David Gray on The New Economics of Packaging EPR and What Businesses Need to Change

The New Economics of Packaging EPR and What Businesses Need to Change

By David Gray, Founder & Managing Director, EPR Global Consulting LLC

U.S. packaging Extended Producer Responsibility is changing how businesses account for packaging, organize supplier information, and evaluate product design. As state programs develop, compliance increasingly depends on coordination among finance, packaging, procurement, legal, and sustainability teams.

For many businesses, packaging decisions have traditionally centered on purchase price, product protection, transport efficiency, and brand presentation. Sustainability commitments have added considerations such as recycled content and recyclability. Extended Producer Responsibility, or EPR, adds another dimension: responsibility for financing the management of packaging after use.

That responsibility can create recurring reporting requirements and producer fees linked to the materials a business supplies into a state. Packaging specifications now influence compliance costs alongside manufacturing and distribution costs. For finance teams, this creates a recurring exposure to include in budgets, forecasts, margin analysis, and pricing decisions.

A material change, an additional closure, or a new sales channel can affect the information a company needs and the financial exposure it must evaluate.

The central argument of my white paper, The New US Packaging Compliance Economy – 2026 Edition, is that businesses need to connect those responsibilities through reliable packaging data and clear internal ownership. The practical challenge begins well before an invoice arrives.

Seven State Programs Require Separate Decisions

The seven states covered in the white paper are California, Colorado, Maine, Maryland, Minnesota, Oregon, and Washington. Their laws share a broad objective: shifting responsibility for managing used packaging toward the businesses placing it on the market. They differ in producer definitions, covered materials, exemptions, reporting categories, funding structures, and implementation schedules.

Businesses should distinguish an enacted law from a fully operating program. Oregon already requires covered producers to register with an approved producer responsibility organization, report supply data, and pay membership fees. Other states are at different stages of program development. Washington’s expanded recycling services begin in 2030, while earlier registration and planning work precedes that date. Maine received no bids in its 2026 request for proposals for a stewardship organization, so its statutory deadlines will not begin until a contract is signed.

For a national business, the useful starting point is a state-by-state obligations register. It should record the responsible entity, covered packaging, exemptions, reporting period, payment dates, and status of relevant guidance. A single national packaging inventory can support this work, but the resulting compliance decisions remain jurisdiction specific.

Identify the Responsible Producer Before Calculating Fees

The company manufacturing a package is not necessarily the entity responsible under an EPR law. Depending on the state and commercial arrangement, responsibility may fall on a brand owner, importer, retailer, or another entity in the supply chain.

Private-label products, imported goods, franchise arrangements, and contract manufacturing therefore deserve particular attention. Businesses need to understand who owns the brand, who introduces the packaged product into the relevant market, and how the applicable law assigns responsibility.

Contract terms can help allocate data collection, reporting work, and commercial costs. Whether they transfer statutory responsibility is a separate legal question. Procurement teams should not assume that a supplier’s agreement to provide packaging automatically resolves the buyer’s EPR obligations.

Exemptions also need documented analysis. Revenue thresholds, packaging quantities, aggregation rules, and excluded materials vary. A business should retain the evidence supporting an exemption and revisit it when sales, ownership, or product distribution changes.

The Data Challenge Starts at the Component Level

One of the white paper’s most practical observations concerns businesses starting without a usable packaging inventory. They may have product catalogs, purchase orders, and supplier specifications, yet still lack the component-level information needed for reporting.

A finished product might include a bottle, cap, label, protective insert, carton, and shipping materials. Each component can introduce a different material, weight, classification, or reporting question. Knowing the finished product’s total shipping weight does not establish the packaging weight attributable to each material.

Consider a business selling the same product through retail stores and directly to consumers. The retail unit may be identical, but the online order can add a mailer, cushioning, and tape. The company needs to establish which packaging it supplies, who is responsible, and how each state treats the relevant format and distribution channel.

The first deliverable should be a structured inventory connecting product identifiers to packaging components, material composition, weights, supplier evidence, and distribution information. Packaging changes should carry effective dates so that historical reports reflect the package actually used during the reporting period.

Build a Methodology That Others Can Follow

Incomplete data does not justify undocumented assumptions. Businesses need an approach to filling gaps that is permitted by the applicable reporting guidance and proportionate to the materiality of the information.

The white paper discusses specific material reporting, average bills of materials, and sector calculators. Their availability and conditions should be checked against current program guidance. Where representative sampling is appropriate, companies should explain why products were grouped together, how samples were selected, and how average weights were calculated.

That explanation matters when a reviewer asks how a reported total was produced. The organization should be able to connect it to source records, unit conversions, sales allocations, and approved assumptions.

A simple methodology register can record the source, calculation, owner, approval date, and known limitations of each estimate. It should distinguish measured weights from supplier specifications and modelled values. Replacing an estimate with better information should leave a visible correction history rather than silently changing prior calculations.

Supplier Information Becomes a Procurement Requirement

Packaging data often originates outside the reporting business. Suppliers may hold specifications at product-family level, omit coatings or laminates, or provide nominal weights that differ from production measurements.

Procurement teams can address this by defining packaging information as a contractual deliverable. Requests should specify component weights, material composition, units of measurement, relevant recycled-content evidence, and notification requirements when specifications change.

Collection should be followed by validation. A weight supplied in kilograms should not enter a system as grams, and an unexplained change in material composition should trigger review. Consistent templates and named supplier contacts can make this work more manageable.

Companies should also prioritize. High-volume packaging, costly material categories, and uncertain specifications warrant attention first. Supplier engagement then becomes a continuing process supporting purchasing decisions and annual reporting.

Finance Needs Separate Views of Data and Payment Timing

EPR introduces timing differences that can confuse budgeting. The period when packaging is supplied, the reporting deadline, the applicable program year, and the payment date may differ.

Circular Action Alliance (CAA) illustrates this with Oregon: the report due May 31, 2026 uses 2025 supply data, informs the 2027 program year, and is followed by payment in January 2027. Treating all four dates as interchangeable can lead to weak forecasts and unexpected cash requirements.

Finance teams should maintain separate calendars for reporting and cash flow, then determine the appropriate accounting treatment under their applicable financial reporting framework. The white paper’s emphasis on anticipating costs is useful, but the timing and measurement of an accounting liability require assessment of the specific obligation and relevant accounting rules.

Forecasts should show the material volumes, rates, program assumptions, and uncertainties behind them. Where rates or plans remain provisional, a range provides more useful information than an unsupported single estimate. Actual invoices should then be reconciled against reported quantities and forecast assumptions.

Annual Rate Changes Require a Fresh Budget

Businesses should not assume that EPR costs will rise uniformly or that one state’s rates provide a reliable proxy for another’s. CAA has published 2027 schedules for Oregon, Colorado, and California, with fees reflecting program needs, material management costs, and state requirements.

Changes in fee schedules can affect states and material categories differently. Businesses should recalculate exposure using the current schedule and their own packaging mix, rather than applying a general inflation percentage to last year’s total.

A business heavily exposed to one material category may experience a different change from the published average. Reserve adjustments, program expansion, material revenues, and revised supply data can also affect rates.

Finance and packaging teams should therefore review fee exposure by state, material, product group, and major brand. This allows them to distinguish a regulatory rate change from a packaging-volume increase or a correction to previously inaccurate data.

California Connects Reporting with Packaging Reduction

California’s SB 54 makes the relationship between packaging design and compliance particularly visible. Beyond financing waste management, it establishes source-reduction requirements for covered single-use plastic packaging and plastic food service ware.

CalRecycle’s current guidance sets statewide reductions against a 2023 baseline, measured by weight and number. Targets are 10% by 2027, 20% by 2030, and 25% by 2032. These are collective responsibilities of the producer responsibility organization. Individual producers contribute through participation in the approved plan, packaging changes, and reporting; they are not each independently required to achieve the statewide percentage.

Baseline quality therefore matters. Businesses need to understand both plastic weight and component counts, rather than assuming lightweighting resolves every requirement. Current guidance also allows opportunities to submit corrected and complete baseline data. Companies should follow the latest instructions rather than treating earlier descriptions of a permanently closed baseline as definitive.

As of November 5, 2026, CAA’s revised California program plan, submitted October 13, remains under CalRecycle review. Public comments are being accepted through November 13. Companies should distinguish proposals under review from approved implementation requirements.

Eco-Modulation Changes the Packaging Business Case

Eco-modulation adjusts producer fees to reflect specified environmental attributes or outcomes. Depending on the program, incentives or disincentives can influence the economics of recyclability improvements, recycled content, or reductions in environmental impacts.

These adjustments should be evaluated separately from the base material fee. A lighter package may reduce reported tonnage, while a specific bonus may require additional evidence, an application, or a qualifying assessment. A packaging change does not automatically earn the same benefit in every state.

Oregon illustrates this distinction through life cycle evaluation incentives. Its approach connects potential fee benefits to documented evaluations and, for certain bonuses, demonstrated impact reductions.

Packaging teams should assess the complete business case: purchase cost, operational performance, product protection, transport, EPR fees, and the evidence needed to obtain incentives. A substitution that lowers packaging fees but increases product damage may have a poor overall economic and environmental outcome.

Technology Works Best with Defined Responsibilities

As portfolios grow, repeated spreadsheet reconciliation can make it difficult to preserve classification rules, calculation versions, and approval histories. Centralized software can help connect packaging records with state-specific reporting and financial analysis.

EPR Axis™, developed by EPR Global Consulting LLC, is one example of a platform designed around SKU-level packaging information, multi-state classifications, fee analysis, and traceable reporting preparation. Its relevance is the connection between those activities within a shared workflow.

Businesses evaluating software should use representative products and real reporting scenarios. They should check how the system handles uncertain data, rule changes, historical versions, exports, and access permissions. Current functionality should be assessed separately from planned integrations or AI features.

The practical value is earlier visibility: teams can review the same packaging volumes, assumptions, and projected fees across states before invoices arrive.

Internal accountability remains essential. Legal or compliance teams can oversee applicability, packaging teams can validate specifications, procurement can manage supplier inputs, and finance can review forecasts and invoices. A named executive owner can resolve gaps between functions.

What Businesses Can Do in the Next 90 Days

During the first month, map products, entities, and sales channels against the relevant states. Confirm registration and reporting status, document exemption decisions, and assign responsibility for unresolved questions. Identify packaging with the highest combination of volume, potential fees, and data uncertainty.

During the second month, build or improve the component inventory. Collect supplier specifications, conduct representative weighing where appropriate, document permitted estimation methods, and test material classifications. Connect packaging records with state-level supply data and create an initial financial forecast.

During the third month, test the reporting and control process. Reconcile totals, review a sample of calculations, check supporting evidence, and confirm that approvals and corrections are recorded. Assess packaging changes using realistic costs and program-specific criteria.

The objective is an operating process that improves with each cycle. Better packaging information can support reporting, supplier negotiations, product design, and financial planning at the same time. Businesses that establish that foundation will be better equipped to respond as individual state programs change.

Guest Information:

Founder: David Gray, Founder & Managing Director

Contact: [email protected]

Affiliations: Circular Action Alliance (CAA), IOPP, PLMA