If you sell physical products in the United States, the packaging you put around your goods is no longer free. Six states have now enacted Extended Producer Responsibility (EPR) laws for packaging, and as of 2026, the bills are arriving. Oregon issued its first invoices in July 2025. Colorado fee obligations began in January 2026. California's permanent regulations took effect on May 1, 2026, with a hard May 31, 2026 producer data submission deadline.
For a mid-size consumer packaged goods (CPG) brand, the cost shock is real. Industry advisors are telling brands to model a 15 to 40 percent uplift on packaging spend over the next three years. If you're an e-commerce operator running 200 SKUs across Shopify and Amazon FBA, that translates into a new recurring line item that didn't exist on your P&L in 2024 — and one your bookkeeper needs to track at the material-by-material level.
This guide walks through what EPR actually requires, which states matter right now, how the fee math works, and the operational and accounting changes you need to put in place before the next reporting cycle hits.
What EPR Actually Means for Your Business
Extended Producer Responsibility shifts the financial and operational burden of end-of-life packaging management from local taxpayers and ratepayers to the brand owners who put that packaging into the market. The brand owner — usually defined as whoever sells the product under their own brand into a covered state — pays an annual fee per ton (or per unit) of packaging material introduced to that state. Those fees fund recycling infrastructure, consumer education, collection contracts, and waste reduction programs.
If you've worked with EU producer responsibility rules, the U.S. framework will feel familiar but messier. Each state has its own thresholds, definitions of "covered material," reporting calendar, fee schedule, and producer responsibility organization (PRO). There is no federal preemption coming, and there is no single national filing.
Who Counts as a "Producer"
In most states, "producer" is the brand owner — the entity whose name or trademark appears on the package. If you import private-label goods, you become the producer the moment those products enter U.S. commerce. If you sell on Amazon under your own brand, you are the producer for that brand's packaging. If you sell only through retailers' private-label programs, the retailer is usually the producer for those SKUs, but you may still be the producer for your branded SKUs.
The implication is sharp: you cannot push EPR liability onto your contract manufacturer or co-packer by default. You can sometimes shift it by contract where state law allows, but absent a written assignment, the regulator looks to the brand on the label.
What Counts as "Covered Material"
Most state programs cover:
- Primary packaging (the box, bottle, pouch, or tube the consumer takes home)
- Secondary packaging (the master carton, shrink wrap, or display tray)
- Tertiary packaging in some cases (pallet wrap and dunnage are sometimes exempt)
- Paper products including catalogs, inserts, and direct mail
- Single-use food service ware in California and Oregon
Plastic, paper, glass, metal, and fiber-based composites are all in scope. Multilayer films and mixed-material packaging usually carry the highest fees because they are the hardest to recycle.
The State-by-State Map You Need to Know
Seven states currently have packaging EPR laws on the books: Maine, Oregon, Colorado, California, Minnesota, Maryland, and Washington. Their timelines diverge significantly, so where you sell determines what you owe and when.
California (SB 54)
California's Plastic Pollution Prevention and Packaging Producer Responsibility Act is the most ambitious U.S. program. Permanent regulations took effect May 1, 2026. The key 2026 deadlines:
- Within 30 days of regulation effective date, producers must register with CalRecycle, join the Circular Action Alliance (CAA) as the sole approved PRO, or apply as an independent producer
- May 31, 2026 was the first hard data submission deadline for 2023 baseline tonnage
- Source reduction baseline reporting follows in July 2026
- By 2032, the program targets a 25 percent source reduction for plastic covered material, a 65 percent recycling rate, and 100 percent recyclable or compostable covered material
Penalties for noncompliance can run up to $50,000 per violation per day. That is not a typo. Each day of continued failure is a separate violation.
Oregon (SB 582 — Recycling Modernization Act)
Oregon became the first U.S. state to begin active producer fee collection on July 1, 2025. CAA Oregon is the only approved PRO. Producers were required to register and submit initial data before the start date. The second annual fee cycle runs in July 2026, and brands should expect refined eco-modulation factors compared to the 2025 starting fees.
Colorado (Producer Responsibility Program for Packaging — HB22-1355)
Colorado fee obligations began January 1, 2026. The de minimis exemption is generous: producers with less than $5 million in revenue or less than one ton of packaging annually are exempt. That carves out genuinely small brands but catches most growing e-commerce operators well before they hit Series A.
Minnesota (Packaging EPR — HF 3577)
Minnesota's program ramps more slowly. The PRO Stewardship Plan is not due until 2028, with producers expected to cover at least 50 percent of program costs by February 1, 2029. Minnesota's de minimis threshold defines small producers as those introducing less than one ton of covered material or earning less than $2 million in global gross revenue.
Maine (LD 1541)
Maine, the first U.S. state to enact a packaging EPR law, will require producers to register with the PRO, report initial data, and pay startup fees in 2026, with full implementation in 2027.
Washington (WRAP Act)
Washington's program implementation is not expected to start until 2030, giving brands time to fold Washington data into existing reporting infrastructure as it matures.
Maryland
Maryland's program is in early rulemaking and will follow a similar implementation arc to Washington's, with first fee assessments still several years out.
How Eco-Modulation Actually Calculates Your Fee
The single most important concept for your sustainability roadmap is "eco-modulation." Rather than charging a flat per-ton fee for all packaging, state programs apply a base rate that adjusts up or down based on the material's environmental profile. Typical eco-modulation factors include:
- Post-consumer recycled (PCR) content percentage — higher PCR means lower fee
- Recyclability — packaging accepted in standard curbside programs pays less than multilayer films
- Source reduction — lightweighting earns credits
- Toxicity — presence of PFAS, heavy metals, or per-fluorinated substances triggers fee surcharges
- Reusability — reusable formats qualify for discounts
The math compounds. A glass jar with 35 percent recycled content sold in California might cost a few cents per kilogram. A multilayer pouch with no PCR content sold in the same state could run several times that rate, plus a toxicity surcharge if it contains PFAS-treated barrier coatings.
This is why brand teams are running design-for-recyclability workshops with co-packers. The shift from "what's cheapest at the brokerage" to "what's cheapest after EPR fees" can flip the economics of an entire SKU line.
The Operational and Accounting Stack You Need
The compliance work is not glamorous, but it is unavoidable. Here is the playbook the most-prepared brands are running.
Build a SKU-Level Bill of Materials for Packaging
You cannot file an EPR report from spreadsheets emailed by your co-packer once a year. You need a structured packaging bill of materials for every SKU, with:
- Material composition by weight (resin code for plastics, fiber grade for paper, glass color, etc.)
- PCR content percentage with supplier verification
- Recyclability score against state-specific definitions
- Annual units shipped into each covered state
Larger brands are deploying specification data management systems. Mid-market brands are building this in spreadsheets backed by supplier data sheets and the brand's own warehouse management system (WMS) shipment data. Either way, the data trail must be auditable because PROs and state regulators will sample.
Allocate Reporting by Ship-To State
Because each state has its own threshold and its own fee schedule, you cannot just file one number for "the U.S. market." You need to tag every shipment with its destination state and aggregate annual tonnage per state. Shopify and Amazon FBA both expose this data through their reports — Amazon's FBA shipment reports are particularly useful because they show which fulfillment center an order shipped from, which usually corresponds to the buyer's region.
Decide PRO Membership vs. Independent Producer Status
In most states, joining the Circular Action Alliance (CAA) is the practical path. CAA is the only approved PRO in California, Oregon, Colorado, Maine, and Maryland for general packaging EPR. Independent producer status is available in some states but requires meeting heightened reporting and infrastructure-investment obligations on your own, which rarely makes sense below 10,000 tons of annual packaging.
Capture the Fees in Your Chart of Accounts
This is where accounting decisions get subtle. EPR fees fall into a gray zone between cost of goods sold and operating expense. The most defensible treatment under GAAP for most brands:
- Annual program fees and registration costs: SG&A, expensed in the period incurred
- Per-unit packaging fees tied to specific SKUs sold: inventoriable as part of finished goods cost under ASC 330, then recognized in cost of goods sold as inventory turns
- Penalties and interest: SG&A, separately disclosed if material
This affects gross margin reporting. If you historically reported a 40 percent gross margin and EPR fees are now adding 0.5 to 2 percentage points of inventoriable cost, your gross margin will compress mechanically once the fees flow through inventory.
For audit defense, you want your accounting system to tag each EPR fee invoice with the underlying state, material, and reporting period. This makes year-end true-ups manageable when CAA issues final per-state fee schedules after preliminary estimates.
Coordinate with Co-Packers and Private-Label Suppliers
Where state law allows, brands are pushing some EPR liability back to co-packers through supply agreements. The two common contractual approaches:
- Co-packer pre-pays the EPR fee for packaging they supply, then bills the brand at landed cost (cleanest, but co-packer often charges a margin on the fee)
- Co-packer provides packaging specifications and PCR documentation, brand retains liability and pays PRO directly (most common for brands with sophisticated compliance teams)
Whichever approach you choose, the underlying spec data must flow to the brand for state filings, because the regulator looks to the brand on the label.
Common Mistakes Brands Are Making
A few patterns have emerged in the first wave of state enforcement and PRO audits:
Forgetting paper. Catalogs, magazine inserts, direct mail, and even shipping paperwork can count as covered material in some states. Direct-to-consumer brands sending paper inserts in every Shopify order are surprised to learn those inserts are reportable.
Underestimating B2B shipments. Tertiary packaging and secondary master cartons used to ship to retailers are covered in most state programs. A wholesale-heavy brand selling into Whole Foods, Sprouts, or REI is reporting on far more packaging than its direct-to-consumer competitor.
Missing the de minimis math. The Colorado $5 million threshold is gross revenue, not in-state revenue. A brand earning $6 million nationally that ships less than $200,000 of product into Colorado still owes a Colorado filing.
Relying on supplier PCR claims without verification. PROs and state regulators are increasingly requiring third-party verification of PCR content. Unverified supplier claims can trigger fee reassessments and back-charges.
Treating the data trail as a one-time project. State regulators expect the data to be reproducible on demand for at least three to five years. A spreadsheet built for the first filing that no one updates is a future audit failure.
What to Do in the Next 90 Days
If your brand has not already started, the immediate to-do list is:
- Map your 2024 and 2025 packaging by material type, weight, and destination state
- Identify which state thresholds you have crossed
- Register with CAA in each state where you owe a filing (one umbrella registration, state-by-state enrollment)
- Reconcile your packaging BOM data with your warehouse shipment data
- Brief your finance team on the inventoriable vs. SG&A treatment so 2026 financials reflect the new costs cleanly
- Initiate the design-for-recyclability conversation with co-packers — eco-modulation rewards compound over multi-year contracts
Accurate, audit-ready packaging records from day one prevent painful retroactive reclassifications when fee schedules are finalized later in the year. The brands that struggle most in the second compliance cycle are the ones that treated the first cycle as a check-the-box filing rather than the foundation of a recurring reporting capability.
Keep Your Financial Records Audit-Ready from Day One
As state EPR fees become a permanent line item on your packaging spend, the brands that come out ahead will be the ones with clean, granular, auditable financial records — not just for the regulator, but for their own gross margin analysis. Beancount.io provides plain-text accounting that gives you complete transparency and version control over every transaction, with full SKU-level and state-level tagging that survives audits and powers sustainability reporting. Get started for free and see why developers, finance professionals, and CPG operators are switching to plain-text accounting.