Starting A Cottage Food Business – Limitations
Cottage food laws usually limit cottage food operations (CFOs) in a number of ways, the most notable of which are sales limits. This post overviews some of the other limitations that home food businesses should be aware of.
Direct Sales
Only about 15 states allow reselling (indirect sales) of homemade food products. The rest of the states only allow direct, in-person sales.
Some states consider online sales to be direct sales, but others do not. For those states that do, CFOs still probably have to deliver the product in-person. A few states allow shipping of products within their state (like Ohio).
Because of the direct sales limitation, most CFOs cannot legally sell their food products on popular digital marketplaces like Etsy.
Primary residence
Most cottage food laws require the business owner to use the kitchen in their “primary residence”, meaning that any other kitchen cannot be used (including a commercial kitchen). The kitchen in an extra home (like a vacation home) also cannot be used.
Domestic activity
Some laws specify that a CFO cannot perform other household activities in their kitchen while they are making products. For instance, if someone has a cake in the oven, they cannot also do other tasks in the kitchen, like making lunch for the family or ironing laundry.
Interstate
Almost all states do not allow sales across state lines. This is because each state has their own food code which specifies how food can be sold, and their cottage food law only creates an allowance for homemade food from their own citizens.
In order for interstate sales to be allowed, both states must be agreeable: for instance, Pennsylvania allows interstate sales, but Illinois doesn’t allow sales of homemade food from nonresidents, so Pennsylvania CFOs can’t sell in Illinois.
In most cases, the only way to sell interstate (including online sales) is to go commercial.
Intercounty
Occasionally, a state also places restrictions on intercounty sales. For instance, California does not allow indirect sales (at restaurants and stores) outside of the CFO’s own county, unless both counties come to an agreement to allow them.
Employees
Some states limit the number of employees that can help a cottage food operator. When there is a limitation like this, usually the CFO is required to be a one-person operation (like Minnesota), though some states still allow household members to help out (like Massachusetts). California is unique, since it specifically allows only one non-household employee.
Children
Sometimes a cottage food law will specify that small children cannot be present in the kitchen while cottage food products are being prepared.
Pets
Many states do not allow pets in the kitchen while a CFO is making their products.
Furthermore, some states do not ever allow pets in the home of a cottage food operation. Although there are currently six laws that have a “no pets” policy, none of them are standard cottage food laws. For instance, Vermont allows almost any type of homemade food to be sold, and North Carolina doesn’t technically even have a cottage food law (although they’ve decided to allow homemade food sales anyway). The other laws with this restriction are “extra” laws that provide more allowances, like the domestic kitchen laws in Oregon and Tennessee.
Regardless of a state’s legal allowances, it’s always a good idea to keep pets out of the kitchen while preparing products for sale. For those who have pets, it’s important to sanitize all equipment and working surfaces before using them, which especially benefits any customers who have pet allergies.
Sampling
Occasionally, a state is not allowed to offer samples of homemade food at markets and other venues. For instance, Alabama doesn’t allow homemade food samples at certified farmers markets.
Most states allow sampling, but they may place restrictions on how products can be sampled. For instance, Florida requires all samples to be individually pre-packaged in the CFO’s kitchen.
Commercial equipment
Some states do not allow CFOs to use large, commercial equipment in their home kitchen. Usually this restriction is in place because most home kitchens don’t have large, three compartment sinks to adequately wash, rinse, and sanitize things like a 20-quart bowl for a commercial stand mixer.
However, some states use equipment limitations to ensure that a CFO stays small and doesn’t use a home environment to run a large, commercial food business. For instance, Ohio only allows CFOs to have one oven or double oven.
LLC
Occasionally, a state will not allow a CFO to operate as an LLC or any other type of corporation. For instance, Minnesota requires all of its CFOs to be sole-proprietors. Sometimes CFOs choose to incorporate as LLCs for the potential protection they can offer.
Farmers
A few states have laws that are only available to farmers. These laws are usually intended to give farmers a way to make “value-added products” from their produce, such as apple pies, fruit jams, etc.
Sometimes, these “farmer-only” laws are also available to those who grow the primary ingredient of their product. For instance, someone who grows strawberries in their backyard could sell homemade strawberry jam in Kentucky.
Home consumption
Wyoming introduced the first statewide food freedom law in 2015, which allows almost any homemade food product to be sold without restriction or regulation. There is just one caveat: the food must be consumed in a home. This allows sales between neighbors to be fully deregulated, without deregulating food establishments like restaurants and stores. Wyoming is currently the only state with this limitation.
