Ruling in CA Sugary Drink Tax Preemption Lawsuit

Press Release: Court rules that state cannot penalize charter cities for managing municipal affairs

October 12, 2021

Oakland, CA: The Sacramento County (California) Superior Court has ruled that the penalty provision of California’s Keep Groceries Affordable Act of 2018 is unconstitutional. The provision penalizes a city that lawfully enacts a sugary drink tax by taking away that city’s sales tax revenue.  

The court ruled in response to a lawsuit filed in 2020 by Jarvis, Fay & Gibson, LLP, on behalf of Cultiva La Salud, an organization dedicated to advancing health equity in the San Joaquin Valley, and Martine Watkins, a resident of Santa Cruz who serves on the Santa Cruz City Council. The lawsuit was supported by ChangeLab Solutions and the American Heart Association

“Three years ago, the beverage industry strong-armed our legislature into passing a measure that protected industry profits at the expense of public health. This ruling affirms what we have known all along: parts of this law are blatantly illegal, and charter cities should not be punished for exercising their constitutionally protected authority to enact policies that improve health and advance health equity,” said Sarah de Guia, JD, chief executive officer of ChangeLab Solutions. “It is imperative that local governments throughout California and the country be permitted to enact policies that protect their residents’ health and advance health equity.”

In 2018, the beverage industry pressured the California legislature into passing a law that prevents cities from enacting new sugary drink taxes until 2031. The legislature enacted the law under the threat of an industry-funded state ballot initiative that, if passed, would have drastically curtailed local governments’ ability to raise revenue for critical services like public health, education, and transportation. 

This case — as intended — removes the possibility that a California charter city could lose its sales tax revenue should it choose to move forward with a sugary drink tax. Although the decision does not affect the underlying prohibition of local sugary drink taxes, the elimination of this financial threat is a victory for voters in charter cities, who can now engage with their fellow residents and elected officials about whether sugary drink taxes are appropriate for their community without risking their city’s sales tax revenues should voters ultimately adopt a tax.

"This ruling sends a strong message to corporate-backed forces around the country who are advancing harmful preemption laws that they cannot circumvent the law to protect their own financial interests," said John Maa, MD, a general surgeon at Marin Health Medical Center and member of the Western States Region board of the American Heart Association. “Once again, local elected leaders in California have an important tool available to invest in the health needs of the communities that they serve. Sugary drink taxes can drive down consumption and fund important community health priorities.”

The issue of state interference extends well beyond sugary drink taxes. Other state governments are interfering with local governments on a wide variety of issues that affect community health and well-being — such as minimum wage increases, equitable housing policies, and broadband access.  The harms associated with this abuse of preemption — especially for communities of color, women, and families with low income — are well documented

“Thanks to this landmark ruling, cities across California can once again enact public health policies like sugary drink taxes without fear of unlawful punishment,” said plaintiff Martine Watkins, who lives in Santa Cruz and serves on the Santa Cruz City Council. “Across our state, sugary drink tax revenues are being reinvested directly in the health of local communities. We’re now one step closer to more California residents being able to reap the benefits of these types of policies.”

“We have clear evidence that sugary drink taxes are an effective strategy for protecting the health of children and families against unjust beverage industry marketing and sales practices,” said Genoveva Islas, MPH, founder and executive director of Cultiva La Salud. “This ruling is a victory for all Californians and clears a path forward for community health advocates and local governments to confront health inequities driven by sugary drink consumption.”

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ChangeLab Solutions is a nonpartisan, nonprofit organization that uses the tools of law and policy to advance health equity. We partner with communities across the nation to improve health and opportunity by changing harmful laws, policies, and systems. Our interdisciplinary team works with community organizations, governments, and local institutions to design and implement equitable and practical policy solutions to complex health challenges. For more information, visit Follow ChangeLab Solutions on Twitter and Facebook.

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