California launches pilot program for small-scale packaging recycling, providing practical model for nationwide epr implementation

Every year, billions of small plastic packages—from prescription pill bottles to condiment packets—are lost in the recycling process, ultimately ending up in landfills. The root of the problem lies in traditional recycling equipment's inability to effectively sort and recycle these items. California is about to introduce a landmark Extended Producer Responsibility (EPR) bill, and a cross-industry alliance is intensifying its empirical work to demonstrate the technical feasibility of large-scale recycling of these materials, while also ensuring stable commercial returns.

Closed Loop Partners’ Center for the Circular Economy recently announced that the Smalls Consortium—formally known as Advancing the Recovery of Small-Format Packaging—has officially entered the next phase of its field pilot work. Founding partner L’Oréal, supporting partners Kraft Heinz and CVS Health, and strategic advisory organization Circular Action Alliance (CAA) are all participating in the project. The pilot will be conducted in California, where SB 54—a landmark extended producer responsibility law—is set to take effect on January 1, 2027.

This pilot rollout in California carries critical strategic significance. The state’s EPR legislation will fundamentally reshape how brands, recyclers, and local municipalities manage packaging waste, creating both compliance and regulatory pressure and broad market opportunities for innovative recycling technologies.

L’Oréal North America Chief Sustainability Officer Marissa McGowan said: “L’Oréal is building a comprehensive system to enable the recycling, sorting and processing of small-format plastic packaging, while also creating end-market demand for recycled materials. As a founding member of the Smalls Consortium, we continue to deepen our partnership with Closed Loop Partners. Advancing the recycling of small-format packaging is both a core environmental priority and a business imperative. Improving recycling solutions for small-format packaging can effectively reduce supply chain risks, prepare companies in advance for EPR compliance, and secure a stable future supply of recycled materials. We call on more companies to join us in scaling recycling solutions, as industry challenges of this kind cannot be solved by any single company alone.”

Testing of landing recovery under real working conditions

Smalls Consortium has partnered with leading recycling operation company Potential Industries to launch a pilot project. Potential Industries has over 50 years of industry experience and operates four regional sorting stations, as well as a large regional Material Recovery Facility (MRF) in Southern California. They also provide glass recycling services for millions of residents in major cities such as Los Angeles and Long Beach.

The alliance will adopt a mature and standardized working framework covering the full process, including site due diligence, material property testing, equipment performance evaluation, financial model calculations, on-site recycling efficiency testing, and end-market coordination for recycled products, with the goal of developing a replicable and scalable small-format packaging recycling solution. The project leverages real operational data accumulated from local recycling facilities in California to provide empirical support for developing an overall roadmap for small-format packaging recycling across the state and in other states implementing EPR policies.

Dan Domonoske, Vice President of Potential Industries Inc., noted: “As one of the longest-operating material recovery enterprises in Southern California, we are deeply aware that sorting is essential. However, without stable downstream markets that can take in recycled materials at fair prices, the entire recycling system cannot operate sustainably over the long term. That is precisely the core value of Closed Loop Partners’ operating model, which also takes end-market demand into account. We are simultaneously improving sorting processes, strengthening recycled-material processing, and expanding downstream outlets, thereby connecting the entire material circular supply chain. For Potential Industries, this partnership is both a real business opportunity and a key step toward building a more resilient recycling system in California and across the United States.”

Synchronize the formulation of supporting policies for EPR.

Closed Loop Center works in close collaboration with the nonprofit Producer Responsibility Organization CAA, which has been authorized in six states—California, Colorado, Maryland, Minnesota, Oregon, and Washington—to develop EPR implementation plans for paper and packaging waste in accordance with each state’s regulations. Closed Loop Center continues to provide CAA with field research data and practical experience on small-format packaging recycling, helping ensure that policy plans align with California’s evolving regulatory framework and the current state of producer responsibility implementation.

CAA Chief Strategy Officer Jeff Meyers said: “The Smalls Consortium, with its focus on recycling small-format packaging, is able to tackle the complex challenges involved in designing the entire recycling system through real-world, data-driven evidence-based solutions. By conducting on-the-ground trials through multi-stakeholder collaboration and building consensus, we have been able to identify the supporting investments required for scaled recycling and pinpoint the optimal areas for investment. These frontline pilot findings will serve as a core foundation for developing EPR implementation plans that reflect actual operating conditions and deliver measurable recycling outcomes.”

Four Core Pillars Driving the Transformation of the Recycling System

Smalls Consortium adopts a whole-chain coordination approach, with all efforts centered on four core pillars: developing a data-supported and actionable industry roadmap for CAA and all industry-chain stakeholders to reference; improving supporting infrastructure for community doorstep collection to enable effective collection of small-format packaging; opening up downstream application channels for recycled materials to ensure recovered plastics can be reused in the manufacturing of new products; and working with brands and retailers to optimize front-end packaging design.

This new phase of work builds on the Consortium’s mature foundation of four years of continuous research, on-the-ground pilots, and market analysis. In 2025, the Smalls Consortium released the in-depth report *Small Materials With A Big Opportunity For Recovery: Unlocking A Hidden Value Stream*, summarizing key findings from real-world measurements at multiple recycling facilities in New York. The Consortium is now bringing this proven operational framework to California — one of the most influential markets for packaging policy in the United States.

Industry-Specific Implementation Opportunities

Many product lines in the food and beverage industry use small-format packaging, whose recycling presents numerous pain points as well as opportunities for technological innovation.

Linda Roman, Director of Packaging R&D at Kraft Heinz, said: “Small-format packaging makes up a very large share of food and beverage companies’ product portfolios, and the entire industry has a responsibility to improve the recycling rate of this type of plastic. However, this complex issue requires coordinated efforts across the entire value chain. We look forward to leveraging the Smalls Consortium to significantly reduce the amount of small plastic packaging lost during the recycling process.”

The healthcare industry faces a similar dilemma, with prescription drug bottles and wellness product packaging generating massive amounts of small plastic waste.

CVS Health's Chief Sustainability Officer and Vice President of Community Impact, Jenny McColloch, stated, "Small packaging is an indispensable carrier in the healthcare sector, with significant recycling potential from prescription bottles to the outer packaging of everyday health products. We are collaborating with Closed Loop Partners’ Circular Economy Center and the Smalls Consortium to explore scalable solutions in real operational scenarios. The progress made in the California pilot not only better serves CVS Health's vast consumer base but also helps the industry move towards a complete circular economy model."

Multiple parties collaborating to gather momentum for industry advancement.

Kate Daly, Managing Partner of Closed Loop Partners, stated: "For a long time, small packaging has consistently been lost in the recycling system, not because the materials lack recycling value, but because the entire industry chain lacks unified collaboration. A large amount of small plastics ultimately ends up in landfills, causing environmental damage and missing out on significant economic benefits. Over the past four years, the Smalls Consortium has thoroughly identified the pain points of the small packaging supply chain, covering all aspects from infrastructure support to downstream recycling markets. Now, it brings together key players from the entire industry chain in California to create a recycling system that has long-term practical effectiveness."

Smalls Consortium continues to collaborate with industry organizations such as the Glass Packaging Institute (GPI), Pact Collective, and The Sustainability Consortium, all sharing the common goal of increasing the recycling rate of small-format plastic packaging. The consortium recently officially joined GPI’s Small Format Coalition, and the two organizations will carry out complementary work in California to amplify the impact of their coordinated efforts.

For brand enterprises, the Smalls Consortium offers a practical pathway to address the increasingly complex challenges of packaging compliance. In the context of rapidly evolving regulatory policies, it enables proactive risk mitigation and forward planning. Participating in the consortium project can help companies understand the actual sorting performance of their packaging in the recycling process, identify recycling bottlenecks, clarify optimization directions in packaging design, sorting processes, recycling, and downstream markets, and comprehensively enhance the company's EPR compliance preparation capabilities.

Companies across beauty, personal care, pharmaceuticals, food service, retail, and beverages are all welcome to apply to join the Smalls Consortium and jointly advance this key pilot initiative focused on the California market.