The Gift and Home Trade Association has a very useful, if somewhat alarming, white paper on Proposition 65:
Here are some common misconceptions about Proposition 65 and similar legislation (referred to as "Prop 65"):
Prop 65 doesn't apply to my products: This is not a safe assumption unless you've actually tested your products for compliance. Prop 65 affects a HUGE array of consumer products. Past lawsuits have targeted candles, brass darts, christmas lights, hammers, mineral oil, billiard cue chalk, picture frames, french fries, chocolate, jewelry, ceramics, glass bottles, apparel, lunchboxes, and many, many other types of products...
If Prop 65 was a "big deal" I would already be hearing about it in the industry: Most defendants quietly settle their lawsuits to avoid a highly public defense, which can be a PR disaster. Dozens of small-to-midsize gift industry vendors have already settled significant Prop 65 lawsuits. Most large vendors have been named in multiple lawsuits. But almost nobody wants to discuss their lawsuits publicly.
If you sell consumer products in the United States, then Prop 65 is something you will want to be aware of. If you sell consumer products intended for children or having play value your products are covered by the new CPSIA. This GHTA White Paper provides an overview of Prop 65 and the CPSIA, describes how they are and will be affecting companies in the gift industry, and provides some additional sources of information.
Click on the above link for more information.