So you have a food business in mind, a great idea, something that you know is in demand and that matches your skills and interests. What next? How can you turn this idea into a reality? Can you run the business from home? Will you need to rent a kitchen?
Before you stock up on ingredients, you’ll want to do some research into your state and local food-safety laws. In the United States, these are usually called cottage food laws, and states have put them into place to allow you to produce certain food items from a home kitchen, so that you can sell directly to your customers.
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Why do we have cottage food laws?
Over the past decade, most states have created some sort of cottage food law or small-business food regulations that allow you to produce low-risk foods without a commercial license.
Before you think of these laws as restrictions, think of them as an opportunity. In some states, there was no protected right to make and sell home-made food until recently. You might have tried selling food from home, sure, but depending on local enforcement, there were conflicting ideas on what was allowed, and you were at the mercy of your local official’s interpretation of regulations.
You were often expected to behave like a restaurant or large food manufacturer, with the same commercial kitchen requirements. This was just not feasible for most folks wanting to produce and sell food on a smaller scale.
Cottage food laws now provide guidelines for smaller food-based businesses, whether you want to sell a few homemade items to your local community, or you want everyone in your state to recognize your name on your family's famous steak seasoning.
There are WIDE variations in these regulations, depending on the state you’re in, but they provide an opportunity for food entrepreneurs to start a business without taking on the cost of a commercial kitchen or full-fledged restaurant.
Why do cottage food laws vary by state?
Since each state is different, their laws have some basic similarities, but they are often created after a push from citizens with an interest in selling their particular food products. In some states, this meant going from a total ban on home-produced food sales, to creating rules for a whole new category of food business. These new regulations are still being shaped by the needs of cottage food producers in those states, and how they fit with consumer safety laws.
This means that some business models will still be a no-go in your state without a commercial kitchen, but you may have other ideas that are a perfect fit, and will fill a gap in the local market.
Where can I find my state’s cottage food law?
You can start by checking your state’s website, usually “your state”.gov – example: michigan.gov, and looking for information on starting a food business.
Try using the site's search function to look for “cottage food” or home processor” – this is often under the state’s department of agriculture, since many folks involved in food production also grow or raise their own ingredients. It could also be under the State Health Department.
Also follow links to local health officials and business resources for your county or city: You’ll want these as well, since:
A. they will probably be responsible for any required inspections or certifications, and
B. You will need to comply with local zoning, business, and health department laws.
Honestly, state sites can be tricky to navigate. They will sometimes lead you deep into pages on business registration and LLC setups, before you can find basic information on becoming a food processor. If you aren't having any luck on your state's main page, you could try a google search for “cottage food law” + “your state”.
We’re working on an index of state resources, to help make it a bit easier to go directly your state’s guidance on starting a cottage food business.
In the meantime, here are some online tools to help you get started. Keep in mind that they may not be completely up-to-date – use them as a starting point, and verify facts with your state:
*The chart below this map at farmtoconsumer.org will give you an overview of cottage food law in your state.
*This clickable map at forrager.com will take you to an overview of your state's cottage food law. Their cottage food community also includes a discussion forum for each state.
*And by clicking through the state index at pickyourown.org, you can learn about how to sell your homemade and canned goods where you live.
What if my state doesn’t have cottage food laws?
A few states (including ours) have no specific cottage food law, but they may still provide resources for you to start a food business. Our state is supportive of home food businesses that produce low-risk foods. We provide a business plan to the state’s Department of Agriculture and Consumer Services, listing the products we will make, our production flow, details about ingredients, equipment, and suppliers, along with an application to have our kitchen inspected. Once approved, there aren’t many restrictions about selling, as long as we follow the labeling rules, and keep our sales inside the state lines.
Other states have strict regulations on every aspect of the business, including placing a cap on the sales revenue you can have in a year – if you make more than that amount, you are considered a commercial operation.
If your state is one that places more restrictions on food businesses, it may be more complicated or more expensive to start the business you had in mind, but don't let that discourage you from finding a way to create a business that you love. It could take considering a completely different business model, but with some creative thinking, you might find something that satisfies both you and the state.
How do I comply with the food laws?
Your state’s website should have instructions or a guide to help you get started. They may even provide a checklist of steps to follow.
Some points to look for:
- You may need to set up and register a legal business – this will involve state and local laws about registration and licensing.
- Your kitchen or production space may need to pass an inspection. In some states this is repeated annually.
- You may be restricted to only selling directly to the consumer, and not to stores or restaurants.
- You may need to collect sales tax on food items in your state, county, or city (and that tax rate might vary, based on the type of food and how it’s sold).
You’ll want to look for and save any important information, including contact information for your state officials, and any specific website addresses (because state sites can be like a maze, sometimes it’s hard to find your way back to that one piece of information you needed). Add all of this to a notebook you keep for business research.
Also get contact information for any local authorities, like the health department. Even if you don’t need it now, it could come in handy at a critical point down the road.
Spend some time reading and researching the rules. Try to get a good overview of the food regulations in your state, county, and city. There should be a list of foods that are allowed or not allowed to be produced in a home kitchen, or in an approved kitchen. And you may find even find a separate set of rules for farmers or other processors who grow some of their own ingredients.
All of this will tell you what kind of food business is allowed in your state, and what requirements you would have to meet to operate that business in your state.
Is all of this research really necessary?
Cottage food law can affect almost every aspect of your business, from your production space, to the types of food you can produce, to where and how much you are allowed to sell.
Learning as much as you can about your state’s law, ahead of time, will help ensure that you are better set up for success, by helping you to avoid surprise setbacks when you run into a regulation or restriction you didn't expect.