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Cottage Food Law Archive

Cottage Food Laws: Media versus Statutes

December 6, 2012

While researching for last week’s post about Cottage Food laws, I stumbled upon a few noteworthy discrepancies between what I was reading in the news about cottage food laws and what I found in the text of state laws. If you plan on legally making money from a home-based food business, it is unwise to place blind trust in the news when you have black letter law to refer to.

During my research I came across an article in FoodProcessing.com which claimed that as a result of the new cottage food law in Colorado, “residences where retail homemade food is produced must be covered by home bakery liability insurance.

The Colorado Cottage Foods Act, however, makes no such requirement. As signed into law, the Act states that producers are merely “encouraged to maintain home bakery liability insurance or other adequate liability insurance.” C. R. S. A. § 25-4-1614 (West 2012). The discrepancy between the law and the reporting is obviously a very big (and expensive) difference.

I gather that the FoodProcessing.com article refers to the Colorado senate version of the bill:

“A person who sells foods pursuant to this act must maintain home bakery liability insurance or other adequate liability insurance.” (Senate Bill 12-048)

This wasn’t the only discrepancy I encountered. Consider the following, and notice the peculiar dates:

Nov. 15, 2012:  “[In addition to California, there are] 25 other states where cottage-food operations are legal.” Raheem F. Hosseini, Homemade foods now legal in Sacramento County, NewsReview.com.

September, 2012:  “29 states have Cottage Food Laws.” Facts, Texas Cottage Food Law,  (last visited Nov. 30, 2012).

August 3, 2012: “Since the recession, 32 states have a cottage food law.” Bill Aims to Give Cottage Food Makers a Break, The California Report.

Obviously, something is screwy here – the numbers actually descend over time… and no, none of these laws have been repealed. Don’t build a business plan around internet advice. The truth is always in the statutes.

–by Gabriella Agostinelli

Cottage Food Laws and Liability: Protecting Your Home and Other Assets

November 28, 2012

Gabriella Agostinelli is back, this time to dispense some much-needed advice for cottage food entrepreneurs; make us something delicious, but cover your assets. Cottage food production is not as simple as getting a permit and turning the oven on.

Small-scale food entrepreneurs have recently celebrated the passing of long-awaited “cottage food laws” in several U.S. states. Formerly, foodies with a recipe and dream were required to either process their goods in a commercial kitchen at high cost, or establish a normal bricks-and-mortar enterprise of their own. Today, cottage food laws allow home cooks/bakers to process “non-potentially hazardous” food products in their own kitchens, to be later sold directly to the public. Cottage foods typically include nonperishable shelf items (think: baked goods, preserves, nut mixes, etc.).

Aspiring “cottage” food processors need only complete a few steps to receive a government stamp of approval. Depending on one’s state of residence, interested parties may only need to participate in a food safety course, attain a local zoning permit, comply with labeling requirements, and agree to have their kitchen inspected in the case of a complaint.

Considering the incredibly low entrance costs associated with this business model, it is obvious why cottage laws are attractive. In these tough economic times, it seems a lot safer for budding food entrepreneurs to test the waters by selling goods processed from home rather than to open shop elsewhere at great expense and even greater risk of failure.

A bit of skepticism, however, is a healthy thing to consider for anyone making food under cottage food laws. Food product liability is as much of a concern for the cottage food entrepreneur as it is for giant producers like General Mills of Tyson Chicken. In an article for the Orlando Weekly, Bob Jones, an owner of a commercial kitchen well-versed in food-safety standards, Voices a typical critique. He equates running a cottage business with playing a game of “Russian Roulette,” warning, “eventually, you’re going to lose.” These risks are largely generated by a lack a “controlled environment” in home kitchens, unlike in his business, which must employ stringent food-safety standards and is subjected to great state oversight (certification/licensure, inspections, etc.).

Mr. Jones makes some very good points. Simply because a law allows you to do business in a certain way does not mean it will exempt you from responsibility if things go awry. Business Law 101: if you run a sole proprietorship, you are the business. If the business’ food made a person sick, you must pay for hospital bills. Because standard homeowners’/renters’ insurance policies usually do not cover home business operations, I highly recommend purchasing liability insurance to protect your personal assets. (Colorado is the only state whose law mentions liability insurance, but merely encourages cottage food businesses to purchase it – C.R.S.A. § 25-4-1614). If you are thinking about starting a cottage food operation, consider establishing an LLC or another business entity to minimize your liability. It is also imperative to buy some liability insurance before you sell your product, and factor the cost of the insurance into your business plan. After all, we want those foodie dreams to live on.

–By Gabriella Agostinelli

When Bad Drafting Happens to Good People: The Texas Cottage Food Law

March 20, 2012

In the past, I have voiced cautious optimism for “cottage food” laws. For one thing, most of these laws are so narrowly tailored they negate the economic advantages of in-home processing altogether. Lauren Medoff, friend, food lawyer, now a proud resident of Texas, elucidates that point in this awesome post on her state’s regulatory implementation of its cottage food law. Thesis alert! State regulators are narrowly construing the law with even stricter regulations:

Less than a year ago, a group of home cooks lobbied the Texas State Legislature to pass a law with the goal of removing homemade goods from the black market. Those cooks rejoiced when the State Senate passed SB. No. 81, also known as, the Texas Cottage Food Law. Unfortunately, the law was written too broadly and gave unlimited power to state regulators to write its implementing rules. Now, small businesses are dealing with the ill-effects of poor drafting and can only hope a lighter version of the rules appears before they are finalized indefinitely.

The intent of the Texas Cottage Food Law was to lift burdensome regulations requiring home cooks to go to through overly expensive lengths i.e. obtaining a license, just to sell homemade foods to consumers. Unfortunately, the proposed rules set to implement the law are not only difficult to comply with, but also impose unreasonable regulations that big players in the food industry do not face. Thus, the rules act as sort of an unfair trade-off: we’ll allow you to sell your goods without license or inspection, but we’re going to make it exceptionally hard for you to make a profit.

A few highlights of Texas Administrative Code Rule 229.661 include: a limit of $50,000 on annual gross income, the requirement that sales must not occur over the internet, restricting the potential success of the business, and strict labeling requirements such as a list of ingredients in descending order of predominance by net weight, including a declaration of artificial color or flavor and chemical preservatives, an accurate declaration of the net quantity of contents including metric measurements and allergen labeling that complies with FDA regulations, a statement that the food was not inspected, suggesting a lack of fitness for consumption, and the usage of permanent ink, ruling out many home printers. The regulations are so riddled with technicalities that many home business owners might also incur legal fees just to ensure compliance and avoid harsh fines or future inspection by the governement.

These rules clearly undermine the intent of the Texas legislature and will be hard for home cooks like Michele Rippey, owner of The Sugared Whisk Bakery in Rockwall, Texas, to comply with. In addition, conventional bakeries do not have to comply with the expensive labeling requirements. When asked about her feelings on the proposed rules, Michele said, “I cannot afford to pay rent on a storefront at this time and to have only had the option of starting a bigger business would’ve impacted me enough to not start the business at all. Getting these types of labels made is very expensive. It is just not fair to impose the same regulations on my in-home business as large scale businesses or require a label stating that my goods were not inspected by DSHS, as if it’s not fit for eating. It’s far too often that we see the products that are inspected by the government causing major outbreaks of food-born illness.”

Even a co-sponsor of the bill, Eddie Rodriguez, is speaking out against the harsh rules stating on his website:

“It is clear to me that these proposed rules subvert the intent of the legislation we worked so hard to pass. We were pretty clear in trying to make it easier for small business to thrive and some of these rules proposed by the state will do just the opposite. I have spoken with the Department of State Health Services and let them know I take issue with their rules and will keep an eye on the process moving forward.”

It is important that you protect your business and be in compliance with the provisions of the Texas Cotttage Food Law. Read and understand Rule 229.661 and contact your local attorney if you still have questions. Also, be aware that being in compliance with this law does not protect your business from consumer lawsuits. Food safety is governed by strict liability and is always a risk in any food sale business.

Although the comment period ended on Feb. 26, it couldn’t hurt to still write a letter voicing your concerns! Interested parties wishing to comment on these proposed rules should write to: Cheryl Wilson, Food Establishments Group, Policy, Standards and Quality Assurance Unit, Division of Regulatory Services, Environmental and Consumer Safety Section, Department of State Health Services, Mail Code 1987, P. O. Box 149347, Austin, Texas 78714-9347, (512) 834-6770, extension 2053, or by email to cheryl.wilson@dshs.state.tx.us.

(We’d like to thank Michele Rippey for her time and her insight. If you would like to chat with her about her delicious, professionally baked nom-noms, you can reach her by email at Mrippey@vt.edu)