Originally approved more than thirty years ago in 1986, California Proposition 65 has had a lasting impact on commerce across a number of industries. The law requires that the state publish a list of all chemicals included in a product that have been shown to cause cancer or impact reproduction. While the law doesn’t address whether the products with these items can be sold specifically, it requires clear disclosure.
What’s more, it impacts almost all sized businesses. In California, any business with more than 10 employees must adhere to these restrictions or they could face significant financial penalties and open themselves to civil action.
Recent Changes and Their Impacts
In August 2018, California updated these restrictions so that merchants are unable to sell products into the state if they don’t provide these warnings about cancer and birth-defects. And in the digital age, that means some e-commerce companies may not be able to sell certain products into the state if they are knowingly in violation of providing these warnings.
In recent years, local advocacy groups who oppose the law have cited the high cost of infractions for small businesses – some of which are not in California. A total of $182.1 million between 2010 and 2017 alone was settled in lawsuits stemming from the law. The result of this was a trend towards “over-warning” to stay compliant. Almost all products and services offered in California had some form of blanket warning that said they contained chemicals that caused cancer and birth defects.
The new law in 2018 was meant to address this, requiring companies to be more specific and to avoid the anesthetizing effect of overwarning. The new restrictions require that companies provide:
- The name of at least one chemical
- A website URL to learn more about the issue
- A yellow warning symbol that is easier to see
As a result, companies are now expected to evaluate California’s list when reviewing the chemicals in their products.
Another impact of the 2018 update to the law is that it more clearly defines what manufacturers and retailers alike need to do to remain compliant. Manufacturers are required to clearly warn and label their products, as was the case under the original 1986 law. Retailers are now also required to clearly warn shoppers when they are about to purchase a product that has one of these warnings.
This applies to online sellers as well, who now must communicate to anyone buying a product shipping to California if it contains one of the chemicals listed under Proposition 65.
The Impact of Proposition 65
For some smaller retailers who are unable to verify and ensure their products meet these requirements, these changes mean stopping sales to California residents, at least temporarily. This can be a frustrating decision for many of them with the country’s most populous state representing more than 40 million potential customers.
To be compliant, e-commerce databases must now store product attributes that identify when a product requires a warning and then provides that appropriate warning before shipping. While most e-commerce platforms should be able to support this, not all inherently do, and the properties must be collected and updated from manufacturer data.
Ensuring Compliance to Maintain Sales in California
Currently, there are still several retailers and distributors who have decided it is easier to not sell into California at all rather than update their databases and ensure compliance to avoid civil liability. With 967 chemicals on the current list, it is a big task, especially for smaller businesses with limited resources to ensure compliance. The cost of doing so may outstrip the benefit of maintaining those sales in California.
It remains to be seen what the overall impact on e-commerce is for companies who must now choose how they want to do business in California, but what is clear is that steps must be taken to ensure compliance and avoid the risk that faces those who are not careful in how they label and sell their goods.