What Municipalities Can Do to Prepare for the Bag Fee

The Plastic Pollution Reduction Act (House Bill 21-1162), passed in 2021, gives municipalities (or counties) the primary role of educating the public, implementing the policy, collecting fees from businesses, and spending the fees collected—60% of the bag fees are 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 their communities. The remaining 40% is kept by retailers to cover costs to comply with the ordinance.

• While the fee on plastic and paper checkout bags begins January 1, 2023, it’s easy to get started—just follow the steps below, and download the Bag Fee Checklist for Municipalities.

Step 1: Set up a system to collect fees

If your municipality already has a sales tax or financial reporting software, such as GovOS, the municipal Department of Finance should create a new webpage for businesses to remit the bag fees.

Note: Home Rule Municipalities can exempt the bag fee from local sales tax. Some municipalities’ codes already establish that a fee such as the bag fee are exempt from sales tax. Only Home Rule Municipalities who self-collect taxes need to consider passing an ordinance to exclude the fee from local sales tax. Here is an example of an ordinance exempting the bag fee from local sales tax: Golden’s ordinance 

If your municipality does not already have a system to collect taxes and fees, contact [email protected]. But first, check to make sure there are businesses in your jurisdiction that are required to charge the bag fee (see Step 2). If all your businesses are exempt, you do not need to set up a system to collect the fees.

Step 2: Determine which businesses in your jurisdiction should participate in the statewide bag fee, and which are exempt

According to Colorado law, the $0.10 checkout bag fee required as of January 1, 2023, only applies to large retailers and grocery stores. These stores generate more plastic and paper bag waste compared to smaller stores. Additionally, most of these larger stores already have systems in place to collect and remit the $0.10 fee on plastic and paper bags. 

Use the criteria below to determine which stores in your jurisdiction should be charging the $0.10 fee per plastic or paper checkout bag, and which stores are exempt. Create a list of participating stores to send alerts and share information and resources.

Retailers that are required to charge a $0.10 fee per plastic and paper checkout bag beginning January 1, 2023, include:

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

Retailers that are not required* to charge the $0.10 fee per plastic and paper checkout bag, or “exempt businesses,” include:

• “Small” stores (the law defines small stores as those with three or fewer locations operating solely in Colorado, not as 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 (restaurants are exempt regardless of number of locations, however, food establishments are not exempt if they do not meet the small store criteria) 

*Please note that exempt stores may choose to charge the $0.10 bag fee and can keep 100% of the fees collected. The store may have to pay tax on fees collected.

Municipalities and counties that would like to allow or require additional businesses to participate in the bag fee can adopt local ordinances. See sample ordinances here.

Step 3: Send a letter to nonexempt businesses alerting them of the change

While many large chain stores may already be aware of the bag fees taking place on January 1, 2023, it is best to alert all nonexempt businesses in your jurisdiction of the change. Many of these businesses may be national chain stores that already have systems in place for collecting and remitting fees.

You may use or customize this letter to alert local nonexempt businesses of the upcoming bag fees:

• Download the Sample letter of notification to retailers

Step 4: Share information and resources with nonexempt businesses

To help local businesses in your jurisdiction get ready to collect and remit fees on plastic and paper bags, make sure to share the Guide to Bag Fees for Businesses page, or copy the information to your own site. This toolkit for businesses includes information on how to collect and remit fees, printable signage, and training for cashiers.

Step 5: Share information and resources with the public

Alert your community of the upcoming $0.10 fee on plastic and paper bags, and encourage them to get into the habit of using reusable bags—so they can skip the bag fee altogether! Use the resources on the Guide to Bag Fees for Communities page, including content for your website, a social media package, utility insert, sample newsletter article, and print advertisements you can place in local newspapers. It’s important to let the public know that recipients of federal or state food assistance—such as EBT, SNAP, or WIC—do NOT have to pay the bag fee.

Step 6: Set up a system to monitor compliance with the bag fee

The Plastic Pollution Reduction Act leaves compliance measures up to the local municipality or county to enforce. Here are a few examples of how municipalities have taken different approaches to monitor compliance with the bag fee:

• Fort Collins: The City of Fort Collins uses a Business Confirmation Form as an educational tool to help businesses determine if they are exempt or must comply with the bag fee.
  
  
• Boulder: The City of Boulder monitors compliance by comparing its list of nonexempt businesses with a list of businesses that remit bag fees quarterly. 
  
  
• Denver: The City and County of Denver uses an online reporting system to monitor compliance with their bag fee.