Hi there,

In conjunction with their new report called Baking Bad, the Institute for Justice has published their own cottage food law map.

Along with Forrager's map, it becomes the second regularly-updated cottage food law map that exists today (that I know of).

And if you check both of them out (here & here), you'll notice that the maps are significantly different.

Both maps use essentially the same data to rank the states, so how can they be different?

In short, it's because my priorities are not the same as those of the Institute for Justice.

Honestly, their map helped me understand just how much my own preferences influence Forrager's map.

Neither map is better than the other. They're just different. Let's dig in and look at some of the differences:


What's The Main Difference?

Here's my best summary for each map in one line:

• Institute for Justice map: Which states make it easy to sell a wide variety of homemade food products?
• Forrager map: Which states provide the most opportunities for selling homemade food products?

Those seem mostly the same, but actually lead to big differences in our ranking algorithms.

To put it another way, the Institute for Justice is more focused on the legal side of things. They reward food freedom states, and punish states to the degree that their governments regulate the sale of homemade food.

Whereas I'd say I'm more focused on the business side of things. As much as I hate them, I'm okay with some regulatory burdens (e.g. permit, training, inspections) IF they allow me to do more with my home business. And that perspective of mine is reflected in Forrager's map.


A State-by-State Comparison

Perhaps the best way to illustrate the difference is by looking at two states that are literally side-by-side: California & Nevada.

Their cottage food laws are quite different.

On Forrager's map, California is ranked "Great" (score: 91) while Nevada is ranked "Poor" (score: 48).

But on the Institute for Justice map, CA & NV have the exact same rank (score: 45).

How is that possible? Let's see...

Unlike Nevada, California allows you to:

• Sell products indirectly through stores
• Ship products in-state
• Earn more income (much higher sales limit)
• Sell more types of food products

BUT unlike Nevada, California requires you to:

• Take a 2-hour online food safety training course ($8)
• Get a kitchen inspection only IF you want to sell indirectly through stores
• Some counties require that you submit sample labels for each of your products when you apply

So in effect, IJ's ranking algorithm is basically saying that those 3 regulatory burdens entirely offset the 4 benefits of CA's law, rendering CA & NV equals.

But I disagree. As a producer, I'd take California's law any day over Nevada's. And that's not just because I live there. :)


The Problem with IJ's Map

I'd say the main thing that I disagree with regarding IJ's ranking algorithm is a lack of focus on wholesaling opportunities.

In their algorithm, if a state allows indirect sales, it only bumps their grade up by 6% overall. And that drops to only 3% if the state doesn't allow indirect sales to restaurants (which cottage food businesses usually don't sell to).

Here's why I don't like it. For most types of packaged (non-custom) cottage food products, wholesaling is the #1 best stepping stone for cottage food entrepreneurs to take their business to the next level.

And if you've listened to my podcast, you know that many of my super successful podcast guests have leveraged indirect sales to start scaling their businesses.

Despite indirect sales only accounting for 6% of a state's grade, IJ's algorithm dings states 9% if they require a kitchen inspection, 6% if they require a permit, and 3% if they require food safety training. That punishes a law by 18% if it requires all three.

But even though getting a (usually simple) kitchen inspection, permit, & food safety course is no fun, you know what is a whole lot less fun? Getting a complex permit, taking a food safety course, and finding and paying for a commercial kitchen, which is what I'd have to do if my state didn't allow indirect sales.


What's Wrong With Forrager's Map

I'd say that the main thing wrong with Forrager's map is exactly what IJ's map does extremely well: highlighting regulatory burdens.

While Forrager's map may do decent job at showing you what is possible with a cottage food business in each state, it does a poor job at showing you how difficult each state makes it to use their law.

This has actually bothered me for awhile with the map, and last fall's algorithm update started punishing states that have the most onerous burdens.

But what if a state has a super complex application process for a permit, rather than a simple one?
What if one state requires a food manager course ($100 - 8 hours), rather than a basic food handler training course ($8 - 2 hours)?
What if a state allows local governments to prohibit cottage food businesses, rather than explicitly preventing that behavior?

Currently, Forrager's map can't rank states based on these burdens. But it's coming next year, and I've already started the process of re-organizing stuff behind-the-scenes to make this work.


Which Map Should You Use?

I really love the Institute for Justice's new map because I think it serves as a direct complement to Forrager's map.

First off, if you want to sell perishable foods, use IJ's map. They put MUCH more emphasis on perishable products than I do.

But beyond that, I'd recommend that people use both maps, like so:

• If a state ranks well on both maps (like Wyoming), you can be sure it's a pretty darn good cottage food law
• If a state ranks poorly on both maps (like Delaware), you can be sure its cottage food law leaves a lot to be desired
• If a state ranks differently on both maps, that's when you need to dig deeper to see its pros and cons

Well, that's my take on the new map. What about you? Do you agree, or agree to disagree? :)


Until next week,
David