This study investigates Latvia’s packaging waste management system as it transitions to a circular economy. The investigation focuses on extended producer responsibility (EPR) as an essential mechanism for sustainable waste management. Using a case study approach, we analysed legislative requirements to identify gaps and overlaps in stakeholder responsibilities, examined municipal binding regulations and contracts with waste management companies and validated the findings using focus groups of municipal stakeholders. The results reveal that EPR operators and municipalities often have overlapping responsibilities. These overlaps create inefficiencies in the collection of separated waste and disproportionately financially burden households. We identified the need for regulatory changes that would increase producer accountability and more clearly divide the tasks between stakeholders. Strengthening EPR’s role in municipal packaging waste management, including public communication, could improve recycling rates and be more consistent with European Union (EU) circular economy goals. The findings suggest that a more standardised EPR framework would facilitate more sustainable waste management across the EU.