Dear Modern Farmer: Is it Legal to Start a Food Business in my Home?

Dear Berry,

In some ways, you are asking two separate questions. I say this because when it comes to cottage or value-added foods that are intended for sale, like jellies and baked goods, the relevant laws and regulations often distinguish what can lawfully be made or processed at home and whether it can actually be sold from the premises. Moreover, like so many of these types of questions, there are often state and local laws at play and you need to check both.

First, let’s define what I mean by cottage foods. For purposes of your question, and therefore my response, I mean those foods that are considered low-risk or non-potentially hazardous and which are made or produced in a residential or home kitchen. The precise list of foods varies from state to state, but generally speaking usually includes most jams/jellies; mustard; vinegar; shelf stable, non-dairy/meatless baked goods likes pies, muffins, cookies, and cakes; dried herbal teas or herb blends; and pickled vegetables/fruits of a certain pH. Some states expressly list the specific foods that are covered by these laws, while others use general terms or categories or merely provide a list of prohibited foods instead. Often the prohibited foods are considered “high risk” and cannot be processed in a residential kitchen, but they might be eligible for sale if made in a properly licensed commercial kitchen and assuming other conditions are met.

Cottage foods are considered low-risk or non-potentially hazardous, and are made or produced in a residential or home kitchen.

Let’s also talk about the sources of law, which I alluded to a bit above. First, in a majority of states there are relevant state laws and regulations. Right now, approximately 30 states expressly regulate home-processed or cottage foods. Mississippi is but one state that has a cottage foods law (but also acknowledges in its FAQ handout that local laws may also apply). My guess is that the list of state cottage food statutes will likely continue to grow and evolve as the local food movement marches onward, so you should continue to check especially if cottage foods are not currently regulated (or are poorly regulated) in your state.

Perhaps one of the more intriguing of these statutes is the California state cottage food law. It expressly prohibits any city or county from prohibiting a cottage food operation in a residence, though it does allow for local regulation that is reasonable (i.e. requiring a permit that is largely ministerial in nature, adherence to reasonable standards for traffic and noise, etc.). For example, here is how such permitting is handled in Santa Clara and San Dimas. California also uses a two-tier system, with certain operations being limited only to direct-to-consumer sales and others having the benefit of also using indirect sales (i.e., to third party retailers).

The state laws are typically enforced by entities like the department of agriculture or department of public health, and usually cover things like licensing, permitting, labeling, and/or inspection requirements, and any exemptions thereto (i.e., some home-based food businesses are exempt from some licensing requirements if they do not meet a certain income threshold). For example, the department of agriculture regulates the cottage food industry at the state level in Washington. There is an annual permit fee (presently $230) for cottage food producers, and the application is quite detailed.

These laws will also identify all of the rules that must be followed — ranging from whether pets are permitted in the home to what kind of water (or water testing) must be used in food products — and the penalties (if any) for failing to do so. Sales tax may or may not be applicable to your business, and often the cottage food statute does not address it. In those cases it would be prudent to ask your local cooperative extension or department of revenue for guidance.

In addition to state law, you need to consider local law, and often it is best to start here first. This is because, with the exception of those state laws that specify that cities and towns cannot prohibit the production and/or on-site sale of cottage foods, it will be local law that determines whether you can operate your business at home. Typically, the operation of a home-based business is regulated under zoning. Your local zoning code will specify whether you are allowed to operate a home business in your zoning district (incidentally, many residential zones prohibit home based businesses or limit them to things like attorneys, accountants, and the like, though this is slowly changing). The zoning code should also state whether a home-based food production business is an as-of-right (allowed) use or one that requires a permit first. Because your plans involve making food, you should also check with your local board of health to see whether any additional rules or regulations apply.

Even if the food production portion of your business is allowed under zoning, there may be very specific rules about whether you can transact any sales on the premises. Some zoning codes allow (or at least do not prohibit) the making of the food in your home, but prohibit customers from coming to your home to buy your products. This is where state law and local law can often conflict. New Hampshire reminds constituents that they will need to consult with local authorities to ensure compliance with any local laws. The state may authorize sales at home but if local law is stricter and prohibits those kinds of transactions, then they cannot take place at your home. If local law prohibits on-site sales, then you will need to seek out other venues, like farmers markets, bazaars, fairs, or other similar types of locations (most cottage food laws prohibit retail sales in stores or to restaurants).

Some zoning codes allow for the making of the food in your home, but prohibit customers from coming to your home to buy your products.

On the other hand, if state and local law both allow for on-site sales of your products, then you will just need to make sure that you comply with any rules pertaining to customer parking, traffic, signage and hours of operation. For example, this past summer, Denver, Colorado, passed a local cottage foods ordinance to allow at-home sales of certain foods. The Denver regulations were established in response to the state’s cottage food law that was passed in 2012. As of July 2014, Denver now allows for sales of uncut produce, eggs, honey, certain baked goods, candy and many other items to take place at home (inside or outside) between 8 a.m. and dusk, does not require sales tax or any parking spaces, and limits signs to no more than 100 square inches.

On the other hand, San Dimas, California, limits hours of operation to 7 a.m. to 8 p.m., customers cannot impede traffic or parking, and no outdoor sales may take place.

Be careful about Internet sales too. Some state and local laws address these kinds of sales, and they can vary. Some ban such sales outright, while others are more flexible and allow for an Internet sale so long as the customer actually comes to your house to pick up his order.

Lastly, while it is not likely that you will be having large numbers of customers driving to your home (although wouldn’t that be nice!), you still should remain mindful of your neighbors and strive to avoid creating any unnecessary nuisances. It is good business practice as much as it is being a good neighbor. Good luck!

Disclaimer: This information is general in nature and for educational purposes only. It is not intended as specific legal or any other advice for any individual case or situation. This information is not intended to create, and receipt or viewing thereof does not constitute, an attorney-client relationship. The reader is encouraged to seek the advice of an attorney or other professional when an opinion is needed.

Kristen M. Ploetz, Esq., is a zoning/land use attorney and Founder/Manager of Green Lodestar Communications & Consulting, LLC (www.greenlodestar.com).

This site uses Akismet to reduce spam. Learn how your comment data is processed.