Councillors Tania Kerr and Wayne Bradshaw were among those at the meeting to describe the council as having its hands tied over the policy.
Confining sales to the CBD intensified a problem for central city retailers but was seen as the council's "least worst" option for dealing with the issue.
Police also believed it was the best option.
Not containing sales to the CBD "would essentially be voting to have [psychoactive substances] being sold in Flaxmere, in Havelock, in Camberley and all of our vulnerable communities," Sergeant Nigel Hurley told the meeting.
"I have a lot of sympathy for our business owners in the CBD but we will work with them," he said.
Hastings currently has two retailers with interim licences issued under the act.
Other retailers will be able to apply for licences when Parliament passes associated regulations, which is expected to happen in March or April next year.
"There will be a lot of people applying for licences to retail because it's such a lucrative business. So I fully support us trying to ring-fence an area for sales," Mr Hurley said.
"I expect there will be a flood of applications because for a lot of people out there, the mighty dollar is what they're after."
The council policy restricts licensed retailers to operating within the city's central commercial zone and not within 100m of kindergartens, childcare centres, schools, libraries, places of worship and community facilities.
Retailers must also be no closer than 300m from another shop selling the substances, a factor that will limit how many licenceholders can operate in the city.
Speaking at the hearing, Gordon Arcus, part owner of Discretions, one of the two stores currently licensed, said he supported the CBD restriction and believed the law should be strongly enforced to ensure psychoactive substances were not sold to minors.
"We as retailers take every care to question ID.
"I have some pretty strong arguments in my shop with people who purport to be 18-plus who are not. There are a lot of confrontations but that's okay, we can handle that," he said. "Good or bad there is a place for psychoactive products in the market."
While Mr Arcus's Karamu Rd store meets the location restrictions passed by the council, the other licensed store in the city, Adult Selections in Heretaunga St will need to move next year once the regulations take effect because it is within 100m of a church.
A director of the business, Steve Batty, said after the meeting he would move the store to another CBD location and had been offered suitable premises.
