How does the small producer exemption work in each state?

What each state measures

Most states offer two routes and qualifying on either is enough: a tonnage test, usually under one ton of covered material supplied into that state, or a revenue test.

The revenue tests are where the states diverge. Maryland and Minnesota set theirs at $2 million. Oregon and Washington set theirs at $5 million. Colorado sets a figure that moves each year with inflation. California does something different again, which the next section covers.

Those are not variations on one number. A brand with $4 million in global revenue clears the revenue test in Oregon, Washington and Colorado, and fails it in Maryland and Minnesota, where it would have to rely on the tonnage route instead.

California measures a different thing entirely

California's test is gross sales in California, not global revenue, and it is set at $1 million in the most recent calendar year.

That changes who it covers. A large national brand with little California business can sit under a test that a much smaller company selling mostly into California will fail. Size, in California, means size in California.

Two further things make California unlike the others. The exemption is subject to CalRecycle approval rather than being automatic, so it is sought rather than assumed. And a producer seeking one still registers: the registration deadline applies whether or not an exemption is being pursued. A brand that decided it was too small and therefore did nothing has not taken the exemption, it has missed the registration.

The statute also allows the department to decline the exemption for a particular producer where granting it would hinder a covered material category's ability to meet its requirements, and the exemption does not reach every obligation the statute imposes.

Global revenue means global

Where a test is written against global gross revenue, that is the whole company worldwide, not the part of it that touches the state. A brand selling a few thousand dollars into Minnesota is measured on everything it sells everywhere.

Two states exclude one item from the revenue figure. Washington and Colorado both leave out on premises alcohol sales. Colorado's statute speaks of realized gross total revenue, and the rule that carries the current figure states it as realized gross total global revenue.

Two states carry a separate provision for agricultural employers selling commodities under their own brand name, Washington and Colorado, each measured on revenue earned in that state rather than on global revenue.

The period is not the same either

A threshold is only half a test. The other half is the year it runs on, and the states do not agree there either.

California measures the most recent calendar year. Colorado measures the prior calendar year, for both of its tests. Maryland and Minnesota both measure the most recent fiscal year.

Two states split their own tests across different years. Oregon runs its revenue test on the most recent fiscal year and its tonnage test on the most recent calendar year. Washington runs its tonnage test on the most recent fiscal year and its revenue test on the prior fiscal year.

So a single company can be measured across two different years inside one state, and against a different year again in the state next door. A brand close to a line needs to know which year it is being read against before it can say which side of the line it falls on.

Colorado's threshold moves every year

Colorado adjusts its exemption figure annually for inflation, by July 1 each year, using the Consumer Price Index.

The figure set for 2026 is $5,779,297 of realized gross total global revenue in the prior calendar year, excluding on premises alcohol sales, a 2.6 percent adjustment from the previous year's figure.

The practical effect is that the question has to be asked again each year rather than answered once. The direction of travel favors producers, since a threshold rising with inflation pulls more companies under it rather than pushing them over, but a brand that checked in one year and filed the answer away is working from a number that no longer exists.

Being under a threshold is not the same as showing it

Maryland's compliance guide states that a producer claiming an exemption must be able to provide evidence and demonstrate that it is exempt. California's has to be approved. Oregon aggregates associated producers, so the figure tested is not necessarily one company's own.

In every case the position has to be established and documented rather than assumed, and the documentation is the same material a filing would need.

The tonnage route needs the number nobody has

For a brand that fails the revenue test, the tonnage route is what remains, and almost every state sets it at about one ton of covered material into that state.

That is a small quantity, and it is measured in packaging weight rather than in units or revenue. Establishing whether a brand is under it means knowing what each component of each package weighs and how many of them went into that state. Most companies have never had a reason to record either.

So the test that exempts a brand from the work is a test it cannot answer without doing part of the work. That is the position most small brands are actually in, and it is why the answer is so often assumed rather than established.

What we do

We work out which test applies in each state a brand supplies, on which year, and against which figure, then establish the packaging weights and volumes needed to answer the tonnage route where the revenue route is closed. Where an exemption has to be applied for or evidenced, we prepare what the state asks for.