In a joint statement, manufacturers and retailers said 'political uncertainty' had disrupted the plans.
"Given this ongoing political uncertainty we don't have the confidence required to provide further voluntary funding for the company," they said.
Staff were sent home from CSL earlier this week and the board is unable to confirm if they will be paid for the month or if they will be able to return to the office.The situation is believed to affect about 50 workers. The board said bosses were "working tirelessly" to find a solution and said it recognised it was an "extremely difficult time" for staff.
The DRS was designed to improve recycling rates for certain bottles and cans by providing a financial incentive to recycle and pick up litter.A 20p deposit would be added to cost of items sold in Scotland and then the customer would get that money back when they took the empty container to a return point, either over-the-counter at a shop or using an automated reverse vending machine.
Scottish Conservative MSP Maurice Golden said of the latest development: "This statement raises enormous question marks over the future viability of Circularity Scotland, and will cause deep alarm to its employees.
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