Santa Cruz is facing a lawsuit from the American Beverage Association and allied industry groups over its newly enacted soda tax, escalating a legal fight that could have far-reaching implications for local public health policy in California.

Approved by voters in the November 2024 election, Measure Z imposes a 2-cent-per-ounce tax on distributors of sugar-sweetened beverages. Public health advocates have championed this and other similar taxes as a way to reduce consumption of sugary drinks—a leading contributor to diabetes, obesity, heart disease and dental decay.

The lawsuit, filed May 28, 2025, argues that the tax violates the Keep Groceries Affordable Act of 2018, which prohibits California cities and counties from creating new taxes on groceries, including beverages, through January 1, 2031. Included in the act was a penalty that would have stripped a local authority of its sales and use tax revenue should it impose a new grocery–related tax or fee.

However, in 2023, the  California Third District Court of Appeals invalidated the financial penalties that once enforced the moratorium, allowing Santa Cruz to move forward with the tax without fear of financial repercussions.

CMA’s long-standing advocacy on sugary beverages

The California Medical Association (CMA) has long supported evidence-based public policies aimed at reducing the health harms associated with sugar-sweetened beverages. Through legislative advocacy and public health partnerships, CMA has backed proposals to impose excise taxes, restrict marketing to children and mandate clear labeling of sugary drinks.

While CMA is not directly involved in the Santa Cruz lawsuit, the association is closely monitoring the case for its potential implications on broader public health policy. CMA policy recognizes the urgent need to reduce consumption of sugary drinks as part of a larger strategy to combat preventable chronic diseases.