California’s diverse economy has long been a key driver of prosperity—particularly for small businesses and Hispanic entrepreneurs who have built thriving industries statewide. From manufacturing and logistics to retail and agriculture, our state’s businesses support local jobs and provide essential goods and services domestically and abroad. However, California’s complex regulatory environment has increasingly created new financial hurdles, driving up operating costs and limiting growth opportunities for the businesses that form the backbone of our communities.
Just over two years ago, lawmakers passed, and the governor signed Senate Bill 54, which intended to increase recycling efforts and create a circular economy. It set the ambitious milestone that 100% of single-use plastic packaging and food service ware must be recyclable or compostable by 2032, source reduction of 25% and recycling mandates of almost 7 in 10 packages. With the first draft plan due in just a little over a year, getting the regulations right rather than just getting them done fast is paramount. We understandably still have a long way. Yet, CalRecycle—the organization charged with implementing the law’s policies—is moving forward with a regulatory framework that threatens to impose crushing costs on California businesses and consumers.
According to the agency’s own analysis on the older set of regulations, the direct cost of SB 54 over ten years is projected to be at least $36 billion, or roughly $3.6 billion annually. This staggering price tag will ripple through the economy, impacting both businesses and households. CalRecycle estimates that 5,741 companies will incur costs as high as $790,248 per year to comply with these regulations. Additionally, CalRecycle estimates the average cost to the more than half a million impacted companies will likely average $8,311 annually per business. And despite the Legislature exempting small mom and pop businesses with revenue under $1 million, the agency admits that small businesses will still bear new financial burdens, with at least $309 in annual costs just for record-keeping and applications despite not being subject to the program. The actual economic impacts are likely to be even greater given the latest set of regulations were modified to make compliance even more challenging.
Beyond the direct business costs, the broader economic impact will hit consumers hard. CalRecycle’s own projections indicate that approximately 546,269 businesses may raise prices in response to regulatory compliance, driving up the cost of goods and services for households already struggling with inflation and high costs of living.
California cannot afford to overlook these economic realities. Small businesses—the backbone of our state’s economy—are already operating on razor-thin margins. Slapping businesses and California families with billions in compliance costs will not only jeopardize jobs but also lead to higher prices for everyday essentials, from groceries to household goods. The environmental promises of SB 54 can only be met with sensible regulations that allow businesses to have the flexibility to figure out how to achieve unprecedented environmental mandates – exactly what extended producer responsibility programs around the world allow. Such a framework promotes a successful California economy while also protecting our communities.
Businesses across California urge state leaders to reconsider CalRecycle’s proposed regulations in their current form. A more balanced approach is needed—one that prioritizes environmental sustainability while ensuring economic viability for businesses and affordability for consumers.
Reuben Franco serves as the president and CEO of the OC Hispanic Chamber of Commerce.
