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The American Beverage Association (ABA) filed a lawsuit Thursday in Sacramento Superior Court seeking to overturn the City of Santa Cruz’s recently enacted tax on sugary drinks, escalating a legal and political battle over public health measures and municipal taxing authority in California.
The ordinance, which levies a two cents per fluid ounce tax on sugar-sweetened beverages, was approved by Santa Cruz voters in November 2024 and went into effect on May 1. The tax targets beverages with added sugar, including sodas and energy drinks, and is intended to discourage consumption while generating revenue for local health programs.
Industry Pushback
The ABA’s suit claims that the tax violates state law and unfairly burdens both consumers and businesses. This marks the latest chapter in a broader campaign by the beverage industry to block municipal efforts to regulate or tax sugary drinks a strategy that included a now-defunct 2018 moratorium on new local soda taxes.
“The beverage industry continues to prioritize profits over public health,” said Nancy Brown, CEO of the American Heart Association (AHA), in a sharply worded statement. “This costly litigation is an attempt to override the will of the voters and delay policies designed to address rising rates of diabetes, heart disease, and obesity.”
Brown criticized the 2018 moratorium as a “backroom deal” orchestrated by beverage companies after losing a string of local ballot measures. Though the courts struck down key provisions of that law in 2023, the ABA’s new lawsuit suggests the industry is not ready to concede.
AHA: Health Over Profits
The AHA has been a vocal proponent of sugary drink taxes across the U.S., arguing that the public health benefits reduced consumption and improved health outcomes outweigh the industry’s economic concerns. In Santa Cruz, the AHA supported the 2024 ballot initiative and pledged to back the city in court.
“Santa Cruz residents made a democratic decision to invest in health,” Brown said. “We urge the beverage industry to accept that decision and drop this baseless challenge.”
Research shows that sugary drink taxes can lead to meaningful reductions in sugar consumption and related illnesses. Proponents argue that revenue from such taxes can support health programs, especially in underserved communities disproportionately affected by diet-related diseases.
Legal and Political Implications
The lawsuit could become a test case for the future of local tax authority in California. Cities like Berkeley, San Francisco, and Oakland already have similar taxes in place, and Santa Cruz’s ordinance could inspire more jurisdictions to follow suit unless the ABA’s legal effort succeeds in drawing new limits around municipal power.
For now, Santa Cruz’s tax remains in effect. The city has not yet responded to the lawsuit, but local officials and public health advocates are expected to mount a vigorous defense.
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