California SB 54 small producer exemption: who qualifies and how to apply

Who qualifies

• The test: less than $1,000,000 in total gross sales in California in the most recent calendar year. This is California sales only, not your worldwide revenue.
• All sales count, not just packaged goods. Sales are attributed to California by ship-to address.
• There is no tonnage exemption in California. In other states, shipping under about 1 ton of packaging can exempt you. In California, only the sales test counts.
• The exemption is available to producers, retailers and wholesalers.

Out-of-state brands that ship to California customers should assume they are the producer. The statute treats a sale as made in California when the covered material is delivered to a purchaser there. The regulation's "in the state" test is worded ambiguously for out-of-state direct-to-consumer brands, but under the statute's last fallback the brand selling into California is the producer anyway.

It is not automatic

In Oregon, Colorado and Washington, a brand under the small-producer thresholds files nothing. California is different: its exemption is not self-executing, so you have to apply for it. The Circular Action Alliance (CAA), the producer responsibility organization for California, will not file it for you.

How to apply

1. Create a WebPass account and register with CalRecycle in PEPRS.
2. File the small producer exemption application there.
3. Attach proof of your California sales: a CDTFA-401-A, an IRS or FTB filing, or audited financials. Supporting evidence can include ERP, carrier, marketplace or processor reports, or a CPA letter.

Deadlines

• Existing producers: within 30 days of the regulations taking effect on May 1, 2026. In practice, June 1, 2026.
• Brands that become producers before January 1, 2027: within 30 days of becoming a producer.
• Brands that become producers on or after January 1, 2027: within 6 months.

The regulations contain no late-filing provision. A brand that qualified but missed June 1, 2026 is technically in violation. How CalRecycle will treat late filings is uncertain; the practical step is to file immediately rather than wait.

Two-year validity and renewal

An approved exemption is valid for 2 years. Renew it between 120 and 90 days before it expires. Keep your address current with CalRecycle: changes are due within 30 days.

What still applies if you're exempt

• The 2032 packaging requirement. Exempt producers must still meet SB 54's requirement that covered packaging be 100% recyclable or compostable by 2032 (PRC 42050(b)).
• The renewal cycle above, every 2 years.

If you don't qualify, or don't apply, you're a covered producer. Your options are to join CAA or to register with CalRecycle as an independent producer. CAA says fee obligations start in January 2027. Penalties under SB 54 run up to $50,000 per day per violation (reportedly $25,000 per day for smaller entities that meet certain criteria). Two lawsuits challenge SB 54; no injunction is in force, and a preliminary-injunction hearing in the federal case is set for January 15, 2027.

What to do next

1. Total your gross sales shipped to California addresses for the most recent calendar year.
2. If it's under $1,000,000, gather proof (CDTFA-401-A, tax filing or audited financials, plus supporting reports).
3. Register in PEPRS and file the small producer exemption application now, even though June 1, 2026 has passed.
4. Put the renewal window (120 to 90 days before the 2-year expiry) on your calendar.
5. Check your packaging against the 2032 recyclable-or-compostable requirement.
6. If you're at or over $1,000,000, plan to join CAA or register as an independent producer.

Sources

• CalRecycle: Exemptions and exclusions
• CalRecycle: Producer guidance
• CalRecycle: SB 54 regulations
• CalRecycle: Packaging EPR (SB 54)
• Circular Action Alliance: California and California covered materials and producer definitions (May 2026, PDF)

General information, not legal advice. Rules change; we re-verify each season.