Cottage Food Operation: What Is It, and Can You Do It?
In 2013, the California Homemade Food Act legalized the production and sale of certain low-risk foods from private homes. Individuals have since been able to start and run homemade food businesses, known as Cottage Food Operations, without necessarily incurring high retail costs or complying with extensive commercial manufacturing and labeling requirements. The effect of the law has been significant not only on the economy but also in its ability to encourage entrepreneurship. In the first year alone, California approved more than 1,200 cottage food businesses. The numbers are steadily growing as more entrepreneurs become aware of the cottage food business.
Anyone considering becoming a Cottage Food Operator (CFO) needs to first consider the type of cottage food products he or she wishes to prepare and sell. By definition, cottage foods are products that do not require refrigeration to keep them safe from bacterial growth. Examples include bread, candy, nuts, dried fruit, and jams.
To become a certified CFO, applicants must obtain approval from their local city or county health department, such as the Los Angeles County Department of Public Health or the Orange County Environmental Health Division. Requirements vary depending on the agency and the application type. Class A CFOs sell to consumers directly, whereas Class B CFOs may also sell indirectly to third-party retailers. Class B CFOs are thus subject to more stringent regulations, including a separate permit requirement, inspections, and higher application fees. While a CFO may take orders and payment for its food online, it may not ship the food via mail courier. All foods must be delivered in person. This is true whether the CFO is approved as Class A or Class B.
Finally, all CFOs need to complete an approved food processor course within three months of becoming registered. Further trainings are required while the business remains in operation.
Operating a Cottage Food Business
CFOs must comply with detailed standards on cleanliness, cottage food storage, and general operations management. For example, no domestic activity may take place in the home kitchen during cottage food preparation. Workers must take safety precautions to reduce any chance of contamination. This includes properly washing hands, distancing those with contagious illnesses, and using potable water, to name a few. Each CFO is allowed to earn up to $50,000 in annual gross sales and hire the equivalent of one full-time employee.
Equally important is complying with specific labeling requirements. Examples include providing a list of ingredients, a descriptive name of the cottage food product, and a marker that the product is “made in a home kitchen.” A product is subject to additional regulations if the CFO makes any claims regarding nutrient content or potential health benefits.
Proper hygiene and accurate labeling are necessary to a CFO’s success. Failure to comply could result in enforcement actions brought by the local health agency and/or the California Department of Public Health. Regulations may vary depending on the local agency.
Since its enactment, the California Homemade Food Act has provided thousands of new opportunities for Californians to thrive as cottage food business owners. To date, we have not identified any incidents of foodborne illnesses caused by cottage foods. Risks appear to be associated more with individual hygiene and cleanliness of operators than with mass foodborne illness contaminants. Although close regulatory compliance is necessary, running a successful Cottage Food Operation is quite achievable. Please feel free to contact Walsworth for further information.