How Businesses Can Prepare for the Bag Fee

With the Passage of the Plastic Pollution Reduction Act (House Bill 21-1162), starting January 1, 2023, large retail stores in Colorado will be required to charge a $0.10 fee on paper and plastic checkout bags. (Note: Recipients of federal or state food assistance—such as EBT, SNAP, or WIC—DO NOT have to pay the bag fee.)

  • Retailers may keep $0.04 of each $0.10 fee collected. The fee can be used to cover costs to comply with the ordinance, including providing reusable bags, training employees, etc. Based on experiences of retailers in Colorado municipalities that already have bag fees, retailers are likely to save money simply by not needing to purchase as many checkout bags to provide to customers.
  • The remaining $0.06 is remitted to the municipality or county to administer the program, or to provide education and outreach or support for recycling, compost, or waste diversion programs in the community. If a municipality or county hasn’t established a process to accept the remitted fees from businesses, businesses in that jurisdiction shall retain the full $0.10 and use it for recycling, composting, or other waste diversion programs and related outreach and education activities, including purchase of reusable bags for their customers.


UPDATED: Timeline of the changes coming with implementation of PPRA

 

Prepare Your Business for the $0.10 Bag Fee Effective Jan. 1, 2023

Step 1: Determine if your business is exempt

Determine if your business is exempt from participating in the plastic and paper bag fee using the chart below. 

Exempt retailers that are not required* to charge a $0.10 bag fee on plastic and paper checkout bags include:

  • “Small” stores (the law defines small stores as those with three or fewer locations operating solely in Colorado, and are not part of a franchise, corporation, or partnership that has physical locations outside of Colorado)

  • Farmers markets and roadside stand vendors that qualify for the small business exemption (three or fewer locations operating solely in Colorado)

  • Restaurants (all restaurants are exempt, regardless of number of locations) 

* Exempt stores may choose to charge the $0.10 bag fee and keep 100% of fees collected unless the municipality or county to which the store pays taxes has adopted an ordinance allowing the store to opt in to the bag fee program. The store may have to pay tax on fees collected.

Nonexempt retailers that are required† to charge a $0.10 bag fee on plastic and paper checkout bags include: 

  • Grocery stores, supermarkets, convenience stores, liquor stores, pharmacies or drug stores, or other retailers with more than three locations in Colorado OR with one or more locations outside of Colorado.

† Nonexempt stores are required to charge the $0.10 bag fee on plastic and paper checkout bags, of which retailers may keep 40% of fees collected and remit 60% of fees collected.

Which bags are included in the bag fee?

Plastic and paper bags provided at checkout are included in the $0.10 bag fee. Single-use checkout bags provided through curbside pickup are also subject to the fee.

Which bags are NOT included in the bag fee?

Bags that are exempt from the $0.10 bag fee include:

Paper and plastic checkout bags used by customers who participate in state or federal food assistance programs (these customers are EXEMPT from the fee).

Bags used for purposes other than checkout are EXEMPT from the fee, including:

  • Produce bags, and bags used for food that could contaminate other items, such as frozen food, meat, seafood, etc.
  • Bags for loose, bulk items including hardware, nuts, fruits, vegetables, grains
  • Bags for unwrapped food such as bakery goods 
  • Bags for dry cleaning, laundry, or garments
  • Bags used for prescription medication
  • Bags for the sale of small pets like fish, crustaceans, mollusks, and insects

Step 2: Set up a fee collection system

Adjust your registers to track and charge for each disposable bag (plastic and paper) provided at checkout, as follows: 

  • Customer receipts must include the number of disposable bags provided and the total amount of fees charged for each bag type. 

  • Be sure that your system records the number of disposable bags provided to customers.

Step 3: Alert your customers

Post signs reminding customers to bring their own bags. The new state law requires businesses to conspicuously display a sign in a location inside or outside of the store to alert customers of the carryout bag fee. Good locations for signage include the parking lot, on store doors, on shelves throughout the store, at checkout, at self-checkout lanes, on grocery cart advertising space (if available), and in the cart corral area.

If your municipality is not providing free store signage, see below for free downloadable posters, signs, shelf talkers, etc.

Provide bag fee information to customers through print and digital communications, such as weekly coupon mailers, on your store website, or in your store app.

Make daily in-store announcements, including thanking customers for bringing their own bags.

Remember, recipients of federal or state food assistance—such as EBT, SNAP, or WIC—DO NOT have to pay the bag fee.

Step 4: Educate your employees

Train employees, including managers, cashiers, baggers, staff in charge of online order fulfillment, and customer service representatives, on the requirements of the new bag fee using these free, downloadable resources:

Designate a bag fee expert and employee trainer on your team to handle questions and train new cashiers and baggers as needed.

Acknowledge employees who consistently make the effort to thank customers for bringing their own bags.

Step 5: Make reusable bags accessible near checkout

  • If you are providing free reusable bags to customers (can be funded by retailer’s portion of bag fees collected), ensure bags are well stocked at each register.
  • Place reusable bags for purchase near checkout lanes, including self-checkout stations.

Step 6: Remit 60% of fees collected to your municipality (or county) 

  • UPDATED JUNE 2023: Remit the appropriate fees (60% of bag fees collected) to your municipality or county quarterly. The original law required remittance by April 2024 of all fees collected since January 1, 2023. The law has since been amended to require quarterly remittance starting in 2023. If your business has not yet remitted your bag fee funds, the first payment should include the funds collected since January 1, 2023. Additionally, if the municipality or county in which your business is located hasn’t established a process to accept the remitted fees from businesses, businesses shall retain the full fee and use it for the original purposes set out in HB21-1162, which include any recycling, composting, or other waste diversion programs and related outreach and education activities, and/or the purchase of reusable bags for your customers.
  • Use this Bag Fee Remittance Form, or the form provided by your municipality (or county).

Related Pages

Implementing the Plastic Pollution Reduction Act

2023 Bag Fees Guide for Municipalities

2023 Bag Fees Guide for Communities