SNAP waivers disrupt compliance for businesses

• The USDA has granted SNAP food restriction waivers to 23 states. These waivers exclude nonnutritious items like candy and soda from SNAP benefits.
• On June 22, 2026, a district court blocked SNAP food restriction waivers in Colorado, Iowa, Nebraska, Tennessee, and West Virginia. The ruling makes the other states’ waivers vulnerable to similar challenges.
• The food restriction waivers create compliance challenges for retailers because each state’s waiver is unique and affects different products.

Since Robert F. Kennedy Jr. became Secretary of U.S. Health and Human Services (HHS) in February 2026, HHS and the USDA have encouraged states to prioritize wholesome foods over unhealthy items like sugary drinks and candy in their SNAP programs.

Efforts to restrict SNAP item eligibility have been around for decades, sometimes initiated by Congress or federal employees, sometimes by states or local governments. In 2004, for example, Minnesota sought to end SNAP benefits for candy and sugar-sweetened beverages (SSBs). In 2010, New York proposed excluding candy and SSBs from SNAP in New York City. Maine petitioned the USDA in 2015 for a waiver to ban SNAP purchases of candy and soda. The USDA refused in all three cases.

Among other reasons, including pressure from lobbyists, the USDA worried such restrictions would create enforcement issues.

“The task of identifying, evaluating, and tracking the nutrition profile of so many products could require a significantly expanded federal bureaucracy, or place an unacceptable certification burden on manufacturers,” reads a 2007 USDA memorandum. “In addition, ordinary SNAP recipients could not be expected to know exactly which foods were allowable and which were not, so final enforcement would rest with poorly trained check-out clerks in the 260,000 stores authorized to accept food stamps.”

It’s a fair point.

But now the tenor of the USDA is different. Since mid-April 2025, the USDA has granted SNAP food restriction waivers to 23 states: Arkansas, Colorado, Florida, Hawaii, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming.

Ten of the states have implemented their waivers already, and food restriction waivers in the remaining 13 states are slated to take effect in the coming months or years. However, a recent ruling by a district court puts the future of these SNAP food restriction waivers at risk — and creates yet more compliance uncertainty for businesses.

In March 2026, SNAP recipients in Colorado, Iowa, Nebraska, Tennessee, and West Virginia challenged those states’ waivers. They argued that the USDA and Secretary of Agriculture Brooke Rollins did not have the authority to approve state pilot projects that restrict SNAP participants from buying certain foods and beverages with SNAP benefits. Their complaint had three counts:

1. The defendants exceeded their statutory authority.
2. The defendants failed to engage in reasoned decision-making.
3. The defendants disregarded a mandatory procedural requirement when approving the pilot projects.

In a memorandum opinion dated June 22, 2026, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia agreed with the plaintiffs, vacating and remanding the waivers in those five states on procedural grounds.

The court determined that the USDA and Secretary of Agriculture Brooke Rollins exceeded their statutory authority (count one) in approving the waivers. While the Secretary of Agriculture has the authority to conduct pilot or experimental projects designed to test changes that might increase the efficiency of SNAP and improve the delivery of SNAP benefits to eligible households, according to Jackson, improving the health and diet of SNAP recipients does neither.

“Congress defined what ‘food’ is supposed to be,” reads the opinion, “and it did not authorize the agency to amend or waive the definition it enacted. It did not authorize the agency to cut types of food out of SNAP entirely.”

The court also ruled that the defendants disregarded a mandatory procedural requirement when approving the pilot projects (count three). They did not post any notice of the pilot projects in the Federal Register. Judge Jackson saw no need to address the second count.

The district court decision halts implementation of the waivers in Colorado, Iowa, Nebraska, Tennessee, and West Virginia. It also makes the other states’ waivers vulnerable to similar challenges. Unfortunately, the decision does not immediately or necessarily simplify SNAP compliance for retailers.

The SNAP food restriction waivers are making SNAP compliance more burdensome for retailers, especially those operating in more than one state with a waiver. Every state’s waiver is unique.

Since the enactment of The Food Stamp Act of 1964 (which became the Supplemental Nutrition Assistance Program in 2008), federal and state food assistance benefits have been largely restricted to “food.” Federal law defines food as “any food or food product for home consumption except alcoholic beverages, tobacco, hot foods or hot food products ready for immediate consumption.”*

While admittedly short on specifics, this definition of food is relatively straightforward for compliance. If something is edible and not an alcoholic beverage, tobacco, a hot food, or a hot food product ready for immediate consumption, it should qualify for SNAP. There are some gray areas — does SNAP cover nonalcoholic beer, wine, and spirits, or kombucha containing trace amounts of alcohol? — but at least every state previously used the same definition for food. A retailer could feel relatively sure that everything in Dairy was eligible for SNAP.

By allowing states to decide which foods they’ll ban from SNAP, the current batch of state food restriction waivers muddies compliance for retailers.

“Compliance with the SNAP program has historically been straightforward for retailers because they only need to follow a single set of federal guidelines,” observes Kate DiNolfi, Senior Manager of Tax Classification Services at Avalara. “Now, retailers have to interpret and apply up to 23 distinct sets of eligibility rules with very little uniformity.”

States are generally banning candy and/or soda from SNAP. But as this state-by-state guide to SNAP waivers shows, each state’s food restriction waiver is unique.

For example, while all 23 states exclude soda-like drinks from SNAP benefits, some states use the term soda while others use soft drinks, sweetened beverages, sugar-sweetened beverages, or unhealthy drinks. Some exclude energy drinks and/or fruit and vegetable drinks with less than 50% natural juice, while those beverages remain eligible for SNAP in other states. Sparkling lemonade isn’t eligible in Nebraska, Utah, or West Virginia, but noncarbonated lemonade is. Sweetened coffee drinks that don’t contain milk are banned from SNAP in Idaho, Indiana, and Texas, while sweetened coffee drinks containing milk still qualify for benefits in those states.

Some states’ waivers cover many other products. Among other items, Florida now excludes “ultra-processed prepared desserts,” meaning “a processed, shelf-stable, ready-to-eat, pre-packaged sweet food intended for immediate consumption without any further preparation” (e.g, a Twinkie). Tennessee no longer covers energy drinks, soda, and processed foods, which include foods altered from their natural state that list cane sugar, corn syrup, high fructose corn syrup, or sugar as the first ingredient.

So, in Florida, Tennessee, and some other states, retailers need to read the labels to figure out which foods do or don’t qualify.

Iowa banned all taxable food items from SNAP eligibility, so sellers registered for Iowa sales tax could have a head start on compliance. On the other hand, the way Iowa defines taxable versus nontaxable food is so complicated that according to the Food Research & Action Center, “Iowa’s waiver is among the most restrictive and challenging to implement.”

The following examples from the Iowa Department of Revenue illustrate the complexity:
 

Iowa is a member of Streamlined Sales Tax (SST), an organization dedicated to reducing the complexity and cost of sales and use tax administration for states and businesses. As such, Iowa and the other SST member states have adopted uniform sales tax base definitions and rules. Many of these are related to food. The definition of candy, which doesn’t include items containing flour, is one example.

“While Iowa’s approach can be applauded for consistency in definition, it’s application as a nutrition standard is challenging for businesses,” explains DiNolfi. “Under the Iowa waiver, SNAP recipients cannot purchase a Snickers bar, but they would be able to pick up a KitKat, Twizzlers, or any other candy item containing ‘flour’ in the ingredients list.”

Given how intricate some waivers are, retailers could have a high error rate, especially at first. Online retailers selling affected products to consumers in numerous states may be even more likely to make errors because they need to comply with requirements in different states.

For businesses, the stakes for noncompliance are high. “You will need to comply with these changes,” explains Iowa’s retailer notice. “If you do not comply, FNS may withdraw your authorization, and you will no longer be able to accept SNAP EBT.” (FNS stands for the Food and Nutrition Service, which is now the Food and Nutrition Administration, or FNA.) The USDA plans to monitor retailers’ compliance and could institute a two-strike policy, meaning retailers found to be noncompliant could face involuntary withdrawal from the program after a second infraction.

Losing the ability to accept SNAP could take a noticeable bite out of some businesses’ sales.

DiNolfi says states are offering varying levels of implementation support to retailers. “Some states have simply published the food exception definitions from their waiver applications and offered little to no further interpretation of intent. Others have published materials intended to help clarify difficult definitions. Arkansas has released the AR SNAP Companion app, which allows SNAP recipients to scan a product’s barcode and see if it’s eligible for purchase.”

The federal government could appeal the district court memorandum opinion. Alternatively, Congress could change the qualifications for SNAP. As Judge Jackson wrote, “The federal defendants and the states may have a genuine desire to improve the health of SNAP households by encouraging healthy choices at the store, and they can take lawful steps to meet those goals.”

In the meantime, all 23 states that were granted food restriction waivers by the USDA — and especially Colorado, Iowa, Nebraska, Tennessee, and West Virginia — must decide how to proceed in the wake of the district court’s decision. As of July 2, 2026:

• The Colorado Department of Human Services had delayed the final vote on the Healthy Choice Waiver, which was scheduled to take effect on October 30, 2026, so there are currently “no changes to what you can purchase with your SNAP benefits.”
• The Iowa Health & Human Services website still states that taxable foods are not eligible for SNAP.
• The Nebraska Department of Health and Human Services (DHHS) “is awaiting further guidance from the USDA and will provide additional information once guidance is received.”
• The Tennessee Department of Human Services website still states that Healthy SNAP Tennessee will be implemented beginning July 31, 2026.
• The West Virginia Department of Human Services website still states beginning January 1, 2026, “SNAP benefits may no longer be used to buy soda.”

Retailers, for their part, must comply with shifting requirements to the best of their ability. Their existing point-of-sale (POS) and ERP systems weren’t set up to comply with these waivers because they’re new. Businesses will need to update systems to be able to comply with state waiver mandates.

To help our customers navigate the quickly shifting landscape of SNAP compliance, Avalara has developed a database of several million UPCs that are ineligible for purchase with SNAP under each state’s new guidelines. “We are constantly adding new products and staying updated on changes to the state waiver program to make sure our customers have all of the information they need to be compliant,” assures DiNolfi.

Source: USDA Food and Nutrition Administration (FNA)