Gotten rid of it in your system. If you are currently using it . This would steer you toward giving out less paper you would offer as first resort electronic. Or convert to nontoxic paper. You are not covered at all then. It is marketed as nontoxic urea based paper. It is compatible with the systems today. The only Financial Impact would be the slight impact in paper cost. You could deplete your current pile of paper and move to nontoxic and not worry about the bill, correct . Correct. These are further back to a lot of years. That is to allow for the natural running out of paper andry stocking. The other question if i understand it properly, businesses covered by the state legislation exclude businesses defined as the Small Businesses as they are defined here. 2 million in revenue for retailer and some other qualifications. Yes, that references government code sections 11342. 510 to 11342. 610. Those came in effect in 2001. There has not been any change since the year 2000. I think that is the conversation to have under a different bill. We do understand that for San Francisco that could be consideration that Small Business and then people who are franchisees and the code doesnt speak per location or entire business. I would read entire business. With two locations you could be over 2 million pretty quickly. Back to the question. Small business as defined here is excluded from your bill, correct. That is correct. If you have a sing will store doing less than 2 million each single store and less than 2 million you dont worry . Correct. If you only take cash. I think it would be worthy of some analysis as to what a reasonable hurdle rate for Small Business in terms of revenue is. 2 million is a lot of money for a single store. Someone with multiple stores might exceed that but having done retail myself i would be delighted to do 2 million a year. Grocery seats gross receipts. Dont boil the ocean. This is not to change the definition of Small Business. This is legislation to address this issue. What i am trying to get at. I dont actually have i will let other commissioners weight in on this. I dont have objection to the state bill from my perspective and agree with the spirit of it. I want an understanding whether San Francisco is proposing something less stringent than you or a matter of agreeing both of these organizations are going down the path that we can agree on. I think San Francisco the department of environment is proposing a more you might say stringent in terms of ensuring the type of paper that is used. That is what you spoke of. They are more aggressive in assuring that if you are using paper that you use nontoxic paper. It is my understanding. The first yesterday was the first i had seen these considerations. These are both dealing with january 1, 2022 is that you get rid of paper receipts. Provide only in electronic form. A date that we get rid of chemicals. It would be additionally stringent. There has been some discussion and expression of potential hardship for a business that would be a great expense for them to go to an emailbased system. I think that someone mentioned that their business would cost them 100,000 to switch from the system they have to the system that would generate email receipts. This is not a pie in the sky number with a lot of hardware skews. If you are independent it could be quite expensive. That being said, i think that your legislation leaves open the option to provide one or the other, is that correct . That is why i am appreciating this. I have been with the merchants, the chamber, you know, just from me coming into this, well the terminal is 400 that is the cost out there. It would be interesting to hear from businesses from the cost of buying the terminal if there are additional costs. Not the equipment costs . That is the overriding process of converting the database. You may not have a database, creating a database of all of the skies. If it is 10,000 or 100,000. It could be a lot of money. We want to behind full of that. Is there any provision for a hardship . I like to leave an out. For the government and for Small Business to say, hey, this is the situation we did not anticipate. It is nice to have a clause that says in the event of undue financial hardship, a business may petition somebody for an exemption. Just putting it out there. Is point is welltaken. Legislation for this or anything else in the future. We represent potentially seven different business categories up here. How can we anticipate all of them and who knows what comes next . Just a thought. Absolutely. Not to speak for the authors intent. I think the exemption was a factor. If we see over 2 million in Gross Revenue that is a hard ship and something i will take to this to talk to legislative staff. I did connect with the capital staffer. Always happy to have conversations and take feedback amendments as the bill moved forward. If you could take to the powers that be, a desire to address if the Small Business definition needs refinement. Every decade is a good idea. We are at that milestone. Maybe we did get data and say this would be very easy data to get from the tax roles. What is 2 million a lot . I dont know that cpi is the right adjustment. We should look at the data to see wha what is the right number today . Maybe we can get remainment. If you can help us in sacramento. We are always grappling with the definition of Small Business, how many people, how much revenue . We find there are several different definitions in each dimension. You can see from your office and from the capital you have been talking to say your cohorts in los angeles how many businesses for all appearances would be small but cross the 23 million threshold. This is something we need to tackle as well. Polling a couple metro areas is where you will have the most Business Activity and highest retail prices, too. Commissioner la. The average retail price plays deeply into this. My business has an average transaction cost of right around 5,000. Pretty easy to cross over to 2 million with a staff in San Francisco we have like three people there. You know, slim margins on 2 million. It is not uncommon for folks to have 5 margins. 100,000 split three ways is Small Business. Under this definition it is not. I would guess your business is capable of generate g. E. Mail invoices and sales orders . We are talking about a condition here. The most likely businesses that would not be able to comply with this are going to be very, very small because they basically are mom and pop that has been in business so long. They are not going to use email. We want to be careful. Really, today, i have to imagine 95 of business busines businesl and ability to generate electronic receipts. You can take a paper receipt and scan it. Or switch to nontoxic. My comments are to expand. I think you are probably talking way out. They were not intended to reflect. We were going off on a sidebar for a minute. With respect to the legislation at hand do you remember the excessively long receipts that come out of the cvss of the world, is it the authors intention to revisit that or is it fairly constrained to the chemicals now . We are still, you know, the chemicals and paper and water that those receipts create. A recent amendment that we put on here was that it also exemptions retailers that dont include nonessential information. Saying if you are only putting purchase information on the receipts this does not apply. If you put on the coupons, this is going to affect you. If you are only putting onness information for a purchase you are amended out of this bill. It is like a ribbon parade . A mile of paper. It is outrageous. I dont think there is a lot to object to here. Commissioner yee riley. We are putting this on the merchant rather than the manufacturer that makes the paper. That is the point. The whilthe bill has not been mg it. I think this paper is being phased out anyway, i believe, or they are switching over to bps. Then i have to look to see. I think it is also kind much a cause and effect. If you have businesses ordering less paper because it is using less paper. Also if you are not using paper you are not in the bill so ordering the paper. I see your point and i would have to ask staff why it wasnt legislated about the paper. This is making incentives for the paper to be phased out as this goes into effect. Thank you for coming out today. A couple questions. To follow up on the manufacture piece and wholesalers like Restaurant Depot where retailers go to pick up supplies. Have you guys reached out to wholesalers in the state about this piece of legislation to make sure they are aware . Sure, i would have to ask the staff. Im not sure all of the conversations that have been had. By referring to the code that defines Small Business it is 9. 5 million is the cutoff to be considered a Small Business. Businesstobusiness if we are we choired to adopt required to adopt new types every seaofreceipt paper is it y available . Yes, it is available, more expensive. The annual cost of switching paper is minimal. Less than a penny worth of paper per transaction then increasing to a pen me plus a bit of a penny. The numbers are very small to convert paper. These are completely compatible with one another. Does this only include brick and mortar businesses. Is there any dimension with Online Retail delivery considering that is a pretty wasteful industry in terms of Paper Supplies and receipts. Like delivery. Online retailers have stopped putting packaging slips in. You know, i think that it goes back to the definition of Small Business under code because just for me looking over, it is a page and a half of the code that de nines Small Business nothing about brick and mortar versus online. That merits conversation. The thing is like are you a mom and pop . Online business with Gross Revenue under 2 million. You are getting an email receipt for online ordering. That would also kind of just to my thinking it through honor the intend of the bill that there could be a discussion about opting in and out of packaging. In terms of enforcement. There is a violation clause. Being in the retail industry. State enforcement is increasing. They need to go behind the register. Most of the time they use enforcement efforts in the form of sting operationses undercover. I am curious what the enforcement piece will look like. The bill only outlines it is enforced by the city attorney, District Attorney or the torch general. I cant speak to the exact enforcement mechanisms. I think that would be an opportunity for locals to work out who would take this. I dont think we are prescriptive what that would look like. It would be a local. This is just my understanding. That would have to be a local because, i mean, unless it is a business that was. You can cost about multiple cities, statewide action. I cant speak to enforcement. Usually in bills we dont prescribe the method then it is up to the executive branch to enforce that. So to be clear, this doesnt include like internal use every seats, right . Because for example at my familys business we ask customers do they want a receipt or not. We also keep one for internal use. I dont have an answer to that, but my understanding of, you know, the use ever use of rs with tax code would be that you keep records necessary to show you pay the tax. The boe regulates that. I would have to doublecheck. I am making a note myself. I usually check in with them. It is not the internal bookkeeping but i can check on that. One last thing. Can you give me more clarity on whether this full move to pos is going to be party to this and necessitate businesses to do that, and in that case how is that going to work with customers that dont have the email. We say they can ask for a paper receipt. There is the option of creating additional receipts if you would like to go down that as well. They would be used only for the receipts, not promotion. That is covered under existing law. I think the last thing i would say we have had people approach us that do japs. There could be an app. I cant speak how that would look. The last receipt would be a paper receipt if you dont want to give an email or identifying information. Any other questions or comments, commissioners . Alex, just because the last set of amendments included the clause if you are using the appropriate paper. I want to make sure you are not bound to that on or after january 1, 2022 a proof of purchase shall be provided to consumer upon request. 42359. 1. By january 1, 2024 customer has option to receive it by electronic or paper. I just want to make sure if the business is absolutely providing the nontoxic paper then it is to the business discretion as to whether they ask the customer or if the customer can request and the business comply. I would like more clarity around the 2022 and 2024 requirements. To my understanding with the amendments that came down, if you arent using that bpa bps paper this bill would be exempted. That is my understanding. That is a pretty broad exception . If you are not using the paper this does not apply to you . I wanted to point out the other exemption he mentioned previously. I want to be clear on that. If receipt only contains the documented evidence of the purchase and no other extraneous information, i believe what you said earlier they were excepted out. The question is and this would be relevant to your familys business because the, you know, i would be inclined to think you are not printing out long coupons after each and every transaction. The question i have is if the information is only specific to the purchase, can it then be on pps paper. My understanding is that currently that if you only include the essential information you are exempt from this bill. I understand that is a large loophole. These were taken a week andahalf two weeks ago in the preparations committee. I cant speak to all of the narrowing of the bill. I think this is revolutionnary. For me speaking off the cup there were asks to narrow it. Wthere were concerns if it is overly broad there may be difficulties. My understanding like the exception it is difficult to conceptualize it being broader. Thank you. It seems narrowly tailored to the long receipts. Most of the businesses in our purview are unlikely to run up against this under any construction. It feels like this legislation doesnt have broad application to Small Business because of the exemptions is my take on it. I agree. Any other comments or questions . All right. Alex, thank you. The public may have questions for you. Any members of the public to comment on this. I see a hardware retailer in our midst. He may have something to say about this. Steven cornell. Just a couple points. Our Grocery Store or Hardware Store has a lot of skus. My business has a full Computer System and most Hardware Stores in San Francisco use this same one since 1982. We have 20,000skus, 500 accounts receivable. It did not have the capacity to email individual receipts to anybody. That would be a whole different thing. You referred to one business costing about 100,000. That is a good possibility of happening. That is one thing. One thing i would like to ask that may be you could have it changed. Instead of 2 million definition. Whatever is in the code with the exception over the years. Maybe the state legislature or doa or doe changes it, it is automatically done rather than revising this bill. Another thing to think about is in my business. 25 years ago the state of massachusetts put in a piece of legislation and the fine was if you didnt do it 25,000 maximum per year, which amounted to less than one employee. The Large Businesses never complied. They just paid the fine. It was much cheaper. 300 annual to a Small Businesses is expensive. You mentioned the long receipt. I can see somebody saying the heck with this. If there is no teeth in there, there is no teeth. Alex one question. In your legislation, do you refer to Small Business as defined elsewhere . You dont mention specifically 2 million . Good point. Dont change every law where it reaves specifically to the characteristics rather than as defined. My understanding is that it does refer. That is how i found the section of the cody finding Small Business. Chapter 5. 8 section 42359. If you go down to line 28. Healthcare providers or 113. 2. 610 of the government code. It refers in abstract . Yes. That makes it easier to change. It is referring to a piece of code that can be changed. Any other members of the public to comment . Seeing none, Public Comment is closed. Do we require action on this item . Preferably direction as we work with the state legislative committee, i think i hear the intent of supportive of we have the definition of Small Business but also that using the nontoxic paper business will be exempt and also not printing out anything other than what is part of the transaction. Businesses will be exempt. As long as those exemptions are there for businesses and we are not really pushing to force hopefully the education to businesses to ask before you start the transaction. I also just want to make sure that forces business businessing to not print receipt has problems down the road. I am cynical a little bit if we are going to mandate businesses not producing a receipt. We can see the issue down the road of consumers be set because they need to return an item. They would have a policy if you do not have a receipt you cannot return pit. There are issues of people turning things of off the self. If we are comfortable with that, that will be the direction we emphasize in supporting. My reading of this is that the exemption for Small Business is suffe sufficient to protect e Small Businesses. The exemptions that are provided are very broad and that define, i mean with all due respect, it is ineffectual. A very Large Business would find a 300 fine nonsequential, and a retailer facing 100,000 versus 300 is going to take the 300 a year out. Anyway, i kind of, i guess where i am at i appreciate the spirit of it. I question whether it will have the intended effect because of the broad exemptions and the light tur touch of the fine. It will be interesting to see what happens. I agree. I want to note i hope this doesnt follow the path of the california reduction act where we have that exact situation where large retailers are taking the fine and enforcement is falling on Small Businesses which results in disruption of business and harassment from enforcement. I see hope it doesnt follow that track. Commissioner. I think this might be the mosthemost relevant point in the hearing. The Large Businesses. I remember reading a story in san jose saabout a ceo that would park his hummer on the walk in front of the business. Every morning he would go park there again. What difference did it make to him . It was a persona personalizer receipt. I think i personally support the bills intentions. The way the bill is currently constructed with the exemptions currently in it, i think i would be interested in hearing more from our Public Commentter about whether or not it will exempt them out. We agree that is not our target market here that we are focusing on the long receipts with toxic characteristics. With that being said now that that we have that in our sites. I would like to see a more vigorous, something that would get the attention of the large retailers of the world. I get a little confused what the real intent here is. I feel like the intent should be to eliminate the toxic sub stan. The person receiving this receipt is going to touch it once or twice. The person at the register is touching 100 or 1,000 receipts every day. I would go to the workplace. I would say this is a hazard. This needs eliminated. It has a replacement. Doe you hinted at something d maybe you can elaborate more. This being groundbreaking legislation. How do you envision that unfolding . What ground are you breaking . I would have to see we amended it. When we came out with this there had not been regulation of paper receipts nationwide. I would like to check to be if we follow this level of regulation that it is something that hasnt been done today. When it was first coming up. Jimmy kimmel mentioned a few times, they said it is amended. It is narrowed, if you do not meet 2 million. Yep, it has been narrowed down. In a first receipt we need to reduce paper receipts now it is with shorter receipts, we can have a further conversation about reduction. I have a question in regards to kind of the labor and work force employee conversation. I know the specific example may or may not be relevant. In some places surveys at the bottom every seats and for employees that could mean a bonus. I think it is important for some industries and individual employee but maybe if you have a focus group around labor or retail employees just ask that. I would be curious if that is an important thing or not. Absolutely. I will speak with staff. I am more than happy to have that conversation with retail workers. Anyone propose action are the comments sufficient . I will check with you. I think we have a clear direction. With what we can work on with our state legislative committee. To summarize, one, i think it would be useful for representative tang to consider the objectives are and if they are going to be met by this legislation as written. From us specifically considering a hardship clause for some unintended circumstance, unanticipated circumstance, and then also you have our support and our cooperation in addressing this definition of Small Business, not in the context of this legislation but overall Small Business legislation. We will be glad of glad to them if you owe on glad to help if you want our assistance. I think just answering our questions around enforcement mechanisms, what other questions did we have . Internal use every seats, confirming that. Is this in the senate now . Yes, it is in the Senate Waiting for referral to committee. It was referred to two committees. It was privacy and environmental safety and appropriations. We dont know where it will be referred in the senate. I am happy to take correspondence. I can get answers to the proper people. If the wholesalers are being talked to in terms of availability. Do you have notes of the discussion . I have got it all. Dont you worry. I just have one other question for the commission. One element that i would like to be able to highlight in our comments. Wila square system is 400. The one thing we are pushing towards that Electronic Component how often do we have to upgrade and change our phones . We havent done a full analysis as to these Electronic System that is upgraded with a new upgrade. Are we trading paper waste with ewaste . That is much harder to get rid of. Moving forward with consideration of mandate, you know, maybe not this particular bill but farther down pushing towards that, you know, mandating, not an option but mandating businesses because as steven said, he had has his system for 1582. What has that done to the waste stream as opposed to every four years update the square system . I think we need to just remind that we can look at the short term. We can look at things from one lens and think we are doing a great thing for the environment while pushing things in the other direction that might have a longer impact to the environment. Commissioner dwight on the last page of legislation there is an exception for businesses who are not able to provide an electronic proof of purchase due to limited Internet Connection or other technical activities. Maybe it is in that section. Technical difficulties is one where you cant physically tie into the Current System you have without spending ad money. Maybe there is a lose interpretation. It would be nice if it was more specific. Acknowledging hard wear is part of the problem. Often times the software is more expenses, one it is recurring. Typically today it is an annual subscription which can be a sub stan expense. Hardware obsolescence creates a different kind of waste. It is a complicated world. That is so noted. Are you here from sacramento today . No, i am across the street. Thank you for having me. Any questions we are happy to get those taken and the questions answered. Thank you, alex for being here and thank you commissioners for helping provide direction so that we can make sure our Small Businesses are adequately represented. Next item 6,please. 6 resolution urging the mayor and board of supervisors per visor to adopt the economic transition assistance for Small Businesses impacted by the ban on sales of tobacco products. Discussion and action item. All right. We didnt read the entire document. We should focus on what we are asking. I think it is on the final paragraph. The resolves and further resolves. The final two paragraphs. Do you want to read that for the record . I am happy to read to the record if you would like me to read it. The resolve that the Small Business commission request that in the spirit of equitable policy administration and in light of use wellbeing allowed to continue operations on City Property and enabled to continue distribution of flavored ecigarettes across the country and 18 to 21year olds in 41 states sans city intervention mayor and board have economic measures to Small Business retailers licensed to sell tobacco. And those mitigation measures should includes, one, tobacco retail permit buy back permit, two reassess meant of cigarette abatement fee to recognize the retailers will reduce the tobacco product inventories, ab, three, Economic Adjustment Program to be developed by Small Business development and office of Small Business which assists licensed retailers to diversify inventory and consumer offerings to remain competitive in light of artificial shifts in consumer demand. Economic Adjustment Program that is developed should be presented to the Small Business commission for approval and the development of the economics Adjustment Program would not be contingent on bos190312 be implemented in a timely manner and avert the closures of affected licensed tobacco retailers. Okay. I do have one question about under further resolved item one. When you say buying back a permit at valuation. What do you mean by that . Current market value or cost purchased . How do you determine the value . Are you just saying a valuation to be determined . To be determined similar to abc licenses, i think, there is now a valuation to those licenses and there isnt an eye equivalent to tobacco. Rye now it is the cost of the license which is less than 1,000. It would be the market valuation to be determined. Well, if fact is if you prohibit the sale of something for which you have a license, your valuation is by definition zero. Going down . No, zero. If you cant sell what you are licensed to sell, the value of the license is zero. I am saying if you need valuation. Be careful with th the value situation. If you pay 1 million to the governing body and now because of the change in the world your medallion is worth 100 that is not a valuable buy back scheme for the person most harmed. I have a couple questions here. That leaves it to be discussed later. I want to get at the intention. That is very vague. If the commission does want something specific we could say valuation prethe ban on flavored tobacco. You have to leave it open to a discussion because there will be a legal discussion about what is the legit mat valuation method . You might said at a valuation method to be determined. Now it is vague without qualifications. I would be amenable to that. A couple questions before we start making resolutions. I would like to better understand what exactly it is. There are a few other areas of ambiguity. I will put it out from. This is not an area of expertise for me. By educating me, you will also educate the record. The first question i have and i am going to take notes while doing this. Commissioners, i know you will probably know the answer. How much is a tobacco retail permit . How much does it cost . There is two different avenues in which one must be licensed through the state and through the city. The difference is the city presents it as a fee as opposed to a tax. I think that is an important clarification especially as we have seen the controller be quoted in newspaper articles saying the city doesnt collect taxes on this which is a huge loophole. I totally get that. There is a fee for the license which as the director mentioned is an initial one then an annual one. Then there are fees related to that license. The city tobacco license there is an initiation fee and annual fee . What is the initiation cost . There is the application fee and application to file. With all licenses you have an application then you have your annual license fee. The Cost Recovery like 100 bucks or something . The Tobacco Program application fee 91. The annual license fee is 346. It is not 10,000 or Something Like that. Right. But it is important to mention, as you said that it needs to be determined how long it has been there. It is a scaled equation. We should know it needs interrogation. Hang on a second. Does every store pay 346 or is this a different amount based on how long you have had it . It is every store 346 . Independent of revenue or tenure. What you are getting at is, you know, what we would call implied damages. In other words, that you have an investment in this thing. You are expecting a return on it over a period of time, when you have removed that return you have screwed up the calculations a lot of other decisions were based on. The qualitative resale value is a different number. Can these be resold . Yes, but it has got restrictions due to recent tobacco laws that put restrictions on which part of town you are in. If you can resell in that district, how many years you owned the license. There are restrictions. Point of clarification. Lets just say store a is in a district that has over 45 tobacco permits and they want to sell their business to a whole new owner, you cant just automatically transfer the tobacco permit. Even if you are buying it regardless of restrictions you still have to reapply nor the license. You have to go pay 91 and get approved . There are certain types of businesses not allowed to do that like gas stations. I am confused by the resale aspect of the permit. Why would somebody buy a permit . The intense is that the city could reimburse the stores. I got that. Im not there yet. I am trying to understand the eco system around the permits. There is resale value. If you own a store and have a permit, there are certain conditions. We dont have to get to what those conditions are. There are certain conditions under which i can sell that permit to somebody else . Yes. Im not sure you can sell the permit. In buying the store they would say i have the ability to apply and get the permit. Now there are numerous restrictions that started in 2015 that eliminates that ability. Next question. Maybe you know the answer to this. How many outstanding tobacco permits are there in the city . I dont know what you mean outstanding. There are a little over 700, 739 tobacco active outstanding. 739. That is in the city. Note there were 900 before the ban on flavored tobacco, over 900. With respect to the buy back program, it seems to me everything turns on what is meant by valu by by valenciauat. If they they valuation. If they give everybody back their fee regardless of how long they have had it. Less than 70,000. We are not talking a substantial period. When we talk about valuation of the business itself. It is 255,000. It is not nominal. It is one quarter of the budget mayor breed announced this morning for Small Business. The important thing is you have to get to a practical valuation technique that does not require a tremendous amount of financial analysis. It is not practical to ask the city to go about valuing businesses with or without their tobacco license. They are not going to do that. We have done it for alcohol. It is that same precedent. Nonmarket restriction on a license at a previous value in terms every sale. For alcohol licenses, are they managed is same way . There are restrictions on full alcohol licenses, beer, wine and. Those are transferable, right . Once an establishment has it, if you sell your business, you are selling your license to sell . Right. There are restrictions in in alcohol special use districts you cant transfer in a new one. The license here is not f un gible. To my knowledge it is worth 400 to 500,000. It has liqui liquiddity. This is not a transferable license. It has operated as that exactly before 2015. Did they rewrite the law in 2015 . Why woul somebody want to bua license . They cant. In 2015 they made restrictions on the sale of licenses. People are buying. You can only have so many in a given district. You cant sell it unless you have owned it for a certain amount of years. They made arbitrary restrictions which devalued the transferable value. Right. Understood. Like a Liquor License unlike a Liquor License. Let me ask you a question. Even if lets say all 739 retailers decide to pull out and they say if we cant sell ecigarettes, it has no value. It seems like a stretch. Lets take it to the extreme to illustrate the position here. If the city agreed to refund the application fee and refund the annual fee, the last annual fee that had been paid as a mitigation measure, the exposure is financially to the city is 255,000. I guess the question for you is what i am picking up from what you are saying, and correct me if im wrong, it sounds like you feel this would be an insufficient mitigation measure, which im not i dont want to put words in your mouth