Santa Cruz Sweetened Beverages Tax

On May 28, 2025, a coalition of trade associations—including the American Beverage Association, California Grocers Association, and California Chamber of Commerce—filed suit in Sacramento County Superior Court challenging Santa Cruz’s Measure Z, a voter-approved 2¢-per-ounce tax on sugar-sweetened beverages that took effect May 1, 2025.

Plaintiffs argue the tax violates California’s 2018 Keep Groceries Affordable Act (moratorium on local grocery taxes), the Bradley-Burns Uniform Local Sales and Use Tax Law, and the state constitutional ban on snack taxes. They also contend the measure’s stated purpose is to discourage consumption, making it an impermissible public health regulation rather than a lawful municipal tax.

The lawsuit seeks to have the tax declared unenforceable and to require refunds of all amounts collected. The City of Santa Cruz defends the measure as a valid exercise of its charter city authority. The case could set a precedent for whether other California cities may enact similar public health-motivated taxes.

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