Schwarzenegger's signature extends those same rules to out-of-state farmers who ship their eggs into the Golden State, beginning in 2015, the same time California's law kicks in.
The Humane Society of the United States pushed the anti-cruelty measure and says this will also improve food safety, which is compromised when chickens live in stress.
"It causes their immunity to be reduced and their ability to ward off illness. That does end up creating higher risk for consumers down the line," said Jennifer Fearing, senior California director of the Humane Society of the U.S.
California is the fifth-largest egg producer in the country, and the new regulation puts competitors on an even playing field.
But the egg industry says studies are mixed as to whether a change in living conditions actually affects egg quality.
And the University of California Agricultural Issues Center estimates prices will increase by a couple of cents per egg because cage-free environments are more expensive. Ninety-seven percent of consumers today choose regular eggs, while only 3 percent buy cage-free eggs.
"This a product that just about everybody eats and almost everybody chooses to eat eggs raised with hens in cages; and take that product and make it illegal -- that's a bit puzzling," said Prof. Daniel Sumner, director of the U.C. Agricultural Issues Center.
Some shoppers seemed OK with being forced to buy cage-free eggs.
"According to the egg producers, it'll up their overhead," said Robert Tatum. "Of course, they're going to pass it on to the consumer. I'm OK with that."
"I usually tend to be more for the animals as it is anyway, whether it's chickens or dog," said Amber Williams.
Egg producers who violate the new regulations could spend six months in jail and face a $1,000 fine.