California Is Changing Who Pays For Packaging. What Businesses Need To Know

Packaging Gets A New Price Tag

Under California’s program, producers generally must participate through the producer responsibility organization, Circular Action Alliance, or obtain an applicable exemption. The law establishes a series of targets that culminate in 2032, when covered packaging and plastic foodservice ware sold in California must be recyclable or compostable. California also calls for a 25% reduction in single-use plastic and a 65% recycling rate for single-use plastic by that year.

For companies, that turns packaging waste into a more direct business consideration.

Lowe describes the underlying economic logic this way: “If there’s a really robust end market and we can be pretty sure that waste isn’t gonna end up in a landfill, those fees are lower. If there’s no recycling infrastructure, there’s no end market, there’s nothing that can be done with this material, those fees are much higher.”

The idea is to change a calculation that has historically favored inexpensive, lightweight packaging even when it is difficult to deal with after disposal.

Lowe gives the example of a food product packaged in a flexible plastic bag. “That bag is incredibly cost-efficient. It’s very lightweight. It moves through the distribution network very, very efficiently. But it’s very expensive on the back end to deal with as a waste product.”

A fiber carton, by comparison, may be heavier and more expensive up front. But more eco-friendly in the long run. EPR is designed to put more of the downstream cost into the packaging decision.

“When the brand is looking at, ‘What is my total cost of ownership of this package?’ the plastic and the fiber are now on a more level playing field,” Lowe says. “And they hopefully will make the more sustainable choice.”

Whether businesses ultimately absorb additional costs or pass some of them on to shoppers is an important unanswered question.

“I would not be surprised,” Lowe says when asked whether businesses might raise prices. “Nobody wants to see their margins erode.” But, she adds, the objective is to change the relative economics of competing packaging choices in the first place.

Small Businesses Aren’t Necessarily Off The Hook

California does provide relief for the smallest producers. Under CalRecycle’s current rules, producers with less than $1 million in gross annual sales may apply for an exemption from most SB 54 reporting and fee requirements. They must first register in California’s Packaging Extended Producer Responsibility System, known as PEPRS, and then apply for the exemption. CalRecycle, however, also says those businesses still need to plan for the 2032 requirement that packaging they sell be recyclable or compostable.

Lowe notes that she has not heard indications that regulators are currently looking to eliminate that small producer threshold. “If we can get everybody whose revenue is above a million dollars in California on board, we’re going to solve 95% of the problem,” Lowe says, describing the logic as she sees it. “In five or ten years, maybe that becomes part of the conversation, but I’ve not heard any rumblings about it yet.”

But one potential trap for businesses is geography. A company does not have to be headquartered in California to encounter California’s rules.

“If you’re a company based in Tennessee, but you sell into California, these laws still apply. There’s a lot of smaller businesses, and a lot of places where EPR is not part of the conversation in that state, that are in scope for these laws and they don’t realize it,” she warns.

That is increasingly making packaging compliance resemble another familiar headache for growing companies: navigating state-by-state sales tax requirements.

Seven states have enacted packaging EPR laws, although their programs are at different stages. Lowe explains that one of the biggest concerns she hears in the packaging industry is harmonization.

“How do we get every state to have the same deadlines, or at least, since the CAA is the producer responsibility organization that’s active in the three right now, how do we get the CAA to kind of come into the states that are still writing their legislation and say, ‘Hey, if your deadline is May, that would make everybody’s lives easier, right?” she argues.

A New Data Problem For Businesses

EPR is also forcing companies to know considerably more about their packaging.

“The first thing they need to do is figure out what packaging is in their portfolio already,” Lowe says. “They’re going to need more granular data than they are used to collecting from their suppliers.”

That can mean knowing the weight and material classification of different components, where products are sold and, in some cases, what ultimately happens to secondary packaging.

Packaging suppliers are feeling that shift as well.

“What I’m hearing from suppliers, the issue is more, ‘We are being asked for more data than we are used to delivering,’” Lowe says. “Typically, when we would send a quote to one of our customers, it wouldn’t include to the gram the weight and material classification of every type of core in that package. We’re being asked to provide that now.”

For national companies with thousands of products, those seemingly small pieces of information can turn into a substantial compliance exercise.

For smaller brands, Caroline DeLoach, Atlantic Packaging’s director of Sustainability, says the first step is to assign someone to determine where the company is actually required to follow through. Only then should that person ask suppliers for a SKU-by-SKU account of the packaging: the material in each component and its weight. Once a company can see which products carry the highest fees, the next question is where it can eliminate a component, use less material, or move from a non recyclable format to a recyclable one.

That sequence matters because small and mid-sized companies often do not have a packaging engineer or regulatory team on staff. DeLoach says suppliers will need to help compile the data for reporting, then help assess which changes are technically feasible. The most reliable way to lower fees, DeLoach, who also sits on the California’s Packaging Producer Responsibility Advisory Board says, is to remove material where possible rather than simply swap one package for another.

Some Packaging Is Much Harder To Change

The easiest solution might appear to be simply replacing plastic with paper or fiber. Lowe cautions that the economics and environmental tradeoffs are not always that straightforward.

Lowe describes analyses in which Bay Cities compared lightweight shrink packaging with a carton. “The per-pound fee on the carton is much lower, but the overall weight of the carton makes that be higher than the shrink packaging,” Lowe says. “So one of the things that we’ve done is said, ‘Look, this is not the right product for you to move.’”

And some products cannot easily move away from plastic at all.

“Anything that’s liquid,” Lowe says, presents a particular challenge. For those products, companies may instead have to look at changing resins, demonstrating that a material has a viable recycling pathway, reducing material use or supporting new recycling infrastructure.

Highly engineered multilayer packaging can be even harder. “A lot of stuff that is in that kind of plastic is in that kind of plastic for a reason,” Lowe says, pointing to sophisticated laminates designed to protect products. “That stuff is so engineered that I have not seen a push to get out of it yet.”

The Recycling Infrastructure Question

The broader argument for EPR is that producer payments can help fund the infrastructure needed to make recycling work better in the first place.

Lowe points to Oregon as an early example. “We’re seeing progress on consumer education,” Lowe says, as well as money going toward recycling infrastructure. “That is really the flywheel. If we can get the fees, which are supposed to fund infrastructure, and the infrastructure becomes robust, the fees come down because now more things are recyclable, there’s better end markets. If we can get that wheel turning, it should help.”

That infrastructure question matters because consumers have good reason to be skeptical about whether items placed in a recycling bin actually get recycled.

DeLoach says flexible films show both the promise and the challenge of the policy. They are often the most functional packaging option, but are notoriously difficult to collect and recycle. A successful EPR system, DeLoach says, would build collection and processing systems that can recover films, including stretch film used across distribution operations, and turn them into new packaging. It would also make it more economically viable for brands to reduce packaging and adopt recyclable formats where those formats make sense.

Consumers should see the difference in clearer rules as well as better infrastructure, DeLoach says. One practical sign of success would be a statewide harmonized recycling list that makes it clear which materials can and cannot go in the bin, wherever someone lives in California.

“I think part of the goal is to build that credibility back from first principles,” Lowe says.

California’s Recycling Rules Face A Separate Legal Test

At the same time, another California packaging law has created additional uncertainty. SB 343, commonly known as California’s “Truth in Recycling” law, restricts recyclability claims and use of the chasing-arrows symbol. In July 2026, a federal court issued a preliminary injunction blocking enforcement of SB 343 while litigation proceeds.

The injunction is specific to SB 343. According to CalRecycle, it does not halt SB 54 or California’s EPR implementation.

Still, the dispute highlights how complicated the transition is becoming for companies. California is moving businesses toward packaging that meets its recyclability or compostability requirements while a separate law governing recycling claims is tied up in litigation.

A Shift In Who Pays

For Lowe, the most important way to understand EPR is that the costs associated with packaging waste are not new. The question is who pays them.

“As long as the incentive is to get the cheapest package out the door, brands are not necessarily going to make the most sustainable choice,” Lowe says. “What these laws do is move the responsibility for that to the people making the decision, so that they are incentivized to make the most optimized decision for the communities where their products go into.”

For companies selling into California, packaging is therefore becoming more than a distribution and branding decision. Increasingly, it is a financial, data, and regulatory one too.