Waste management historically focused on the protection of human health and the natural environment from the impacts of littering and dispersion of pollutants. An additional and more recent concern is the resource value of waste. Our analysis shows that the regulatory concept of waste in the European Union, which comprises environmental principles, the legal definition of waste, legal requirements, and policy implementation, is not fit for addressing this concern. The legal definition of waste overlooks the context of waste, fails to consider the interests of the waste user as opposed to the waste holder, and aims to control the impacts of careless discarding rather than stimulating careful discarding. To address these challenges, we suggest a legal requirement to recognise the potential of waste to be used, operationalised by formulating a waste use potential, which expresses how and how much waste can be used as a resource, given enabling conditions. Recognition of waste use potential highlights local opportunities for reuse and recovery, reduces the likelihood of careless discarding, and reveals the interests of possible waste users to the waste holder. The waste use potential may be employed in the formulation and evaluation of policies for industrial and municipal solid waste in a circular economy.