Distributing Packaged Products in California? What Businesses Should Know Before California’s Plastics Reduction Act Takes Effect

A new California law that has largely gone under the radar will soon go into effect with major implications for nearly every business, wherever located, producing or selling tangible products in the State. This law, SB 54 (the “Plastic Pollution Prevention and Packaging Producer Responsibility Act”), will require these businesses to take responsibility for reducing California’s packaging waste by 25% and for increasing plastic recycling to 65% over time–with significant daily penalties for noncompliance and the threat of banning noncompliant businesses from distributing products in California altogether. Covered businesses will need to understand how this new law will affect them and what they need to do to comply.

SB 54 Overview

At its core, SB 54 makes businesses that introduce packaging materials into California, referred to as “producers”, ultimately responsible for helping to manage the lifecycle of that packaging after it is used.

The scope of SB 54 is broader than its name suggests. Despite being regularly referred to as the Plastics Reduction Act, SB 54 covers most single-use packaging materials, regardless of whether they are made of plastic, paper, glass, or something else. The statute’s focus is on packaging that is typically discarded after use, rather than reused or refilled.

SB 54 mandates both strict targets and procedural participation simultaneously, and it is not asking particularly politely about it. Failure to comply may result in penalties of up to $50,000 per violation per day. More significantly, by January 2027 or the time SB 54’s program plan gets finalized (whichever comes first), producers that are not in compliance will no longer be able to distribute products with covered materials in California. 

The law establishes long-term statewide targets. By 2032, SB 54 aims to reduce covered materials by 25 percent and achieve a 65 percent recycling rate for plastics. These targets are measured at the statewide level rather than imposed on individual producers. However, individual producers also must ensure that all their packaging is recyclable or compostable by 2032. 

This raises an obvious question: If some of SB 54’s most important benchmarks are measured at the statewide level, what prevents some individual producers from free-riding on the reductions of others, hoping that the overall targets are still met? The legislators in Sacramento seemed to have a plan to tackle this “collective action” problem.

Meet the Steward: Circular Action Alliance (CAA)

Rather than requiring each company to build its own compliance system and the State to monitor compliance individually, SB 54 is primarily designed to operate through a centralized, non-governmental entity known as a Producer Responsibility Organization (PRO). In California, the PRO role is filled by the Circular Action Alliance (CAA), a nonprofit organization led by producers. 

The CAA can best be understood as an intermediary between the State and producers. It is expected to develop a concrete implementation plan of SB 54, collect data and fees from producers, fund recycling and waste-management infrastructure, and report compliance to the State. In effect, the CAA becomes the operational center of SB 54’s implementation, translating abstract regulatory goals into real-world programs. Once the CAA’s implementation plan is approved, participation is mandatory for all producers, unless one chooses to pursue individual compliance.

It is expected that most companies will not be interacting directly with the State on a day-to-day basis. Instead, their primary interaction will be with the CAA, which will in turn operate its programs to ensure the producers are on track to satisfy the State’s regulatory mandates. 

Uncharted Waters for Everyone, CAA Included

For a statute as complex as SB 54, the current implementation landscape remains unusually fluid. 

CalRecycle, the State agency overseeing the Act, has finalized the regulations that CAA will need to use to develop its implementation plan only last Friday, on May 1, 2026. The rulemaking process has been lengthy and bumpy, including the withdrawal of a prior draft in January 2026 and subsequent revisions.

The CAA, in turn, has spent much of the past year developing its plan in the dark without the benefit of finalized regulations. Its current plan is expected to be released for public comment on June 15, 2026, meaning that the finalized regulations arrived only shortly before the plan’s anticipated publication.

Data gaps further complicate matters. The CAA relies on producer-reported data, particularly from 2023 (the baseline year for measuring source reduction), to build its program. However, not all producers have submitted complete data, and some appear to be waiting for regulatory clarity before doing so.

Finally, SB 54’s entire framework is developing under the cloud of potential legal challenges, similar to those that programs in other states have already faced. For example, in February 2026, a federal district court in Oregon paused portions of that state’s single-use plastic program, also administered by the CAA. That Oregon challenge involves constitutional claims, including arguments that the law places a disproportionate burden on out-of-state businesses, disrupts uniform packaging practices across the nation, and sets fees and rules with limited transparency.

What To Do Now?

Despite the constantly evolving regulatory landscape, there are still concrete steps companies can start taking today. The most practical approach is to focus on actions that are likely to remain relevant regardless of how the final regulations are structured.

First, determine whether your business qualifies as a “producer” under SB 54. This determination can be broader than expected, particularly for companies selling products into California from outside the State. 

Second, if your business qualifies as a producer and has not already done so, consider registering with the CAA. Registration has been open since August 2025.

Third, begin collecting and organizing data on covered packaging materials. The CAA’s reporting process, particularly for baseline data on covered materials based on 2023 activity, can require detailed information about packaging materials, including total weight and component-level breakdowns. This can be a technical and time-consuming process. Once final regulations are adopted, producers may be required to submit their baseline data on short notice, making early preparation especially valuable.

Finally, pay attention to the upcoming public comment period for the CAA’s program plan, currently expected to begin on June 15, 2026, for a short period of 60 days. For companies with strong views on how the system should operate, this period presents a meaningful opportunity to provide input. In a regulatory environment that is still taking shape, engagement at this stage may be one of the few chances to influence the outcome that will have ramifications for years.