California grocery prices could rise as plastic packaging law takes effect

California consumers could soon see higher grocery bills as the state begins implementing a sweeping packaging law that shifts recycling costs from taxpayers to manufacturers, expenses some businesses warn could eventually be passed on to shoppers.

Beginning next month, California will start collecting preliminary fees under the state’s Plastic Pollution Prevention and Packaging Producer Responsibility Act, a 2022 law that requires companies to help pay for the recycling and disposal of the packaging they sell. 

State regulators say the measure is intended to reduce plastic waste while encouraging businesses to use more recyclable materials.

Companies that use harder-to-recycle packaging are expected to pay more than those using recyclable or compostable materials, creating an incentive to redesign packaging over the coming years. Producers must ensure all covered packaging sold in California is recyclable or compostable by 2032.

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CalRecycle estimates the law could increase household costs by up to $190 per year — about $66 per person — if manufacturers pass all compliance costs on to consumers. The agency says the actual increase could be lower if companies absorb some of those expenses themselves.

The state estimates roughly 5,700 large producers will be subject to the new requirements, with average annual compliance costs topping $450,000. Businesses that buy packaged goods could also face higher costs if manufacturers raise prices to offset the new fees.

CalRecycle says the law is intended to reduce plastic pollution, expand recycling infrastructure and shift responsibility for managing packaging waste from taxpayers and local governments to producers.

Some industry groups, however, argue the state’s projections underestimate the potential impact on consumers and have warned grocery prices could rise more sharply as companies adjust to the new requirements.

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FOX Business reached out to CalRecycle for comment.