The Local Food Movement – Rise and Regulation of the Cottage Food Industry
ComplianceJuly 27, 2022

The local food movement – Rise and regulation of the cottage food industry

While a swath of food businesses closed as a result of COVID, more cottage food businesses started in 2020 than any other year, and the statistics aren't even close.

"Cottage food" is a blanket term describing certain types of food products, generally homemade, produced, and sold locally by individuals or families. There are several contributing factors to this industry's recent growth, most germinating from the global pandemic. For one, many Americans have been sidelined from their regular careers, forcing families to find creative ways to earn a living; the revenue, however small, generated from selling homemade food products can make all the difference. For another, quarantined individuals turn to hobbies and activities that provide a sense of personal value; recurrent studies show that cooking reduces stress for many people. Indeed, there is a noticeable correlation between economic downturns and an increase in cottage food businesses, a parallel that spurred a number of states to amend or improve their cottage food laws following the Great Recession of the late 2000s.1

There are particular definitions for what constitutes a "cottage food" product, though most laws tend to agree that it is food that does not require refrigeration — baked goods, jams and jellies, and dried food products are common examples of cottage food — and is sold primarily to other individuals locally (i.e. inside the state). Some states include limits on total revenue in the definition of cottage food as well.2

Producers of food products that fall outside of the definition of cottage food are subject to more stringent regulations such as kitchen inspections, stricter labeling requirements, and more complex licensing processes, so it is important that businesses wishing to remain under the cottage food legal umbrella familiarize themselves with their governing jurisdiction's laws and definitions. There are resources for food businesses that do want to produce non-cottage food, such as licensed commercial kitchen spaces that businesses rent or "share" to produce their product legally.

Current cottage food laws vary from state to state, with some states imposing regulations through an overarching health and safety board and others delegating the responsibility to local county health or agricultural departments. License or permit requirements typically involve an application with a fee, a description of the products sold, and a sketch of the kitchen or space in which the product will be made. Some authorities may require a water test if a business uses well water during production. States like Washington require an individual to obtain a Food Worker Card in addition to a food business permit. Other states might require copies of labels and descriptions of product packaging. Licenses and permits are usually subject to annual renewals during which a renewal application must be submitted and a renewal fee paid.

As with all businesses, local counties, townships, cities, and villages may impose their own business license and tax requirements; those that do not typically require a license for all businesses may still require one for a food business. It is important to check with all levels of government to ensure that the totality of regulations is met before the business activity occurs.

CT Corporation provides a turnkey package to get your business up and running legally. Contact us for a consultation today.

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