Four more states this month began restricting the use of government food assistance funds to buy select products ranging from energy drinks and sweetened beverages to candy, desserts and some bars despite ongoing litigation challenging USDA’s authority to approve the pilot programs.
As of Nov. 1, Montana, North Dakota, South Carolina and Virginia join 13 other states with USDA-approved waivers currently restricting the use of government funds via the Supplemental Nutrition Assistance Program (SNAP) to buy foods and beverages that politicians and legislators deem “unhealthy.”
Under the Trump administration, the US Department of Agriculture called on states to submit SNAP Food Restriction Waivers “that restrict the purchase of non-nutritious items like soda and candy,” as a “key step in ensuring that taxpayer dollars provide nutritious options that improve health outcomes within SNAP.”
The move triggered a political firestorm with opponents condemning the demonstrations as limiting participant choice, adding burdens to retailers that accept SNAP benefits and creating consumer confusion given many of the prohibited items are defined broadly and vary state by state. Advocates counter that the projects advance “SNAP’s nutrition objectives, could improve public health outcomes and would promote responsible use of taxpayer-funded benefits,” according to the Federal Register notices published Nov. 3 about the most recent demonstrations.
The disagreement spurred a major federal lawsuit filed March 11 in the US District Court for the District of Columbia representing SNAP recipients from Colorado, Iowa, Nebraska, Tennessee and West Virginia against USDA and Secretary Brooke Rollins arguing the agency did not have authority to redefine which foods qualified as eligible under SNAP and that the waivers violated the Administrative Procedure Act, which requires in part public notice before approving the projects. In June, a judge ruled in favor of the SNAP recipients and vacated the waiver in the five states. However, it did not apply to waivers in other states.
Despite the court’s ruling and disagreement about the legal and ethical implications of the demonstrations, at least one other state – Nebraska – is seeking USDA approval of a similar demonstration restricting the use of SNAP funding on certain items.
The exclusions under the four new states are diverse and, some might argue ambiguous, further complicating a growing patchwork of legislation.
In Montana, for example, SNAP funds cannot be used to buy energy drinks that contain more than 6 mg of caffeine per fluid ounce or 140 mg total caffeine per container plus one or more of the following ingredients: taurine, guarana, glucuronolactone, ginseng, yerba mate or other stimulants, including herbal stimulants. But, the restriction does not apply to coffee, tea or “any beverages that are substantially coffee-tea-based.”
Other states set different thresholds for key ingredients when determining what cannot be purchased with SNAP funding. For example, South Carolina sets the caffeine threshold at 65 milligrams of caffeine per 8 fluid ounces for products advertised as “energy drinks.” This is slightly more than 8 mg per fluid ounce – about 2 mg more than in Montana.
Other states are not as prescriptive and simply restrict the sale of “soft drinks” or “energy drinks,” as in the case of North Dakota.
Montana also prohibits the purchase of shelf-stable prepared desserts with SNAP funding, but does not include store-made bakery items.
How are SNAP restrictions impacting sales?
While only 11 states have implemented SNAP restrictions so far, early evidence from Circana, Numerator, Ibotta and academic research show a meaningful decline in purchases of restricted products – prompting some food and beverage manufacturers to alert investors about the impact on demand for the products.
In the first quarter of 2026, soda spending per SNAP household in waiver states fell 8% and the share of SNAP trips including soda was down 9 percentage points year-over-year, according to Circana data presented in the first-half of 2026 during a July 22 webinar.
The incidence of candy purchased by SNAP households in waiver states also fell 6.3 percentage points from 22.5% to 16.2%, and energy drink trip incidence fell 4.8 percentage points from 10.2% to 5.4% in waiver states, according to Circana data presented.
Receipt data collected and shared by Ibotta showed similar trends in soda and candy purchases in the first quarter of 2026. In Indiana, Iowa, Nebraska, Utah and West Virginia where waivers were enacted, soda purchases fell 15% compared to a 7.5% decline in non-waiver states, in the period.
By late May the impact was even more stark, according to a report from Numerator released May 26 that estimated SNAP restrictions could trigger up to $830 million in lost sales across the targeted categories in states expected to have waivers in place by the end of the year. Of this, it estimated, $430 million would be lost soda sales, $300 million lost candy sales and $100 lost energy drink sales.
How are CPG companies assessing the risk?
Within months of the first waivers being enacted, large CPG players acknowledge the potential impact of the waivers, but many described it as “manageable” or “consistent” with their expectations. But several added they were keeping an eye on the impact and, as more time passed, at least one warned investors of potential dampened demand.
Hershey’s CEO Kirk Tanner told investment analysts during the company’s first quarter earnings call on April 30 that the impact of the first five state waivers was “pretty mild or minor” during the first quarter, but he added the company planned “for this headwind to increase over the course of the year” and said Hershey would “adjust our plans to meet the needs of the consumer with portfolio pack types.”
Keurig Dr Pepper CEO Tim Cofer echoed this sentiment during the company’s first quarter earnings call April 23, noting the “impacts to date have been manageable and largely consistent with our expectations and our plans.”
He added the company would “monitor closely, state-by-state, how these waivers roll out,” and as needed adjust its RGM capabilities “to ensure that we deliver on our guide.”
The Coca-Cola Co was a bit more pointed in its 10-K for 2025, noting “restrictive policies, if widely enacted, could have adverse impact on our products, input costs, sales and reputation. Further, state variability in such policies could result in supply chain and customer relationship complexities.”
Conagra Brands also warned in its 10-K for the year ending May 31 that changes to government food assistance programs could negatively impact demand for its products.
What’s next?
The impact from the waivers – as well as how long they may be in place – is uncertain, but for now the pressure created by the patchwork of state models is a source of confusion, frustration and caution by industry stakeholders.
As early sales data and cautionary company statements suggest, the impact of the demonstrations is notable and worth watching.
It is also possible additional states could submit waivers to USDA, which continues to solicit proposals. In addition, several approved demonstrations will come online in the coming months, placing additional pressure on consumers and companies.
According to USDA, pilot programs restricting the use of SNAP funds will go into effect in February in Kansas, Missouri and Wyoming. In April, Hawaii and Ohio will begin demonstrations, and in February 2028, Nevada will begin its program.