It's a change that major retailers have wanted for weeks.
Many grocery stores have stopped letting customers bring in reusable bags over fears of spreading the coronavirus.
However, Newsom's executive order eliminates the requirement that stores charge for bags, but it doesn't prohibit them from charging.
The order Thursday also lifted the ban on stores handing out single-use plastic bags for 60 days.
State law requires stores that do hand out plastic bags to give ones that can be reused.
Environmental leaders say the governor's move is unnecessary, asserting as long as people bag their own groceries, reusable bags are perfectly safe.
The Associated Press contributed to this report.