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SB 54 Is in Effect: What California's New Packaging Law Means for Your Business
Although challenged by an injunction filed on August 20, 2026, by a coalition of 17 states, California’s SB 54 Plastic Pollution Prevention and Packaging Producer Responsibility Act is now in effect, and companies that sell, distribute, import, or ship packaged products into California should be evaluating whether they have compliance obligations. SB 54 creates an extended producer responsibility (EPR) program for single-use packaging and single-use plastic food service ware, shifting end-of-life management costs from local governments and taxpayers to covered “producers.” The final implementing regulations took effect on May 1, 2026.
The law is particularly important for consumer brands, retail and e-commerce companies, apparel and footwear companies, food and beverage businesses, food-service companies, private-label sellers, distributors, importers, and any business shipping packaged goods into California or other states with packaging EPR laws.
What Is SB 54?
SB 54 establishes a statewide EPR program for “covered material,” which generally includes two categories:
1. Single-use packaging—materials used to contain, protect, handle, deliver, or present goods, such as product packaging, display or grouped packaging, and transport packaging
2. Single-use plastic food service ware—plastic food-service items such, as trays, plates, bowls, clamshells, lids, cups, utensils, straws, and certain wraps or bags used by food-service establishments.
The “producer” definition is broad. It can reach brand or trademark owners, licensees, and, if those entities are not in California, sellers or distributors placing products using covered material into California. Out-of-state and e-commerce sellers may, therefore, be within the statute’s scope when products are delivered to California purchasers.
SB 54’s key targets phase in over the following dates:
January 1, 2027: Producers must achieve a 10 percent reduction in single-use plastic packaging.
January 1, 2028: Producers must achieve a 30 percent recycling rate for plastic covered material.
January 1, 2030: Producers must achieve a 20 percent reduction in single-use plastic packaging, and plastic materials must meet a 40 percent recycling rate.
January 1, 2032: Full compliance goals take effect: single-use plastic packaging and food service ware must see a 25 percent source reduction, achieve a 65 percent recycling rate, and 100 percent of single-use packaging sold must be fully recyclable or compostable.
The first major compliance checkpoint has already passed: producers were required by June 1, 2026, to join Circular Action Alliance (CAA), register with CalRecycle as an independent producer, or apply for the small-producer exemption. CAA is California’s first approved producer responsibility organization, and program implementation is targeted to begin on or before January 1, 2027.
What Does This Mean for Businesses?
Companies should not assume SB 54 applies only to packaging manufacturers. The law can reach businesses that sell finished products in covered packaging, private-label sellers, online sellers, distributors, and importers depending on where the relevant brand owner, licensee, seller, or distributor sits in the chain.
For potentially covered companies, the practical compliance burden is data-driven. Businesses will need to understand what packaging they place into the California market, who is responsible for reporting it, how the packaging is categorized, whether any exemptions apply, and how California obligations coordinate with other state packaging EPR programs.
The small-producer exemption generally applies to entities with less than $1 million in California gross sales, but producers still must register or apply, and CalRecycle may deny the exemption if it would impair compliance for a covered material category. EPS food service ware is already a live issue because the required 25 percent recycling-rate threshold has not been met, meaning producers are prohibited from selling, offering for sale, distributing, or importing EPS food service ware into California.
Companies making “recyclable” claims also should evaluate California SB 343 because SB 54’s recyclability framework is tied to California’s “Truth in Recycling” criteria. Noncompliance can carry penalties of up to $50,000 per day per violation.
Impact on Small and Emerging Businesses
A byproduct of the internet age is that many companies can be formed with very little legal governance and compliance infrastructure. Yet these producers and sellers are still subject to the law. With many companies and individuals starting businesses on Etsy, TikTok Shop, Instagram, and other digital platforms, depending on whether they do well, they can find themselves squarely impacted by SB 54’s requirements.
The scope of potential impact is significant. CalRecycle’s Regulatory Impact Assessment estimates that the regulations will directly affect 5,741 regulated producers (i.e., those with annual gross sales of $1 million or greater) and 7,874 small producers eligible for exemption. An additional 546,269 non-regulated businesses—including retailers, wholesalers, and restaurants—will be indirectly affected.
Platform sellers are particularly vulnerable. According to Business of Apps, Etsy alone has approximately 8.7 million active sellers globally, with the majority based in the United States. TikTok Shop has over 500,000 U.S. merchants registered. Many of these sellers ship packaged goods to California customers and may not be aware of their SB 54 obligations. These sellers typically lack in-house legal counsel and may not be monitoring California regulatory developments.
The small-producer exemption does not eliminate obligations. Producers with less than $1 million in California gross sales may qualify for the small-producer exemption, but this exemption is not self-executing. Even exempt producers must register with CalRecycle and substantiate their eligibility. CalRecycle retains the authority to deny the exemption if it would impair compliance for a covered material category. Moreover, the exemption does not relieve producers of the obligation to ensure their packaging is recyclable or compostable by 2032.
For small businesses and platform sellers, key action items include:
Determine whether you are a “producer” under SB 54 based on the packaging used to ship your products to California customers.
If you qualify as a small producer, register with CalRecycle and apply for the exemption. Failure to do so may result in enforcement action.
Begin evaluating your packaging materials for recyclability and compostability, as the 2032 requirements will apply regardless of producer size.
Monitor whether the platforms on which you sell (e.g., Etsy, TikTok Shop, Amazon) implement compliance mechanisms that may cover their sellers.
Litigation and Regulatory Uncertainty
SB 54 and related California packaging laws are subject to significant litigation and regulatory uncertainty. Companies should monitor developments in such actions, which include:
NRDC and Californians Against Waste v. CalRecycle
In June 2026, NRDC, Californians Against Waste Foundation and Oceana, Inc. formally filed a lawsuit challenging CalRecycle’s final implementing regulations, arguing that CalRecycle created unlawful loopholes exempting certain plastic packaging and allowing “polluting technologies,” such as chemical recycling to count toward recycling targets. The petitioners claim that the final regulations are “invalid because or to the extent they are inconsistent with the Plastic Pollution Prevention and Packaging Producer Responsibility Act,” and “that they are arbitrary and capricious, and without rational basis.” This challenge could result in modifications to the regulatory framework and affect how producers demonstrate compliance.
SB 343 Preliminary Injunction
On July 14, 2026, the U.S. District Court for the Southern District of California issued a preliminary injunction blocking enforcement of SB 343, California’s “Truth-in-Recycling” law, in California League of Food Producers et al. v. Bonta, Case No. 3:26-cv-01675 (S.D. Cal.). The court found that the plaintiffs—a coalition of 18 trade organizations—were likely to succeed on claims that: (a) certain SB 343 requirements are unconstitutionally vague under the Fourteenth Amendment, and (b) the law’s restrictions violate the First Amendment because the state failed to demonstrate the restrictions would materially advance its interests.
Multi-State Challenge to SB 54
A separate lawsuit has been filed by 17 states, including the National Association of Wholesaler-Distributors as the sole business plaintiff, challenging SB 54 itself on Dormant Commerce Clause, Free Speech, and Due Process grounds. This challenge contends that SB 54 impermissibly regulates interstate commerce and imposes burdens on out-of-state producers that exceed California’s legitimate regulatory authority. On August 20, 2026, the 17-state coalition filed a motion for a preliminary injunction, asking the U.S. District Court for the Eastern District of California to block enforcement of SB 54 while the coalition’s challenge proceeds. If successful, this challenge could invalidate or substantially modify SB 54’s application to out-of-state companies.
Practical Implications
Despite this litigation, companies should not delay compliance efforts. Preliminary injunctions can be reversed, and SB 54’s registration and reporting deadlines remain in effect unless separately enjoined. Moreover, while the suspension of SB 343 is significant, it does not limit the legal risks associated with other recyclability claims, and companies making representations should continue to evaluate their exposure under California’s false advertising statutes, the Federal Trade Commission’s’ (FTC) Green Guides, and consumer class-action litigation challenging environmental marketing claims. Companies should continue to monitor the legal developments and the adjacent statutes and consult counsel regarding the implications for their specific compliance strategies.
Other States to Watch
California is part of a broader state-packaging EPR trend. Several other states—including Colorado, Maine, Oregon, Minnesota, Maryland, and Washington—have enacted packaging EPR programs, with additional proposals and adjacent measures continuing to emerge. This remains a rapidly developing area, and companies should monitor additional state legislation.
For companies operating nationally, the key issue is harmonization: each state may use different definitions, registration timelines, reporting requirements, fee structures, and exemptions. A packaging data system built only for California may not be sufficient for multi-state compliance.
Recommended Next Steps
Confirm whether your organization is a “producer” under SB 54 and, if so, verify that registration obligations have been met. Audit your packaging portfolio to identify covered materials and determine recyclability status under current California standards. Assess the impact of the SB 343 preliminary injunction on your recyclability determinations and labeling practices. Monitor the pending multi-state challenge and the NRDC lawsuit for developments that may affect the regulatory framework. Evaluate whether your California compliance systems can scale to address emerging packaging EPR requirements in other states. Consider engaging legal counsel to develop a coordinated multi-state compliance strategy.
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This client alert is for informational purposes only and does not constitute legal advice. Companies should consult with legal counsel regarding their specific compliance obligations under SB 54 and related state packaging EPR programs.
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