How Cottage Food Law Affects Your Home-Based Food Business

Most states in the US now have some sort of guidelines in place for food businesses being run from a home kitchen. These rules are often referred to as cottage food laws, and they will serve as your reference point for any food-related business that you want to start from a home kitchen.

It’s important to research and become familiar with the cottage food law and any other food-business regulations in your state, because they will affect several aspects of your business, from whether your products or process is allowed at all, to how and where you can make, sell, or deliver those products. There may even be a limit on the amount of money you can make from selling food products as a small business.

Let’s start where you’ll be operating your business.

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Production space

In this case, we’re probably talking about a kitchen. Your state may consider you a “home processor”, and allow food production in your home kitchen, or they may require you to have a separate kitchen, or to use a community kitchen that has been inspected and approved for business use. Or, if your product is not on the approved cottage foods list for home production, you may be required to operate your business from a commercial kitchen.

There may be rules regarding:

–Cleaning and sanitizing the surfaces in your kitchen (smooth surfaces and stainless-steel equipment are sometimes a requirement)
–Food safety and storage – you may need to take a food-safety course or renew a food-handler’s certificate.
-Having a separate sink for handwashing, or having a bathroom sink nearby.

There are often requirements about the types of surfaces in your home kitchen, and how they will be cleaned. In North Carolina, we are required to have smooth surfaces that are easily cleaned and sanitized, with no knick-knacks sitting around gathering dust, and no exposed light bulbs.

Foods that are allowed

Ingredients

Food type: Foods that are typically allowed under cottage food laws will be those considered low-risk, or “non-potentially hazardous”. They will be shelf-stable products, not requiring refrigeration. Some states allow certain canned goods, while others have restrictions on these or require lab-testing of certain types of products.

Baked goods, candy, jams and jellies, agricultural products, and herbs are commonly on the approved list.

There are typically bigger restrictions on producing meat or dairy products for sale, although these may be fine when used as ingredients in finished products.

There can also be grey areas, for products that require lab testing or evaluation from the state:  things like low-acid or acidified foods, or sauces that need to be checked to make sure they are shelf-stable.

Approval of finished products may also depend on your production methods.

Processing method

Baked goods that do not require refrigeration are usually on the approved list.

Your state may allow the sale of fermented products.

Dehydrated foods may be allowed, but home processors may not be allowed to produce beef or venison jerky.

Freeze-drying may be considered a form of dehydrating, but many states don’t have set rules for this, so it will often come down to the type of food you are processing, or the state’s familiarity with freeze-drying – you may want to include more information on the freeze-drying process or the water content of your finished products, when applying to start a freeze-dried food business in your state.

Freezing – selling frozen foods may not be allowed under cottage food law. If you’re selling farm products such as meat or poultry, or even seafood, there will be specific laws or regulations that apply in your state, usually under the Department of Agriculture. If you are selling processed foods, such as ice cream, you might need to operate from a commercial facility.

Storage and refrigeration (of ingredients and product)

For food-safety reasons, you should have some sort of refrigeration temperature monitor, and you may be required to have a separate compartment or entire refrigerator or freezer dedicated to storing perishable ingredients for your food business.

Finished products that require refrigeration may not be allowed under your state’s cottage law – find out if there are exceptions for desserts made to order, or foods made right before they are to be served and eaten.

Packaging

If your food products will be sold for later consumption rather than served directly, you will need to have appropriate packaging. In a retail setting, you might need to have air-tight, heat-sealed packaging. Requirements may depend on where and how the food will be sold.

For your business’s sake, you’ll also want packaging that protects the food from damage in the case of handling, transporting, or display, including exposure to heat, humidity, and sunlight.

Labeling

Labeling requirement can vary based on how you are selling the product (serving portions vs selling a package). General requirements for package labels will include:

• the product name
• an ingredients list, in descending order by weight
• the net weight of the product before packaging
• an allergen statement
• the production location (usually your physical street address is required, but you may be able to use an alternative like a business registration number, your website address, or a business PO Box)

Some states may also require:

•  a nutrition information label
• a statement about being produced in a home kitchen without requirement for state inspection.
• the date of production, or a “best by” date

We use two labels on our food products – one displays the name and weight of the item, along with our brand and logo. The other (usually on the back of the package) lists the ingredients and our contact information.

Selling products in your state

The biggest questions here will be: where and how can you sell? Your state’s cottage food laws will determine this, depending on the situation:

Retail sales, either through consignment or rented space in a business or shop, or through your own storefront, may be possible as a home processor. If your state allows cottage food products in a retail setting, you can approach a variety of businesses, from salons and boutiques to grocery stores.

Wholesale Selling to other businesses as a wholesaler may be allowed for cottage food producers. This can help your business expand quickly. Even larger chain stores may have a policy that encourages them to promote local food businesses, and this would be great exposure for your products.
If acting as a wholesaler is not allowed, this will also affect whether you can provide products to a buyer who wants to apply their own brand label when selling your products.

Online sales – More and more customers are shopping online, and hopefully your state has adapted its rules to allow online sales, but this will still apply to in-state customers only.

And it’s worth finding out whether you can ship your products to those in-state online customers. If your state allows you to sell online, but then requires that you hand over the product in person, you might need to limit your sales to a local market.

Don’t let the phrase “direct-to-consumer only” discourage you: this can also refer to selling directly to your customers by online, mail-order, or through your own rented vendor space, vs selling to another business.

Find out, in writing, what your state rules are on this. If the state website doesn’t offer a clear definition, write to the state agency that governs cottage food businesses. Asking other sellers in your community can be helpful, but you’ll want to document the official rule on this, preferably at the state level.

In-person only sales – If your state does restrict cottage food businesses to only make in-person sales, this will affect your business model. You will be able to deliver custom orders, set up at vendor events, and possibly sell at farmers markets. You might also travel to vendor events across your state.

Again, make sure you’ve got the official word. Other sellers and even local officials can interpret “direct-to-consumer” as in-person only.

Speaking of in-person sales, there may be additional rules that apply:

Farm or local product sales – Can you sell at a farmers market? A roadside stand? If you are using locally grown ingredients for what you create, then probably so, within allowed food lists. Again, this varies by state, but there may be benefits to growing or raising ingredients used in your products.

One of the common cottage food rules will be that you must contain your sales within your state. (Interstate sales would fall under federal law.) This means no shipping to an Etsy customer across the country. In fact, you may not be able to ship anywhere at all, including within your own state – this leads us back to in-person-sales-only states.

Amount of sales

Your state may place a cap on the amount of money you can make from sales of your product under cottage food law. Going above that amount can mean that you are required to become a commercial operation.

Growth is a good thing, obviously, but being aware of these limits will help you plan for when you might need to adapt your business model, and be prepared to expand into a commercial facility.

Does your state impose a cap on profits for cottage food businesses? You can check this chart at Farm to Consumer Legal Defense Fund (scroll down below the map) for notes on each state’s cottage food law, including any sales limits the state might have – but please remember that this information can change at any time; the site might not be updated to include those changes.

Tired, yet? Or ready to get started?

There are a lot of things to consider before diving into starting a cottage food business. Take plenty of notes, but don’t let the details stop you from moving toward your goals – think of them as valuable information that will help you create an even stronger plan for your business.

By doing this research up front, you’ll have a better grasp of what it will take for your business to succeed. You're gathering the tools you need, and your mindset going forward will have everything to do with your success.