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You didn't read clearly. $600k just to cover the mandatory losses, leaving $1.4m for the rest of the compliance with the law. If you think $1.4 million is in total costs (extra labor, lawyers, venues for meetings, courting other grocers to come to the area), I don't think you have a good experience with business at this level. Its at the edge of my knowledge so $1.4m may be way too low.
If I am a grocer, why would I risk setting up a new store in a place with this kind of law? I can go to any other city in the nation and not have the risk found here with this new law.
When you're looking at forecasting for a business, you project into the future where your profitability is. Its not a perfect science so you may allow for some loss months to see if you can improve operations. With this law, its too expensive to risk extra months of loss without those going to the notice period.
The whole reason SF lawmakers are creating this law is because grocery stores are leaving, they only leave if they are losing money.
The proposed law is so poorly worded, I don't know how you can make that claim with any authority. I'll be the first to say I'm spitballing the dollar figure judging from other billings for legal compliance work and all the unexpected costs. The proposed law is so open to liability, a company isn't going to go cheap on lawyers and open themselves up to the harsh penalties (law suits from grocery store customers). They're going to jump firmly through every hoop twice to make sure they are iron tight. Even then there will still be people that sue and part of that money I claimed will have to go to paying lawyers to defend the grocery store's actions of compliance. Even if the grocery store customer suing loses, the grocery store still has to pay the lawyers to defend the cases in court.
If the attraction for new non-corporate grocery stores is so strong, why are SF law makers even making this law? If all the non-corporate grocers exist as you claim, how are there enough communities served only by a single corporate grocery store that it leaving creates a food desert? The proposal of the law speaks against your claims that there are non-corporate grocers just waiting to set up shop. Nothing is stopping them today, yet they aren't apparently, requiring this propose law.