On the other hand, environmentalists welcome the new rule with great delight.
Environmental group Greenpeace Mexico said businesses have been given ample time to prepare for the change.
"It's been under discussion for 15 years, and in all this time the companies have done nothing to find a solution," said Ornela Garelli, an activist with the group.
The City’s authorities have placed a 150,000 pesos ($7,500) fine and closure of the premises on any organization violating the rule.
Under the new law, packaging made out of compostable materials like corn starch and avocado seeds are allowed.
"But the world's compostable capacity is not even enough to cover the needs of Mexico," a country of nearly 129 million people, said Aldimir Torres, president of Mexico's national plastic industry association.
According to Torres, the ban will greatly affect the industry and could lead to the loss of 20,000 to 50,000 jobs.