candy counter, 3) take out 4) bar/tavern, 5) restaurant, 6) fast food, and 7) tattoo parlor. The Bureau of Environmental Health provided a database of all the establishments from the above codes. This was the list that the February 2004 mailing was based on.

The second mailing was sent by the Tax Collector as part of the annual mailing to all business in San Francisco with food permits from Environmental Health. In addition, the State Board of Equalization (BOE) provided a list of licensed tobacco outlets in late 2005 (The BOE can share this information for enforcement purposes with other jurisdictions that have a retail tobacco licensing law).

Since new tobacco permit applications are processed by the Bureau of Environmental Health on an on-going basis, the Tobacco-Free Project requested an updated listing of permitted tobacco retail establishments each time a mailing or site visit was to be conducted. Tobacco-Free Project staff will also request a listing from the State BOE’s list of licensed establishments on an annual basis so that establishments in common can be compared, and the list of known retailers further refined.

In Feb/Mar 2006, Tobacco-Free Project staff compiled a list of 294 stores. The list included establishments that were on the State BOE’s list as licensed to sell tobacco but that had not yet applied for a local tobacco permit. It also included stores that had sent back a postcard stating they would not be selling tobacco but seemed likely to (i.e.: convenience stores, tobacco shops, etc.) Between February and March 2006, site visits were completed for the 294 stores on the list. Results of these visits showed that of the 294 stores visited, 179 of the stores were either out of business, did not sell tobacco, or were closed. Of the remaining 101 stores that did sell tobacco, 97% did not have a valid local tobacco permit.

OUTREACH TO MERCHANTS:

Tobacco-Free Project staff conducted a number of mailings in coordination with the Bureau of Environmental Health and the Tax Collector’s Office to ensure that any of the City’s retailers that might be selling tobacco would receive notification about the new tobacco permit ordinance.

The initial mailing – February 2004

An initial mailing was sent to 6,361 establishments in February 2004 informing them that the Health Code had been amended and a local permit was now required to sell tobacco products within the City and County of San Francisco. The mailing informed retailers that a completed application and an application fee were due by April 1, 2004. The informational flyer was in Arabic, Chinese, English and Spanish. The small number of applications received confirmed Tobacco-Free Project’s concerns about initial compliance with the new law.

Local vs. State Tobacco Permit – October 2004

In October 2004, a second, informational mailing was sent by the Tax Collector to 1001 establishments that had applied for a tobacco permit. The mailing included an invoice for payment of the annual tobacco permit fees. This mailing explained how to comply with San Francisco’s Tobacco Permit Ordinance. The flyer also made it clear that the San Francisco permit was different than the new permit being required by the State Board of Equalization. The informational flyer was also in Arabic, Chinese, English, and Spanish.

Local Enforcement Begins – March 2005

A third mailing was sent to 4,292 establishments in March 2005 (Table 1), informing them that enforcement of the SF Tobacco Permit Ordinance had begun. The list of 4,292 retailers believed to sell tobacco that did not have a permit was developed by compiling the list of permitted tobacco retail outlets with a listing of establishments by code type that were most likely to sell tobacco (See Table 1) It required those establishments who would not be selling tobacco to send in a postcard stating so. This requirement, to respond if not selling tobacco, was not part of the prior (February 2004) mailing. (A total of 1257 postcards were received back in response).

The mailing was sent to the following establishment types:

ESTABLISHMENT	ESTABLISHMENT TYPE CODE
Bar/tavern	146
Take out	160
Retail Food	280
Restaurant	1332
Candy Counter	95
Fast Food	27
Tattoo Parlor	10
Miscellaneous	129

Results of the third mailing

Of the 4,292 letters sent to possible tobacco retailers, a total of 1257 (29.2%) post cards were returned from retailers indicating they were not selling tobacco, (4.9%) were returned to the Tobacco-Free Project as “undeliverable”, (3.1%) responded that they were selling tobacco but had not yet obtained a permit (and returned a completed application to Environmental Health) and 64% (2754) did not respond to the mailing at all.

Questioning the credibility of retailer responses

Of the 1257 postcards returned by retailers stating they were not selling tobacco, 92 were reviewed by Tobacco-Free Project staff and determined to possibly be selling tobacco, despite their claims to the contrary. These retailer types included smoke shops, convenience stores, etc. Of the 92 establishments noted above, 28 were tobacco shops. A list of the 28 tobacco shops was sent to the Bureau of Environmental Health for follow-up. Of the 28, 13 were out of business, five (5) had existing permits, six (6) received a “Notice to Apply” and applied for a tobacco permit, three (3) had a permit application pending, and one shop received a notice to “cease and desist”. The remaining 64 establishments were included in the list of stores for the October 2005 mailing

Another mailing to non-responders – October 2005

In October 2005, a fourth mailing in English, Spanish, Chinese and Arabic (See Figure 2 below) went out to 552 establishments that did not respond to the prior mailings or that were on the database received from the State BOE of licensed tobacco retail outlets, but were not in the City’s database of permitted tobacco retailers. (The number of retailers dropped from 2754 to 552 for this mailing because Tobacco-Free Project staff determined that a number of retail types that had not responded to the earlier mailings were likely retailers that were not selling tobacco). These retailer types included school cafeterias, hospital cafeterias, fast food restaurants, tattoo parlors, etc. The October 2005 mailing was sent only to retail food outlets, bars/taverns, and candy counters—a total of 552 establishments.

The mailing stated that the establishment was being sent the notice because no response had been received from them in reply to previous mailings. It noted that even if an establishment had a State license, it still needed to obtain a San Francisco tobacco permit. The mailing required that if the establishment did not sell tobacco products, the enclosed postcard must be returned documenting that fact.

The results of that mailing to the 552 establishments were as follows:

116 total postcards returned
61 total envelopes returned undeliverable
375 no response
354 of which were from the State dbase

Among the 552 establishments, (64.1%) were establishments that were in the State database as selling tobacco but did not have a local permit. Results from the mailing were: 21% returned the postcard saying they would not be selling tobacco, 11% had their mailing returned as “undeliverable”, and 70% did not respond to the mailing at all. Because of San Francisco’s diverse population and the fact that there are many immigrants among the city’s small business community, this mailing was also sent out in English, Spanish, Chinese and Arabic languages.

A last attempt to reach merchants – June 2006

Finally, at the request of the Board of Appeals, a final mailing went out in June 2006 to permitted tobacco retailers providing them tips and tools designed to help clerks avoid selling tobacco to minors

COMPLIANCE CHECKS:

Three site visits were made to tobacco retailers as a result of the new tobacco permit ordinance. The first round of visits was made to a randomly selected group of 350 retailers and was conducted by a community-based organization (Youth Leadership Institute) in August 2005. The compliance check combined a purchase survey (where underage youth attempt to purchase tobacco) with a compliance check to determine whether tobacco retailers had posted their red tobacco permit (local permit) as required under the new law. The results of this baseline compliance revealed a low purchase rate (10.7%), but an extremely high non-compliance rate with the new tobacco ordinance. That is, youth were unable to see red tobacco permits posted in more than four out of five establishments.

In Feb/Mar 2006 a second round of site visits was completed using an initial list of 380 establishments that included establishments that appeared on State list of tobacco retailers. This list of stores was then compared to the list of Active Locations that sell tobacco from the Environmental Health database and from the Tax Collector’s lists of delinquent tobacco retailers.

Any stores that were on the Environmental Health or Tax Collector’s lists were not visited as they already had obtained permits. After comparing the lists a total 294 stores were visited between Feb 18th and March 11th. Results revealed that 101 stores sold tobacco and of those, 98 stores (97.0%) did not have a permit. Only three (3) of the visited stores had a tobacco permit posted.

Of the 98 stores without a permit, 57 of them were on the March 05 mailing list. No response was received from them. Four of the stores received a second mailing in Oct 05. Results of Feb/Mar 2006 Site Visit:

Active Businesses

Didn’t sell tobacco	128	43.5
Closed	36	12.2
Out of business	29	9.9
Permit posted	3	1.1
No permit	98	33.3
TOTAL	294	100.0

A third visit (and a second compliance check) was conducted in August 2006 (a year after the YLI baseline compliance check) to measure merchants’ compliance with the new law following the many strategies undertaken by the Tobacco Free Project. The compliance rate at the second site visit was 80%.

DECOY STING OPERATIONS:

The Tobacco-Free Project contracts with the San Francisco Police Department to conduct ongoing decoy sting operations to enforce Penal Code 308A, which bans tobacco sales to minors. The police visit approximately 35-40 stores per month throughout the year. It was hoped that the tobacco permit ordinance would provide the City with a better way to identify tobacco retailers, and ensure they are complying with tobacco control laws, particularly those dealing with the sale of tobacco to young people under the age of 18. Additionally suspension or revocation of a tobacco permit for selling cigarettes to minors is an important disincentive to the owner. Under PC308a, an owner or manager is not cited for selling tobacco to a minor unless he/she actually sold the cigarettes. With respect to the tobacco permit, the owner is held responsible if he/she or any his/her employees sell tobacco to a young person under the age of 18.

In the past, decoy sting operations have been conducted using only a convenience sample. That is, police officers visited all stores they thought to be selling tobacco to minors in a geographic area. Geographic areas were selected with the intent to cover the entire City. The convenience sampling technique used by the police meant that the selection of stores was not random—and did not result in every store having an equal chance of being visited. The Tobacco Free Project staff felt it was important to begin conducting decoy operations based on a random sample to be able to evaluate tobacco sales to minors since the Tobacco Permit Ordinance was implemented. This was done, and a randomly generated list of 350 stores was provided to the Police Department. To make the visits easier to accomplish in the allotted time, the list was then sorted by Health District and given to the police to use for their compliance checks. The police started to use this sample in December 2006.

SALES TO MINORS:

The information on establishments that are cited for selling tobacco to a minor are provided by the police to the Tobacco-Free Project, who in turn forward the information to the Bureau of Environmental Health. Cited establishments are required to attend a Director’s Hearing within the Department of Public Health, where their permit to sell tobacco is generally suspended for a number of days because they have sold tobacco to a minor. Cited establishments that are also found not to have the needed local permit must also go to an abatement hearing where they must apply for a permit—which is then suspended.

Any of the establishments cited that disagree with their suspension, can appeal the suspension to the City’s Board of Appeals.

The penalties written in to the ordinance include either but not both a:

Fine
Suspension

BOARD OF APPEALS HEARING:

According to an interview with one of the Bureau of Environmental Health Principal Inspectors, the law stipulates that the City can either charge a fine or suspend a merchant’s right to sell tobacco products, but they cannot do both. It was decided that a suspension would provide a stronger incentive to the merchants than a fine (which could easily be seen as a cost of doing business, and not something which would encourage compliance with the new law). If the retailer disagrees with the suspension they have the right to appeal it before the City’s Board of Appeals. When first enacted, the usual penalty based on a Sale to Minor violation was a suspension prohibiting the merchant from selling tobacco for 45 days. Many of the merchants protested their suspensions and the Board of Appeals was routinely reducing the suspensions to 10 days and in some cases just 5 days. Key informant interviews revealed that some of this was due to sympathy for the tobacco retailers regarding their confusion over the two permits required (the one-time state permit, and the annual permit required by the City). The duration of the suspension issued by Environmental Health was lowered from 45 to 10 days (for a first offense), and since that time, the Board of Appeals has upheld almost all of the suspensions.

Prior to each hearing, Tobacco-Free Project staff review the agenda for the upcoming Director’s Hearing and check to see if any of those on the list are repeat violators. The information is then forwarded to the person who oversees the Director’s Hearing. If the tobacco retailer is unhappy with the decision at the Director’s Hearing they can appeal the decision before the Board of Appeals. (The members of the Board of Appeals are appointed by the Board of Supervisors, and hear all appeals (not just tobacco-related ones) for the City.)

Challenges/Barriers Encountered:

The Tobacco-Free Project faced a number of challenges in their efforts to ensure the enforcement of the new tobacco permit ordinance, including:

Enactment of a statewide tobacco license law taking effect only nine months after the City’s local ordinance, which resulted in a high degree of confusion among tobacco retailers about what permits were required.
Coordinating with the Bureau of Environmental Health on the development of an enforcement program.
Getting the Board of Appeals to uphold tobacco permit suspensions received as a result of selling tobacco to a minor.

STATEWIDE TOBACCO PERMIT LAW Approximately nine months after San Francisco’s tobacco permit ordinance took effect, the State of California also passed a statewide tobacco licensing law (AB 71) requiring that tobacco retailers statewide pay a one time tobacco licensing fee which went into effect in June 2004. The fact that tobacco retailers were asked to pay another tobacco license fee (in addition to the one required by the City of San Francisco) within a relatively short amount of time caused much confusion among the City’s small business owners. Many retailers did not obtain a local tobacco retailer’s permit because they thought only a statewide license was needed and vice versa. It took several mailings to clarify the differences between the two requirements (and inform retailers that they had to purchase both permits in order to sell tobacco in San Francisco).

ENFORCEMENT Environmental Health inspectors act on information provided to them from the police about Sales to Minor violations, and if the establishment is not in compliance with the tobacco permit law, they also follow-up and make sure the retailers purchase the requisite permit. However, it is unclear whether the Inspectors proactively check for the presence of a valid retail tobacco permit during their routine inspections. They have been responsive to an anonymous complaint received by the Tobacco-Free Project. The complainant stated that the owner of a tobacco retail outlet was smoking behind the counter which is a violation of the part of the tobacco permit that requires retailers to be in compliance with all other tobacco laws (prohibiting smoking in a public place). The complaint was forwarded to Environmental Health and was investigated on 8/30/2006. At the time of inspection no one was smoking. However, ashtrays were observed. The Inspector asked the person behind the counter (who turned out to be the owner of the store) who used the ashtrays. He admitted smoking in violation of the Health Code and was ordered to stop smoking on the premises.

BOARD OF APPEALS Early on in the process many merchants protested the 45-day suspensions they received at the Director’s Hearings and took their cases to the City’s Board of Appeals, where the suspensions were routinely reduced. Upon learning of this, the Tobacco-Free Project staff investigated this phenomenon and found: 4 During the first 8 months of enforcement, over half of the 35 stores that were cited for selling tobacco to minors by the Police and had their tobacco permits suspended by Environmental Health for 45 days filed an appeal with the Board of Appeals and got their suspensions reduced to 20, 10 or 5 days.

The Tobacco-Free Coalition and Tobacco-Free Project staff were concerned that the Board of Appeals was weakening enforcement because the board was routinely not upholding the 45-day suspension. Therefore the Coalition recommended that the suspension for a first time offense be dropped to 20 days to avoid so many appeals. Environmental Health decided to drop the suspension from 45 to 10 days (10 days had been recommended by the state-funded Technical Legal Assistance Center).

Discussions with Board of Appeals members revealed one reason they reduced the suspensions initially was because they felt that the confusion faced by merchants over the two permits (state and local) was legitimate. Tobacco-Free Project staff and some members of the Bureau of Environmental Health agree that the suspension should be increased to 45 days, now that the retailers are well informed of the need for both permits.

Lessons Learned:

Creating an accurate list of who exactly is selling tobacco takes time and effort.
Timing is everything. The fact that the State passed a tobacco permit law shortly after San Francisco passed their local law caused tremendous confusion among tobacco retailers. As a result, the Board of Appeals drastically reduced the suspensions received by merchants.
It is important to proactively educate the City’s Board of Appeals members about the new law and the possible flood of complaints they may receive initially.
Enforcement of the sales to minors law is driving enforcement of the new tobacco permit law. Environmental Health Inspectors enforce the tobacco permit law when triggered by a sales to minor citation received from the police department. To date, no citations for non-compliance to the new law have been issued as part of a routine inspection by Environmental Health Inspectors. Therefore continued funding for the police department to conduct decoy sting operations is essential to the enforcement of the tobacco permit law.

Methods:

Evaluation of any kind is designed to show 1) what actually occurred, 2) whether it had an impact, expected or unexpected, 3) what links exist between a program and its observed impacts. Most traditional evaluation designs use quantitative measures, collected over a sample of the population to document these three stages. However, there are times when this sort of evaluation design does not work as effectively as a case study evaluation.

Non-probability purposive sampling techniques were used for this case study because the unit being studied (the San Francisco Department of Public Health) is unique and the only entity charged with enforcing the new tobacco permit ordinance. Non-probability sampling methods were used because the sample size (1) is well below the required 30 needed to generate enough power for probability sampling.

DATA COLLECTION METHODS

Data collection in case study evaluation is designed to answer the classic journalism
questions: who, what, when, where and why
Who was involved in the program/effort?
What did they do in terms of activities/strategies?
In what context were they working, political, organizational, cultural, etc.?
When did the program activities take place?
Where did the activities take place?
Why did participants do what they did?
What if anything, about the actions taken caused the observed changes to
take place (if indeed there were changes)?

The methods used to collect data for this case study included:

15 Key stakeholder interviews (using structured questionnaires)
Observation
Document review
Datebase review
Site visits (two random sample of 350 tobacco retailers were drawn and used
for baseline and follow-up site visits)

Developing theory: Compliance with sales to minors laws (rather than compliance
with the tobacco permit alone) drives compliance. If decoy sting operations were
to cease, enforcement of the new tobacco permit would decrease dramatically.

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