A group of Fresno smoke shops has dropped its federal lawsuit against the city over new regulations.

And that’s good news to the Fresno City Councilmembers who wrote the ordinance.

“The council is very clear that the primary purpose was to ensure the public health and safety of the city, and we remain steadfast on that principle,” Councilmember Miguel Arias said at a Wednesday morning news conference at City Hall.

Earlier this year, the council enacted new regulations on certain tobacco retailers, requiring conditional use permits to operate and limiting those permits to 49 citywide.

The California Smoke Shops Association challenged the regulations in court. The group argued that it was unfair and unconstitutional to apply regulations to smaller retailers while allowing larger stores such as grocery chains to avoid limitations.

In a Nov. 19 filing, attorneys for CSSA and the city filed a joint stipulation to dismiss the lawsuit without prejudice. That means the lawsuit could be filed again.

“Some of our members are struggling to comply with the aggressive timeline set out in the ordinance, and we felt it was the most responsible thing to do at this point to dismiss the case,” CSSA attorney Shane Smith said.

Each party will pay its own costs. The city said its cost was $1,000. Smith would not disclose how much the CSSA spent, but said the dismissal was not due to financial hardship.

Arias said any future tobacco shop retailer needs to “clean up your act now!”

Violations Continue, Councilmembers Say

“These businesses generate hundreds of police calls for service and undermine the quality of life throughout our entire community. And that’s why we took decisive action, and that’s why the courts agreed enough is enough,” Councilmember Nelson Esparza said.

During court hearings, the city said 43 of the 44 CSSA members had violations. At the news conference, Arias said violations continued even after reinspection.

“A lot of the shops that portrayed themselves as the ‘good actors’ before the City Council and to the public were the same shops where we seized illegal cannabis, flavored tobacco products, guns, and other weapons,” Arias said.

Arias said one inspection found a 16-year-old working and selling tobacco.

Smoke Shops Lost First Two Rounds in Court

The CSSA had trouble gaining traction in court. Judge Kirk E. Sherriff denied a temporary restraining order in June and denied a preliminary injunction in September. A trial was set for January 2027.

Passed by the council in April, the new regulations require smoke shops to keep the outside of their shops clean and install color video monitoring systems, among other requirements.

“The standard is very much weighted in favor of the city. We disagree that the city has a rational basis,” Smith said.

Fresno City Attorney Andrew Janz said the city has strong policing powers to regulate tobacco, something Sherriff agreed with.

Janz also refuted claims made by the CSSA, including allegations of unequal inspections. The city has inspected larger retailers such as Walmart and Costco. Those stores already have conditional-use permits because they sell alcohol.

The ordinance also limits shops to seven in each of the seven City Council districts, or 49 total.

Although not argued in court, the CSSA said in filings that more than 30 shops would have to close. That would amount to an illegal government taking in violation of the U.S. Constitution, their attorney wrote.

Existing shops must apply for permits to operate. Shops that do not obtain a permit may remain open until December 2026. However, the city has extended the deadline for existing shops to apply for the permit to Jan. 21, 2026.

The city said only 10 shops have submitted applications so far. Arias expressed doubts, saying several were too close to sensitive areas such as schools.

“If you continuously violate state law and city ordinance and continue to employ tactics that endanger the public health and safety of our city, you’re likely not going to be awarded a license,” Arias said.