AB 936 directs the Department of Social Services to build a supplemental-benefits mechanism inside California’s EBT system that awards additional funds to CalFresh recipients when they buy eligible fresh fruits and vegetables, and to run pilot projects via a new grant fund to test operational models across grocery stores, farmers’ markets, farm stands, and mobile markets. The measure sets technical requirements for integration with both centralized EBT terminals and integrated POS systems, defines eligible produce, requires privacy protections, and sets program guardrails such as transferability of benefits and a household cap determined by the department.
The bill matters because it turns a common nutrition-incentive model into a state-led, EBT-native mechanism rather than a paper scrip or third‑party coupon system. It prescribes how grants are awarded, prioritizes smaller retailers for funding and technical support, requires quarterly public data, and lays out an evaluation and transition plan for potential statewide scale-up — all while carving out procurement and contracting exemptions and limiting recovery of the supplemental benefits.
At a Glance
What It Does
Requires the department to add a supplemental-benefits workflow to the EBT system that automatically awards, tracks, and redeems extra funds when CalFresh purchases of defined fresh fruits and vegetables occur, and creates a CalFresh Fruit and Vegetable EBT Grant Fund to finance pilot projects that implement that mechanism.
Who It Affects
CalFresh recipients (benefit accrual and redemption), authorized retailers (grocery chains, small stores, farmers’ markets, farm stands, mobile markets), nonprofit or government grantees that run pilots, and the state offices responsible for EBT and CalSAWS integration and reporting.
Why It Matters
The bill creates a state-controlled, digital nutrition incentive model designed to overcome technical barriers at farmers’ markets and small retailers, prioritizes funding to support smaller retail operators, and requires public reporting and an evaluative pathway to potentially transition to direct state management.
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What This Bill Actually Does
AB 936 establishes a named pilot — the California CalFresh Fruit and Vegetable EBT Supplemental Benefits Program — and starts by defining the core terms: which retailers qualify as “authorized pilot retailers,” what counts as “fresh fruits and vegetables,” and what “supplemental benefits” are (additional funds issued to a recipient’s EBT card when a CalFresh purchase of eligible produce is made). The bill requires the department to design the mechanism so it works at both centralized EBT terminals common at farmers’ markets and at integrated grocery-store POS systems, while protecting privacy and ensuring benefits move only between authorized CalFresh retailers.
The bill turns implementation into a grant-driven pilot. It creates the California CalFresh Fruit and Vegetable EBT Grant Fund and directs the department to award multiple grants to nonprofits or government agencies that will recruit retailers, run community outreach, secure retailer commitments, and collect evaluation data.
At least one grant must test the model at farmers’ markets; grantees must show prior experience running nutrition-incentive programs and partner with existing authorized retailers that sell produce.AB 936 prescribes operational guardrails: the supplemental benefits must be transferable across CalFresh-authorized retailers, accrued only when a recipient uses CalFresh to buy eligible fresh produce, and redeemable only for CalFresh-eligible purchases. The mechanism must provide a benefits match ratio of at least 1:1, impose a household accrual cap set by the department, and include no expiration date (though benefits can be expunged under federal SNAP rules).
The statute also specifies how the department should allocate appropriated funds: first to administrative costs, then to a baseline level to cover a full year of anticipated supplemental benefits at participating sites, and then to tiered allocations that prioritize small retailers (those with 50 or fewer locations and ≤$50M in annual CalFresh redemptions) for supplemental-benefit funding and limited tech upgrade grants (capped at $1 million per fiscal year). Larger chains are eligible for supplemental-benefit funding but not for state-funded tech upgrades.Finally, the bill requires quarterly public data publication on program use; mandates an independent evaluation of pilots that ran between February 1, 2023 and January 31, 2025; asks the department to scope a state-managed transition (including staff, IT certification, reconciliation with CalSAWS, and online transaction/delivery expansion); grants contracting and procurement exemptions for program awards; makes supplemental benefits non-recoverable for overissuance and non-entitlement (subject to appropriation); and sunsets the section on January 1, 2027, pending necessary federal approvals.
The Five Things You Need to Know
The supplemental-benefits mechanism must provide at least a 1:1 match of CalFresh benefits to supplemental benefits when eligible fresh fruits and vegetables are purchased.
Grants must go to nonprofits or government agencies, with a minimum of three awards and at least one grant specifically testing the mechanism at farmers’ markets.
The department’s funding allocation prioritizes small retailers (≤50 locations and annual CalFresh redemptions ≤$50,000,000) and allows grantees to use up to $1,000,000 per fiscal year for small-retailer tech upgrades; large retailers are excluded from upgrade funding.
Supplemental benefits have no expiration date but can be expunged under federal SNAP rules, are not entitlement benefits, and the statute bars recovery of these benefits for overissuances.
The program includes mandatory quarterly public reporting and requires the department to submit an evaluation and a transition scoping report (covering staffing, IT certification, CalSAWS reconciliation, and online/delivery expansion) to the Legislature.
Section-by-Section Breakdown
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Name and key definitions
These subsections give the pilot a formal name and define the terms that control scope: who qualifies as an authorized pilot retailer (grocers, corner stores, farmers’ markets, farm stands, mobile markets), what counts as fresh fruits and vegetables (whole or cut, no added sugar/fats/oils/salt, not processed by heat/drying/canning/freezing), and what supplemental benefits are (funds loaded to EBT upon eligible purchases and restricted to CalFresh-allowed redemptions). The definitions narrow the program to in-season, minimally processed produce and set expectations for where the new EBT flows will apply.
Technical requirements for an EBT supplemental-benefits mechanism
This section requires the department — in consultation with the Department of Food and Agriculture and county administrators — to build an EBT-native mechanism that accrues, tracks, transfers, and redeems supplemental benefits. It specifies compatibility with both centralized market terminals and integrated POS systems, mandates privacy and confidentiality compliance, and requires that benefits only accrue when a CalFresh purchase of eligible produce occurs. It also requires transferability across authorized retailers and gives the department authority to set a household accrual cap.
Creation of the grant fund and grant program requirements
Creates the California CalFresh Fruit and Vegetable EBT Grant Fund to receive state, federal and private monies for grants. Grants must be awarded to nonprofits or government agencies; the bill envisions at least three grantees and requires one to test farmers’ market operations. Applicants must demonstrate prior experience running nutrition-incentive programs, secure retailer partnerships, and commit to evaluation data collection. Grantees are responsible for retailer recruitment, outreach, integrity safeguards, and providing evaluation data.
Criteria for adding and prioritizing retail locations
When grantees propose adding retail locations, the department must prioritize sites that offer broad and high-quality produce assortments, add geographic reach, attract many CalFresh customers, or can scale the technology to other locations. This subsection is designed to encourage strategic growth that balances access, cultural diversity in produce, and scalability of the chosen POS technology.
Funding allocation hierarchy and support for small retailers
Appropriated funds must first cover administrative costs, then a baseline to cover 12 months of anticipated supplemental benefits at existing participants. Remaining funds are split: at least 50% to anticipated benefits earned at small retailers (≤50 locations and ≤$50M in annual CalFresh redemptions), and the balance to larger retailers. The department may allow grantees to use funds to offset small-retailer tech upgrades but caps such upgrade support at $1,000,000 per fiscal year; large retailers cannot receive state funding for tech upgrades under this bill.
Reporting and evaluation
The department must publish quarterly utilization data (number of households/individuals receiving supplemental benefits, average monthly supplemental benefits per household, and amounts earned by retailer category). It must also evaluate pilots that operated between Feb 1, 2023 and Jan 31, 2025, recommend refinements, and provide a transition plan to state-managed operations, including staffing, IT certification processes, CalSAWS reconciliation, and expansion to online/delivery transactions. A report on these items is due to the Legislature by July 1, 2025.
Procurement exemptions, liability, recovery rules, and sunset
The bill exempts related contracts and grants from many state contracting rules and personal-service contracting requirements, shields the state from liability arising from program implementation, and allows the department to implement the statute without formal rulemaking. It also prohibits recovery of the supplemental benefits for overissuance and excludes these benefits from entitlement status; appropriated funding is required. The program is temporary, set to repeal on January 1, 2027, and conditioned on securing any necessary federal approvals.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- CalFresh households who purchase fresh produce: the program increases effective purchasing power for eligible fresh fruits and vegetables through automatic EBT-based supplemental credits and removes the need for separate coupon or scrip systems.
- Small and independent retailers, farmers’ markets, and farm stands: the statute prioritizes their participation, permits grantee-funded tech upgrades (subject to a $1M annual cap), and requires at least one farmers’ market pilot, reducing technology barriers that have historically limited market participation.
- Nonprofit organizations and local government agencies experienced in nutrition incentives: eligible to receive grants to operate pilots, build retailer partnerships, run outreach, and gather evaluative data — creating funding and operational roles for these intermediaries.
- State administrators, public‑health and nutrition programs: they gain public, quarterly data and an independent evaluation that can inform future policy and program design, improving the evidence base for state-level nutrition incentives.
Who Bears the Cost
- The California Department of Social Services and state IT offices: the department must design, certify, and maintain the supplemental-benefits mechanism, align EBT and CalSAWS reconciliation, and potentially expand staff and technical capacity to onboard retailers.
- The Legislature/state budget: any ongoing supplemental benefits and tech support require appropriations; the program is explicitly non‑entitlement and therefore depends on annual budget decisions.
- Large retail chains and grocery operators with >50 locations: while eligible to participate, they cannot receive state-funded tech upgrade support under the bill and must absorb integration costs themselves to offer supplemental benefits.
- Grantee organizations: responsible for outreach, retailer recruitment, data collection and program integrity, which may require operational investments and staffing without guaranteed ongoing state support beyond appropriations.
Key Issues
The Core Tension
The central dilemma is equity versus scale: the bill deliberately steers funds and technical help toward small retailers and farmers’ markets to increase access and preserve culturally appropriate produce options, but that prioritization makes rapid, broad reach harder because larger chains — which serve most CalFresh transactions — must handle tech integration costs themselves; lawmakers and implementers must choose between a slower, equity‑focused rollout or a faster, cost‑efficient scale that risks leaving smaller retailers behind.
AB 936 packs a lot of policy choices into a technical product: it prioritizes an EBT-native incentive model and small-retailer support while also carving out procurement and liability protections to speed implementation. That creates implementation frictions.
Building a single supplemental-benefits mechanism that works across centralized market terminals, legacy integrated POS systems, mobile vendors, and state-issued farmers’ market hardware is technically complex and costly; the bill mitigates this for smaller retailers via a modest upgrade fund but bars similar support to larger chains, raising questions about the pace and pattern of retailer adoption.
The bill’s operational rules — transferability, a departmental household cap, no expiration but possible expungement under federal SNAP rules, and a required 1:1 match — solve several integrity and incentive-design issues but leave open practical reconciliation challenges, especially when integrating EBT transactions with CalSAWS for automated financial reconciliation. The procurement exemptions speed grant-making but reduce standard state contracting oversight, which shifts risk management onto grantees and the department.
Finally, the sunset date and non-entitlement language create policy uncertainty: vendors and local partners may hesitate to invest in long-term operational changes when benefits and administrative funding are contingent on future appropriations and federal approvals.
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