Councils cannot apply a total ban on the sale of approved products, but could set restrictions as to where authorised retailers could operate, the distance to sensitive sites such schools, community facilities and places of worship, set the distance between authorised retailers and consider putting a cap on the amount of authorised retailers.
He said the policy would look to "minimise the harm from these products to our community whilst accepting that they are a legally approved product".
Mr Hill said there were three key points to the draft policy - being a proposed 500m limit between authorised legal high retailers, a 100m retail restriction from designated sensitive sites and a maximum of three approved retail sites within the district with a "sinking lid" policy which would eventually see this number reduce.
Another part of the draft policy could set time restrictions of between 9am and 2.30pm for the sale of legal highs.
However, Mr Hill said a lot would depend on pending changes to the Psychoactive Substances Act which were currently being worked on by the government and were due out in June.
There are three approved legal high retailers in the Rotorua district - Skingraft, the Rotorua Discounter and Adult World, while Wild Things is awaiting approval.
No more licences can be granted until new regulations are in force.
Rotorua Mayor Steve Chadwick previously told the Rotorua Daily Post she would prefer a complete ban on legal highs, but would do whatever she could to limit their sale under the law.
If approved by councillors, a public consultation process would start on March 10 and end on April 11. The hearing of submissions is timed for May 1 with the final policy to be set on May 21. The policy could come into effect by June 5.
