With Measure Z poised to pass, Santa Cruz jolts national debate around soda taxes as legal battle looms

Last week, Jim Krieger, the executive director of Healthy Food America, convened a meeting with public health officials from eight counties in one of the mountain states. Top of the agenda? Santa Cruz’s soda tax, the high-profile ballot initiative that appears certain to pass once the remaining group of ballots are tallied on Tuesday. 

“The officials wanted to know what happened in Santa Cruz with their soda tax, and how it might impact their own planning over the next few years,” including the possibility of introducing their own measures, Krieger said. 

Krieger, who is also a professor emeritus at the University of Washington, helped Seattle pass one of the only other soda taxes in the U.S. in 2017. He said he has fielded communications from “four to five cities and three states” that are now thinking about introducing local soda taxes in the wake of Santa Cruz’s apparent success. (He declined to offer the names of these jurisdictions so as “not to tip off the soda industry and give them a head start.”)

If Measure Z’s proposed 2-cents-per-fluid-ounce distribution tax on sugar-sweetened beverages passes, Santa Cruz will be the first city to back a new soda tax in the U.S. since 2018, when the beverage industry successfully lobbied the California legislature to sign a bill that appeared to squash the potential for such taxes.

Now, with public health advocates, politicians and organizers across the country closely watching Measure Z, Santa Cruz’s soda tax is already reawakening a national movement that has stalled for years.

“I think when Santa Cruz’s measure passes, it’s possible, and maybe even likely, that it will restimulate soda tax efforts all over the country,” said Harold Goldstein, executive director of the Davis-based Public Health Advocates, an organization focused on addressing health disparities through legislation.

Dr. John Maa, a Bay Area general surgeon and chair of the American Heart Association’s advocacy committee, agreed, saying the “win in Santa Cruz should lead to the rebirth of the soda tax movement across California and the country.” The American Heart Association was the only significant financial backer of the Yes on Z campaign, contributing $20,000 to support the ballot measure.

The national reverberations of Santa Cruz’s apparent success confirms some theories around why the American Beverage Association, the industry lobby representing the likes of Coke, Pepsi and Dr Pepper, put nearly $2 million into a local campaign to stop Measure Z. 

The industry doesn’t care about Santa Cruz, nor will the tax itself affect beverage companies’ bottom lines, Larry Tramutola, an Oakland-based political organizer and consultant, told Lookout in the fall as energy around the soda tax began to build. The concern, he said, was much greater. 

“People are going to question why, on this simple, local thing, was it so important that the soda industry had to spend so much money?” said Tramutola, who helped lead Berkeley’s successful soda tax campaign in 2014. “It’s because they don’t want what they perceive as cancer to spread around, whether it be in California or the Philippines. It’s an industry that is worried about its future.” 

Berkeley was the first city in the U.S. to pass a soda tax. After Berkeley’s success a decade ago, the American Beverage Association appeared to issue a warning to the rest of the country. 

“Berkeley is not like mainstream America,” spokesperson Christopher Gindlesperger told the Los Angeles Times. “If politicians in this country want to stake their reputations on what Berkeley’s done, then they do so at their own risk.”

“That’s pretty threatening, eh?” said Goldstein, who worked on five unsuccessful attempts to get the California state legislature to pass a statewide soda tax.

In the wake of Berkeley’s victory, San Francisco, Oakland, Albany, Philadelphia, Seattle and Boulder, Colorado, each passed similar taxes. Santa Cruz, San Jose, Stockton and other California jurisdictions were set to place soda tax measures on their ballots in 2018.

But that year, California lawmakers passed the Keep Groceries Affordable Act, which forbade local jurisdictions from increasing taxes on grocery products. The law, combined with the soda industry’s 2017 success pumping millions of dollars into local politics in Cook County, Illinois, to repeal a soda tax there, had a chilling effect on soda tax momentum nationwide.

Maa, of the American Heart Association, noted that Santa Cruz’s campaign was “the first time a group of citizens without major financial backing was able to beat the soda industry’s infrastructure.” 

Successful campaigns, such as those in Berkeley and Philadelphia, received hundreds of thousands of dollars from billionaire Michael Bloomberg. Santa Cruz’s largest donor was the American Heart Association. The campaign spent less than $50,000 compared to the $1.7 million from the American Beverage Association. 

“Santa Cruz’s success shows the power of grassroots advocacy and that David can beat Goliath,” Maa said. “The American Hearth Association is very interested in what this will mean for the next chapter of these taxes in the 2026 cycle.” 

Yet, looming over the cautious celebration is the reality of the court battle to ensue. Before voting over the summer to put the measure on the 2024 ballot, Santa Cruz Mayor Fred Keeley said the industry was very clear about its intention to sue the city if Measure Z passed. In October, Politico reported that Rick Rivas, brother of California Assembly Speaker Robert Rivas and strategist for the American Beverage Association, called Keeley on a “number of occasions” to “warn what would happen if Santa Cruz were to move forward with the tax.” 

Rick Rivas and Keeley did not answer Lookout’s multiple attempts to reach them for comment. During the campaign, the American Beverage Association levied its own threats. Steve Maviglio, the well-known Sacramento political consultant leading the No on Z camp, told Lookout that if the measure passed, there would be “enormous legal costs involved that rival the money in the campaign. … The legal costs of this are going to be astronomical.” 

City attorney Tony Condotti said he has not yet received any communication from the American Beverage Association about a lawsuit; his team is preparing for that reality by examining the legal arguments for and against the measure. Condotti expects a lawsuit, but doesn’t foresee it being particularly long or expensive. 

“The issues that would be litigated are fairly narrow,” and would focus on whether a charter city like Santa Cruz is allowed to pass a tax like Measure Z, Condotti said. “It won’t be fact-intensive, or require extensive discovery or a lot of expensive, expert witnesses. I don’t expect it to be that huge of a lawsuit, but, obviously, the industry has a lot of resources and they could try to make it expensive.” 

Goldstein also expects the American Beverage Association to sue. 

“It’s without question,” Goldstein said, before saying he believes the city will win. “It would be expected that the American Beverage Association fight this for as long and hard as they can.” 

Still, Krieger sees Measure Z’s apparent success as a significant rupture in the existing power structure. “The news out of Santa Cruz is important,” Krieger said. “It shows Big Soda is not invincible.”

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