California’s latest push to curb plastic waste could significantly reshape how manufacturers, distributors, and ecommerce platforms operate — especially those serving business-to-business (B2B) markets, according to an analysis by law firm Nixon Peabody.

On July 2, the California Department of Resources Recycling and Recovery (CalRecycle) released a draft proposing regulations under Senate Bill 54, the state’s Plastic Pollution Prevention and Packaging Producer Responsibility Act. The draft replaces earlier text circulated during a year-long rulemaking process and reflects feedback from Governor Gavin Newsom’s office to balance environmental goals with cost impacts on families and small businesses.

How California’s EPR program affects B2B ecommerce

Although the original legislative intent of SB 54 focused on single-use packaging and plastic food service ware for consumer products, CalRecycle’s proposed definitions raise the possibility that industrial and commercial packaging could now fall within scope. That would put B2B manufacturers, importers, and distributors at risk of California’s Extended Producer Responsibility (EPR) program regulating them as “producers.”

At the center of the debate is CalRecycle’s proposed definition of “consumer.” It describes the consumer as “the end user of an item, or the last person in the supply chain who acquires and uses an item.” The agency further states: “For example, a retailer that obtains and uses a covered material item in its business operations, without selling or otherwise further distributing the item, is the consumer of the item.”

This language does not limit the term “consumer” to individuals purchasing items for personal use. That could lead to commercial users — such as retailers, restaurants, warehouses, or manufacturers — being classified as “consumers” for regulatory purposes. That interpretation would potentially make packaging used in commercial operations subject to EPR requirements, even when products never reach households or traditional end consumers.

If finalized as proposed, CalRecycle’s interpretation would differ from all other state-level EPR programs. Those typically exclude packaging used strictly for industrial, commercial, or institutional purposes.

Under the draft regulations, the definition of “covered material” includes plastic and non-compostable packaging and plastic food service ware entering California’s market. If that term is interpreted to apply to commercial-use packaging — such as pallet wrap, shrink film, protective foam, corrugate, or shipping paper used in warehouses or supply chains — B2B firms could be required to register, track packaging materials, and pay EPR fees.

California law on sustainable covered packaging

The financial and operational impacts could be considerable, particularly for national manufacturers and distributors that ship products into California but do not currently collect packaging recyclability data or segment packaging by use case.

Despite the new draft regulations, the core deadlines under SB 54 remain unchanged. The law, which passed in 2022, requires that 100% of covered packaging sold in California be recyclable or compostable by 2032. Companies must also reduce plastic packaging by 25% by weight. They also must ensure that companies recycle 65% of plastic packaging in the same period.

Once finalized, CalRecycle’s regulations will require designated “producers” to register with a producer responsibility organization (PRO). They will then begin reporting packaging materials within 30 days of the effective date. EPR fees would follow, calculated based on material type, recyclability, and volume.

As of now, the proposed regulations are undergoing review by California’s Department of Finance through the standardized regulatory impact assessment (SRIA) process. A formal 45-day public comment period will open once that review is complete.

The proposed rules could reverberate across ecommerce platforms and digital procurement channels that serve industrial customers, such as Amazon Business and others. If suppliers and logistics providers face new EPR costs or labeling and packaging requirements, those changes may cascade through procurement workflows, fulfillment networks, and pricing structures.

Additionally, B2B manufacturers who had not previously engaged with packaging regulations — because they do not sell directly to consumers — may need to overhaul supply chain practices, product packaging, and compliance systems to meet the state’s requirements.

How to prepare to comply

While the definitive version of the regulations is still months away, manufacturers and distributors should begin preparing for potential compliance:

• Conduct a packaging exposure assessment to identify which materials could fall within scope, even if they are used in non-consumer settings.
• Monitor CalRecycle’s Advisory Board Meeting on Aug. 15, 2025, where stakeholder feedback will be discussed.
• Engage in the public comment process during the 45-day period expected later this year.
• Coordinate with suppliers and customers to collect data, align responsibilities, and avoid duplicative efforts.
• Begin developing internal compliance infrastructure to track packaging use and recyclability.

As the largest state economy in the U.S., California often sets regulatory trends that influence other states. If the state succeeds in applying EPR to B2B and commercial packaging, other areas may follow suit, accelerating nationwide pressure for packaging reform across all sectors, not just consumer goods.

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