Why Do We Always Have to Hear About California? Compostables Policy Update

Think of California as America’s commercial test kitchen; the ‘legislative dishes’ cooked up there often end up on the menu nationwide. Case in point: right now, two major state laws - SB 54 (EPR for Packaging) and AB 1201 (Compostables Labeling Law) have the compostable products industry on its toes. Starting July 1, 2027, unless CalRecycle, the state waste authority, grants another extension, products made with compostable plastic (PLA, TPLA, PBAT) can no longer be labeled “compostable” and sold in California. Without that label, products lose their compliance pathway under SB 54 since composters won’t compost them, and customers may quit buying them.

Why do we talk about California SO MUCH?

• California is a significant portion of our business: We need to continue to sell compliant products into this market.
• California also sets the menu, remember? Six other states (Oregon, Colorado, Washington, Maine, Maryland and Minnesota) also have EPR for packaging laws. CAA, the Product Responsibility Organization (PRO) that implements California’s program, also runs 5 out of these six programs so California’s decisions tend to spread.
• National customers standardize. Large chains often adopt California-compliant packaging everywhere

What is the risk to our products?

SAFE: Unlined molded fiber and bamboo
AT RISK: PLA-lined paper and fiber
LIKELY OUT: Rigid PLA (cups, lids, clamshells), PBAT, and TPLA cutlery

Why we aren’t changing products or certifications yet:

Too many key decisions are still unresolved, and the outcomes require very different strategies. Key decisions from California and the USDA will start landing this December and continue through late 2027. Those decisions will determine whether our current compostable portfolio remains viable or whether we need to accelerate a transition to alternative materials or product labeling.

At the same time, the alternatives aren't fully validated so changing course now could simply trade one compliance risk for another. Our approach is to stay prepared without making premature investments. We're continuing to evaluate and qualify non-plastic alternatives so we can move quickly if needed, but we're avoiding major commitments to new tooling, certifications, labeling, or production capacity until the regulatory path is clearer.

What we are doing internally:

Rest assured we are not sitting idly by. There is a multi-pronged approach and a significant number of conversations happening to help keep us positioned strategically around this issue.

• Regulatory monitoring & Policy engagement: Zack is actively working with legislators, regulators, and industry partners to preserve a viable pathway for compostable packaging in California while keeping time with legislation activity that may lengthen the runway.
• Plan and fee analysis: We're monitoring packaging plan updates, acceptance data, and potential fee impacts to understand the business implications and preserve market sales.
• On-the-ground insight: Conversations with composters, customers, industry peers and trade groups continue to give us a clearer picture of what's happening beyond the policy discussions to inform real, practical decision making.

What to tell customers:

Keep it simple: California’s rules are changing. We do know that our unlined fiber and bamboo products are safe. We will keep you compliant.

We’re following the rules closely and will keep you updated as they take shape. Please reach out with any questions.

What to tell yourself:

We do give a lot of attention to California for multiple reasons. California is the test kitchen. What gets served there can end up on regulatory menus nationwide so we watch it closely. While the recipe is still being workshopped, we are not ready to change ours. Once a clear regulatory path emerges, we will be able to make confident decisions that hold up for years.