Starting a Home-Based Food Business Under State Cottage Food Laws

Some food businesses are easier to start than others. For example, a food business selling cookies or cakes is easier than a business selling chicken or beef tamales. That’s because, whenever you sell food with meat, you’ll have to work with some pretty complicated sanitation and safety laws. In contrast, a food business that makes cookies or cakes can fall under state laws called cottage food laws. These laws make it easy to start your food business right from your home kitchen.

So, if you’re an entrepreneurial cook or baker who’s interested in starting a home-based food business, you’ve come to the right place. We’ll first explain what cottage food laws are and how these laws work with FDA rules and regulations. Then, we’ll look at the cottage food laws of the four most populous states to get a more concrete understanding of how these laws work.

What is Cottage Food Law?

Webster’s defines cottage industry as any industry carried out from a person’s home, using home equipment, and employing family members as workers.

Cottage Food Laws are State-by-State

With such a definition, one would imagine that cottage food laws have long been in existence, as a part of farming communities and pre-industrial life.

Not so. Technically, FDA and USDA rules won’t allow any sort of food processing business from home. But, the FDA rules have some loopholes that will let each state regulate very small home-based food businesses. (USDA rules are still a blanket “no.”) So, over the years, some states have enacted cottage food laws but other have not.

According to our research, the last state to enact a cottage food law is New Jersey. Their law became effective on October 4, 2021. Now, every state has some sort of cottage food law, but with slight variations in each state.

Typical Rules Under Cottage Food Laws

Despite the variations, cottage food laws usually have these requirements:

• Your annual sales is less than $50,000.
• You make your products in your home kitchen. Some states allow a “home attachment” but that term has a very specific definition.
• The food won’t spoil easily. So, no meat or dairy products. Some states allow foods only on a specific list, but others have more of a guidance list.
• Usually, you can’t make pickled products because of botulism concerns. Some states do allow vinegar and mustards, however.
• You cannot make juices.
• Many states require a permit.
• You have to follow the state’s cottage food labeling laws. Usually, you won’t need a Nutrition Facts label. Your labels must include something like: Made in a home kitchen and not inspected by health authorities.
• You have to follow health and sanitation rules. Some states include the minimum sanitation requirements in the law itself. Other states require heath and sanitation training like those designed for restaurant operators.
• The business is retail only. Some states allow internet sales with mail order, but others require in-person delivery.
• You can only sell inside your state. No interstate commerce. If you wish to sell out of state, then you must follow FDA rules and cannot make food from home.

How Cottage Food Laws Work with FDA Rules and Regulations

As mentioned above, cottage food laws exist because of a loophole in US federal law. Specifically, under US law, all food businesses have to register with the FDA (or USDA) and let the FDA (or USDA) do onsite inspections. But the FDA says it only has to register “facilities.” FDA also says a home is not a facility, so home-based food businesses do not have to register or be inspected.

But home-based food businesses might still have to follow other FDA rules and regulations. US laws often give small businesses a break because the government wants to encourage people to start businesses. With the FDA, the small business exemption line for many rules is conveniently set at $50,000. So, below $50,000, you follow your state’s cottage food laws. Above $50,000, you follow FDA’s rules and regulations.

Be careful, though, because there are plenty of exceptions to this $50,000 rule. For example, if you want to say your food is low calories or low fat, then this counts as a “health claim” and you’ll have to follow FDA’s labeling rules instead of your state’s labeling rules. Same if you want to sell into another state—you’ll have to follow other FDA regulations. And for some states that allow home-based businesses to have sales of more than $50,000, you’ll have to check each FDA rule to see if you’re still exempt.

For more FDA small business exemptions, check out our full article on FDA food regulations.

Example Cottage Food Laws: California, Texas, Florida, New York

Even though cottage food laws have general similarities, when you drill down to the details, every state’s law is a little different. This is why, if you decide to start a home-based food business, you’ll need to check your state’s laws to make sure you can make what you wish to make.

It is, of course, impossible for an article like this to cover the cottage food law of every state. But, just to give you a flavor, below is a quick survey of the cottage food laws of the four most populous states: California, Texas, Florida, and New York.

California

To sell any type of processed food in California, you must have a license either from the Food and Drug Branch of the California Department of Public Health or another local health agency. There are no exemptions for small businesses, so every food manufacturer or processor must have a license of some sort.

Two Types of Licenses for Cottage Food Operations

However, there are licenses designed especially for small, home-based food businesses (Cottage Food Operations) under Assembly Bill 1616. You can either get a Class A license or a Class B License.

• Class A: A Class A license lets you sell food only directly to consumers. Mostly, these are in-person sales. To get a Class A license, all you have to do is finish a checklist on the honor system and follow specific sanitary requirements.
• Class B: A Class B license lets you sell food directly and indirectly to consumers and across county lines. This means you can wholesale to restaurants, supermarkets, convenience stores, and the like. To get a Class B license, a local health inspector must visit your home and make sure you comply with health requirements before they issue a license. Thereafter, you must follow health requirements on the honor system.

Qualifications for a California Cottage Food Operation

To qualify for either a Class A or Class B license, you have to have:

• $50,000 or less in gross annual sales,
• No more than one full time employee who isn’t a family member,
• Complete a food processing training course for cottage food operators,
• Follow state food labeling requirements, and
• Meet the food sanitation requirements for cottage food operators.

Here are the detailed licensing requirements.

Authorized Foods under California’s Cottage Food Law

In California, you can only sell foods that are on an approved foods list. Some examples include:

• Baked goods (no meat or dairy that can spoil)
• Candies and confections
• Dried or dehydrated foods (fruits or grains only, no meat or seafood)
• Jellies and jams
• Nuts

Here’s the complete list as of this writing.

Texas

Texas has a Cottage Food Bill, but it’s not the only law that allows for small, home-based food processing operations.

Texas Food Manufacturing Laws

Texas food manufacturing is regulated by the Texas Department of State Health Services (DSHS). If you want to operate a food business of any sort, then you must obtain a license from DSHS.

Generally, Texas law does not allow you to start a food business from inside your home. However, there are some exceptions. One exception is that if you seal your garage from your home and open a separate entrance and if you comply with other relevant laws (e.g. zoning, health and safety, FDA regulations), then you can use your garage to process food.

Another exception is the Texas Cottage Food Bill, which allows you to process food for sale only from your home kitchen.

Qualifications Under the Texas Cottage Food Bill

To qualify under the Cottage Food Bill, you:

• Can only make certain types of food like baked goods, candy, popcorn, roasted nuts, or jam or jelly. None of these can contain any meat. The food must not be sensitive to temperature control (e.g. you can’t make frozen foods).
• May make pickled foods, but it seems that the DSHS will have to approve the recipe and the PH of the food might have to be tested by approved sources. Note most cottage food laws won’t allow picked food due to botulism concerns, but the Texas Cottage Food Bill specifically allows it.
• Have annual gross income of $50,000 or less.
• Sell the food directly to consumers. Internet sales are forbidden but the law might allow you to take orders on the internet. However, you’d have to take payment when you deliver the food to the consumer at, e.g., a farmer’s market or other pickup locations.
• Take and pass a safe food handling class approved by the state.
• Follow Texas’ cottage food labeling laws. This includes adding to the label: This food is made in a home kitchen and is not inspected by the Department of State Health Services or a local health department.

Here’s the link to the Cottage Food Bill main page. Here’s an additional link to a very useful, detailed FAQ page.

The Texas Cottage Food Bill overrides local regulations (e.g., health, zoning) that might forbid a home-based food business allowed under the Cottage Food Bill.

Florida

The Florida Department of Agriculture and Consumer Services (FDACS) is responsible for regulating and enforcing food manufacturing and processing rules and regulations in Florida. If you make or process food, you’ll need a permit from the FDACS.

Qualifications under the Florida Cottage Food Law

Florida does have a cottage food law. If you qualify under this law, then you won’t need a permit and won’t be inspected by the FDACS. However, it’s safer to still check local/city requirements to see if you need a permit or must be inspected.

Florida’s cottage food operation requirements are:

• Annual gross sale of less than $250,000.
• Must make food in your home kitchen.
• Foods limited to non-temperature sensitive foods, so no meat, dairy, seafood, or similar.
• No pickling or canning.
• Retail only. You can sell over the internet and deliver the food by mail, as long as it’s inside Florida.
• Must follow Florida cottage food law labeling requirements. Label must include the statement: Made in a cottage food operation that is not subject to Florida’s food safety regulations.

Example of Permitted Foods

Foods permitted under Florida’s cottage food law include:

• Breads
• Cakes and cookies
• Candies and confections
• Raw honey
• Jellies and jams
• Nuts
• Popcorn

You can find the complete list as well as many helpful Questions/Answers in the Cottage Food Guidance document. The document also includes food labeling requirements and clarifies where you can and cannot sell your product.

New York

In New York state, the Department of Agriculture and Markets is responsible for regulating food processing businesses. Every food processing business needs to have an Article 20-C license, unless specifically exempt for this requirement.

New York Food Manufacturing Laws

New York has two types of home manufacturing laws. The first type, like other states, is a cottage food law they call the Home Processor Exemption. The second type relates to a home annex (e.g. attached garage).

Under the Home Processor Exemption, you may process from a very specific list of foods from your home and be exempt from an Article 20-C license. This is basically New York’s cottage food law, and we’ll discuss this law in more detail in the section below.

If you wish for a larger operation, you can build a home annex to process certain foods. The home annex requires an Article 20-C license. You’ll also be inspected by local and state inspectors and will have to follow other sanitation rules. The home annex can make pickled products but still can’t process meat products.

Here is a PDF presentation that gives detailed information for home processors and small businesses of what they can and cannot do under New York law. The presentation also includes processing facility sanitation requirements.

Don’t forget to check your city/county laws and regulations too. For example, if you live in New York City, you might have to get Food Processing Establishment License too. The easiest way to find the correct answer is to call your local health department and ask for help.

New York Cottage Food Law

New York’s home processing laws are more restrictive than other states in some areas but also more relaxed in other areas. Under the New York Home Processor Exemption:

• You must register with the Department of Agriculture and Markets
• You must follow the cottage food law’s labeling requirements (including having a statement that food is made in a home kitchen)
• Can retail and wholesale
• Can sell over the internet and deliver by mail but only within New York state
• Must make food in your home kitchen and use non-commercial equipment
• Must sell only food on the approved list, which include:
  • Breads
  • Cookies
  • Jellies and jams
  • Cupcakes
  • Confections (but no chocolate that you have to melt)

Here is the general information page for home processing. The page includes a list of approved and not approved foods, labeling requirements, and other useful information.

Unlike other states, New York does not have a revenue limit for home processors. But, since only non-commercial equipment can be used, for all practical purposes, there is a maximum production limit depending on the type of food.

Cottage Food Laws Can Help a Small Home-Based Food Business Get Started, but Only for Certain Types of Food

Cottage food laws seem like a great idea—start a food business in your home kitchen so you can minimize costs and risk until you know your product is marketable. However, these laws can be restrictive because only a limited type of foods fall under a typical cottage food law.

If you have a great recipe that includes meat, poultry, seafood, pickling, or juicing, cottage food laws won’t be able to help you start your home-based food business. But, we don’t think you should give up. You might be able to rent an affordable space and start a small FDA, USDA, or even state inspected facility. Or maybe even just open a restaurant to try out your food.

In the US, there are a lot of exceptions and exemptions in food processing laws especially designed for small businesses. You just have to look for them. We have an article focused on FDA exemptions and another on USDA exemptions to help get you started. Or, if reading isn’t your thing, just ask your state agency, the FDA, the USDA, or even the Small Business Administration (SBA). They’ll point you on the right path. So, dig a little deeper and see what you can find.

Interested in starting and running a small business? Here’s the beginning of our step-by-step guide: What to do right after getting that great business idea.

DISCLAIMER: This article does not constitute legal or accounting advice. Instead, it contains general information. The information gives you the background you’ll need to hit the ground running when you do go get advice from a lawyer or accountant. Only lawyers and accountants properly licensed in your state/country are qualified to give you legal or accounting advice.