The cards, expected to be worth £105, can be used in hundreds of shops — including on alcohol — but councillors had initially agreed to exclude the purchase of tobacco products.
However, officials have now reported the restriction isn’t possible as the programme is designed nationally.
“As most food retailers also sell tobacco, the intended benefits of the scheme would not be deliverable if these businesses were excluded,” a report added.
Council staff will work with Scotland’s Towns Partnership to ensure “messaging to participating businesses is done in a way that discourages the spending of gift cards on tobacco”.
The gift cards, expected to be sent out in July, are also set to be reduced from £110 to £105 to allow some of the funding to be ring-fenced to “support other groups equally impacted by the current cost of living crisis”.
Under the altered plan, which will go before councillors for approval next week, there would be £8.8m spent on the gift cards and almost £425,000 set aside for other groups.
Attempts to prevent tobacco sales had been brought forward by the city’s Conservative group, and were accepted by council leader Susan Aitken, who said the Tories had originally wanted to stop people using the card to buy alcohol too.
Cllr Aitken said at the time: “It would be my view that if someone wants to go for a meal in a local restaurant they should be able to buy a beer or share a bottle of wine.
“But tobacco is different. As a country we have made a decision that we significantly restrict people’s access to tobacco whether through the smoking ban or advertising restrictions and display.”
However, Labour councillor Malcolm Cunning said the move was “paternalism in the extreme”. His group wanted residents to get a cash payment.
He believed the scheme implied: “We can’t trust the poor to spend their own money without putting restrictions on them that they are not allowed to by a packet of rolling tobacco.”
Officials were also asked whether the scheme could exclude national chains to benefit local retailers, but they have reported that is not possible.
They stated: “The Scotland Loves Local campaign aims to support sustainable recovery that mainly focuses on independents, but does not ignore chains, nationals, and multiples as they too pay tax, rates, are key employers locally and regionally and are vital to the wider supply chain.”
Gambling and online companies from outwith Scotland, such as Amazon, Boohoo and ASOS, are exempt. Businesses that trade online can accept the gift card but they must have a “physical ‘bricks and mortar’ presence in Glasgow” as the campaign aims to encourage consumers back into high streets and city centres.
The number of firms that accept that card has increased to 660 and a further 385 are in the process of completing registration. More marketing activity is planned which it is hoped will “act as a catalyst” for other businesses in the city to sign up.
Cards will be “sent securely” with a two-stage verification process and will “have no value throughout postage, therefore reducing the risk of theft and fraud”. They will have an expiry date and unspent funds will be returned to the council. Any proposals to use an underspend would be presented to councillors.