Circular economy systems are often designed with a focus on material flows and technological substitution, but their ecological performance is also shaped by geography. As a circular economy expands geographically, it encounters rising institutional diversity, logistical constraints, and behavioral divergence. This paper introduces a framework, based on lessons from the plastics industry, that models how spatial frictions—defined across regulatory, logistical, behavioral, economic, and coordination dimensions—accumulate with scale and undermine system performance. Costs escalate, and reliability deteriorates as circular systems become more spatially dispersed. These dynamics can result in delayed material recovery, inconsistent quality, and increased ecological inefficiency, even when technical feasibility exists. By placing geography at the center of analysis, the paper highlights the need for institutional harmonization, coordination buffers, and spatially adaptive system architectures to sustain circular transitions at scale.