The law, known as Senate Bill 54, will begin its first phase of implementation next month. It requires packaging that cannot be reused, recycled, or composted to be phased out, potentially forcing manufacturers to adopt more expensive alternatives.
The debate has drawn particular attention from the dairy industry, which says many of its current packaging formats cannot easily be converted into recyclable versions. Some industry leaders fear the added costs could eventually be passed on to consumers.
Dairy Industry Says Packaging Requirements Present Major Challenges
The dairy sector has emerged as one of the industries expressing the strongest concerns over the new law. Katie Davey, executive director of the Dairy Institute of California, said dairy companies expect to face approximately $15 million in impact fees under Senate Bill 54.
“Our members are very sensitive about the price of their product,” Davey told SFGate. “They take a lot of pride in it, and they are at level 10, code-red alert and deeply concerned about what SB 54 is going to do to the price of their dairy products.”
Davey also said the additional costs could leave some companies with the choice of raising consumer prices or shutting down. She predicted the legislation could increase annual grocery costs by as much as $1,300 for consumers.
State Estimates Point to a Lower Increase in Annual Household Costs
California’s own projections differ significantly from those offered by the dairy industry. According to CalRecycle, consumers are expected to pay between $157 and $190 more per year as a result of the packaging requirements.
The legislation applies to packaging that cannot be reused, recycled, or composted, with the goal of reducing waste by encouraging manufacturers to develop environmentally friendly packaging solutions.
According to The U.S. Sun, the expected impact has also raised concerns among grocery retailers, including chains such as Walmart, as manufacturers assess the costs of complying with the new requirements.
Lawmakers Say the Policy Shifts Cleanup Costs to Manufacturers
Supporters of Senate Bill 54 argue the legislation is designed to make companies responsible for the waste generated by their packaging rather than placing those costs on the public.
State Senator Beth Allen, who proposed the law, said in a statement: “Rather than forcing taxpayers and ratepayers to shoulder these costs, we are ensuring companies that profit from this mass pollution help pay for its cleanup.”
The approach is not unique to California. Europe has maintained similar policies since the 1990s, while Oregon enacted a comparable law in 2021. A study commissioned by the state of Oregon found that the packaging restrictions did not meaningfully change consumer costs.
