The circular economy is a current European and global phenomenon, which, especially after the adoption of EU circulation packages and Act No. 541/2020 Coll. on waste is gaining increasing attention, especially in relation to municipal waste, for which it sets specific and ambitious long-term goals that are legally binding. Especially for municipalities, achieving these goals will be very difficult, as their current practice in the field of circular economy is very limited, both in terms of volume and structure of municipal waste. Based on the analysis of four selected cities of the South Moravian Region, the paper evaluates their potential in relation to the circular economy, including economic aspects for 2019, and shows that in relation to the current objectives of Act No. 541/2020 Coll. on waste, meeting these targets will be very difficult and will have an impact on the economy of municipalities.