This comes after video surfaced of a CFMA representative, Gail Hayden, telling a vendor that he could not pass out Pride flags to "satisfy his political agenda."
The City of Livermore says that the incident does not reflect the city's values of inclusion and respect.
Read the city's full statement in the Facebook post below.
On Monday night, the head of CFMA told ABC7 News that it has received physical threats as a result of this incident. The family tells us they have filed a police report and are fearful for their safety.
Orinigal story follows.
Tonight there is a battle brewing between the LGBTQ community and a nonprofit that runs more than a dozen farmer's markets in the Bay Area including locations in San Francisco and San Jose.
A vendor at the Livermore Farmer's Market was told he could not pass out Pride flags by management to quote, "satisfy his political agenda."
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"Nobody else has flags that should have been a clue," is what Gail Hayden of the California Farmer's Market Association could be seen saying in a video that was recorded recently at the Livermore Farmer's Market.
WATCH: Vendor at Livermore Farmer's Market told not to pass out Pride flags
She was talking to Dan Floyd, a cookie vendor who has been selling at the farmer's market for four years. Floyd says it was his first time also passing out free Pride flags at his booth.
"You need to go read the rules and the section about cooperating with market management. I will suspend you right now until you read those rules," said Hayden.
Floyd wasn't happy with the way that Hayden approached him.
"You don't come yelling at each other, you explain calmly if there's a disagreement," he said.
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Hayden's daughter Kayla says there is a free speech area where passing out flags would have been allowed, but not in a food zone.
She went on to say that kids were using the flags as swords, creating a dangerous situation.
"If he just wanted to pass out rainbow stickers or take the flag off of the shaft that would even be better for us," she said.
At one point the argument took another turn when Hayden brought up politics.
"I've been in places for 40 years where they bring out fetuses and put them on ironing boards, my job is to run the market not to satisfy your political point of view."
Floyd says he wants an apology and he hopes that the city will opt to go with a new farmer's market operator saying, "We are grateful for the community of Livermore and we know that this is not them and we hope they change things to reflect that."
Go here to read the response from Livermore Pride.