The European Union bioeconomy strategy seeks to unlock the potential of circular economy and to strengthen and deploy local bioeconomies rapidly. The decentralization of waste management can be a coherent supporting mechanism for achieving long-term climate goals for the future communities while overcoming some of the constraints introduced due to the centralized treatment plants. Through stakeholder analysis we identified the major supporting and hindering factors when implementing circular decentralized biowaste management models, focusing mainly on the regulatory and institutional environment. To enable local communities to operate in a circular environment, several factors need to be taken into account and sought to be changed usually through legislation. The economic viability of all actors should be safeguarded under a holistic framework and new alternative regulatory incentives are required for circular economy to support positive externalities and other benefits over linear economy.