Cottage Food Laws in California
Essential Guide for Home-based Producers
This article is part of our Guide on Cottage Food Laws State By State
Cottage Food Laws in California have opened up new opportunities for small-scale food entrepreneurs to launch their businesses without the financial burden of expensive commercial kitchens. These laws allow individuals to produce a wide range of non-potentially hazardous foods, like baked goods and jams, within the comfort of their own homes. By eliminating the need for industrial-grade equipment and facilities, these laws are fostering communities of passionate home-based food producers who are financially and creatively empowered.
The California Homemade Food Act, passed in 2012, established a comprehensive framework for Cottage Food Operators (CFOs) to legally sell their homemade products. This Act defines the types of low-risk food items allowed, safety and sanitary requirements for food preparation and packaging, and the appropriate ways to gain permits and register businesses. In addition, it puts a cap on the operators' annual gross revenues, ensuring that these businesses remain small and community-focused.
Staying up-to-date on California's Cottage Food Laws is crucial for aspiring food entrepreneurs, as it enables them to navigate the ever-evolving home baking industry. Compliance with these regulations not only ensures that CFOs can protect consumers from foodborne illnesses, but also creates a stable, legitimate foundation for their businesses to thrive within their local communities.
Cottage Food Laws Overview
Purpose
Cottage Food Laws aim to support the growth and success of small-scale food entrepreneurs by easing the regulatory burdens on them. These laws allow individuals to produce and sell certain non-perishable food items, made in their home kitchens, without the need for a commercial kitchen or the same level of licensing and inspection as larger food businesses.
California Homemade Food Act
The California Homemade Food Act, passed in 2012 and implemented in 2013, established the Cottage Food Operation (CFO) framework in the state. This act provides guidelines for two types of CFOs:
Class A: Allows the direct sale of homemade products to consumers.
Class B: Permits both direct and indirect sales. This includes sales to retail stores, restaurants, and other third-party vendors.
Cottage Food Operations must adhere to certain requirements, such as:
Obtaining a permit or registration from the local health department
Taking a food safety training course and obtaining a Food Handler Card
Proper labeling of all products, including ingredients and allergen information
The list of approved food items for CFOs is specified by the California Department of Public Health, focusing primarily on non-potentially hazardous foods with a low risk of causing foodborne illnesses. Examples include:
Baked goods (e.g., cookies, cakes, breads)
Jams, jellies, and preserves
Dried fruits and vegetables
Candy and confections
Popcorn (how long does popcorn last?) and related snacks
California's Cottage Food Laws aim to balance public health concerns while providing opportunities for individuals to start or grow their own food businesses within a regulated and safer framework.
Classification of Cottage Food
Cottage Food Laws in California are designed to support small-scale food production and encourage entrepreneurial ventures. They have developed a two-tier classification system to distinguish the types of cottage food operations: Class A and Class B.
In this section, we will explore the differences and requirements of both classes.
Class A
Class A cottage food operations are primarily focused on direct sales to consumers. This means that the producers can only sell their products directly to individuals for their personal use. Some common venues for these direct sales transactions include:
Farmers markets
Roadside stands
Home sales
The requirements for Class A cottage food operations include:
Registration with the local county environmental health agency
Completion of a food processor training course within three months of registration
Labeling products according to specific guidelines
Ensuring annual gross sales do not exceed the allowed limits ($50,000 in 2023)
Class B
In contrast, Class B cottage food operations are allowed to engage in indirect sales. This means they can sell their products to third-party retailers such as:
Restaurants
Cafes
Grocery stores
While Class B offers more opportunities for sales, its requirements are more stringent than those for Class A. The specific criteria for Class B include:
Obtaining a permit from the local county environmental health agency
Passing an annual home inspection
Taking a food processor training course
Meeting the same labeling and annual gross sales limit as Class A operators
In summary, the Classification of Cottage Food Laws in California is based on the nature and scale of the business, with each class having its respective set of requirements and limitations. Understanding these differences is crucial for aspiring entrepreneurs who wish to venture into the cottage food industry.
Allowed Products
California's Cottage Food Laws permit the production and sale of specific homemade food items, referred to as cottage food products. These products fall into two main categories: non-potentially hazardous foods and potentially hazardous foods.
Non-potentially hazardous foods are those with low risk of causing foodborne illnesses. These include baked goods without cream or custard fillings, such as cookies, cakes, and breads. Additionally, dry goods like granola (how long does granola last?), coffee beans (how long do coffee beans last?), and tea blends fall under this category. Many types of candy, which don't need refrigeration, are also allowed.
Potentially hazardous foods can pose a higher risk of foodborne illnesses, but are still permitted under certain conditions. Examples include cheesecakes, pumpkin pies, and custard-filled pastries. These foods require appropriate temperature control during storage and preparation. However, they must still comply with the Cottage Food Laws' restrictions and requirements.
Aside from these broad categories, the California Department of Public Health provides a comprehensive list of allowed cottage food products. This list includes, but is not limited to, the following items:
Jams, jellies, and preserves made from high-acid fruits
Fruit butters, pies, and empanadas
Nut mixes and peanut brittle
Dehydrated fruits and vegetables
Popcorn, popcorn balls, and caramel corn
Fruit leathers (how long does fruit leather last?) made from low-sugar or sugar-substituted recipes
It's crucial for cottage food operators to familiarize themselves with California's Cottage Food Laws and adhere to the rules and regulations regarding allowed products. This ensures that small business owners can confidently produce safe and enjoyable food items for their customers from their home kitchens.
Prohibited Products
Cottage Food laws in California allow entrepreneurs to produce and sell a range of nonperishable foods from their homes. However, there are certain products which are not permitted under these laws. In this section, we will outline some of the prohibited food items.
First and foremost, meat products are strictly off-limits under California’s Cottage Food laws. This includes raw or cooked meats, poultry, and fish, as well as products made from these sources, such as sausages and jerky.
Dairy products that require temperature control, such as milk, yogurt, and cheese, are also not allowed. While butter and cream can be used as ingredients in cottage food products, selling standalone dairy products is prohibited.
Additionally, canned vegetables, fruits, and pickles are not permitted under California’s Cottage Food regulations. This is mainly due to the risk for botulism present in low-acid canned goods. Furthermore, products made from these canned items are also prohibited.
It should be noted that items requiring refrigeration or which have a shelf life of less than 90 days are not permitted. Examples include custards, cream pies, and certain baked goods with perishable fillings.
Lastly, alcoholic beverages and energy drinks are not allowed to be sold under the Cottage Food laws. This extends to products containing alcohol as an ingredient, such as rum cakes or beer-battered items.
In summary, California's Cottage Food laws restrict the production and sale of various products due to safety and health concerns. Potential producers should familiarize themselves with the list of prohibited items to ensure compliance with the law.
Food Safety Requirements
California's Cottage Food Laws have specific food safety requirements to ensure that consumers are protected. These requirements focus on two main areas: training and product labeling.
Training
Cottage food operators must complete a food safety training course approved by the California Department of Public Health. This training helps ensure that operators understand the importance of food safety and can apply the necessary practices in their cottage food business.
Some key components of the training include:
Proper food handling and storage techniques
Understanding foodborne illnesses and allergens
Sanitation and hygiene best practices
Proper preparation processes for cottage food products
Labeling
In addition to the training requirements, California Cottage Food Laws mandate that all cottage food products must have clear and accurate labels. The information on the label must include:
Product name: The common, descriptive name of the product
Ingredient list: A list of all ingredients used in the product, in descending order by weight
Net weight: The actual weight of the product in ounces or grams
Operator identification: The name, address, and phone number of the cottage food operator
Cottage Food Operation Permit Number: The permit number assigned by the local health department
Allergen warning: A statement that the product was made in a home kitchen and may contain allergens
Adhering to these food safety requirements can help maintain consumer confidence in cottage food products and protect public health in California.
Permits and Licensing
In California, Cottage Food Laws require businesses to obtain permits and licensing to sell homemade food items. Two types of permits are essential: Class A permits and Class B permits.
Class A Permit
A Class A permit allows cottage food operators to sell their products directly to consumers. Cottage food businesses with Class A permits can avoid dealing with middlemen and wholesalers. It is crucial for businesses to work within the boundaries of this permit as it directly affects their consumer base.
Some aspects of the Class A permit include:
Direct sales: Entrepreneurs can sell their homemade food items directly to their customers.
Local approval: Businesses must comply with local environmental health and city regulations.
Allergen training: Business owners must complete a food handler's allergen awareness course.
Class B Permit
The Class B permit is designed for cottage food operators who are interested in selling their products both directly to consumers as well as indirectly through third parties like grocery stores, restaurants, and other retailers.
Key features of the Class B permit include:
Indirect sales: Businesses can sell their products to retailers, who will then resell them to customers.
Extended trading area: Depending on local regulations, operators may be able to sell foods statewide or in limited regions.
More stringent inspections: As Class B involves third-party dealings, businesses must undergo and pass more rigorous inspections by the local environmental health department.
Income and Sales Limitations
California's Cottage Food Law has specific income and sales limitations designed to protect both small-scale food producers and consumers. Under the current law, a Class A Cottage Food Operator (CFO) can generate annual gross sales of up to $50,000. Meanwhile, a Class B CFO can earn a maximum of $50,000 in gross sales per year, but with additional allowances for indirect sales to third-party retailers.
Understanding the structure of these income limitations is vital for Cottage Food Operators in California. Class A CFOs can only perform direct sales within the state, meaning selling products to consumers at venues such as farmers' markets, community events, home-based parties, or through their website.
On the other hand, Class B CFOs have the flexibility to engage in both direct and indirect sales. Indirect sales refer to selling products to third-party retailers, such as restaurants, cafes, and stores that then sell the items to consumers. This broader range of sales opportunities makes it slightly easier for Class B CFOs to reach the $50,000 gross sales cap.
To monitor compliance with these income and sales limitations, CFOs are required to maintain accurate records of their transactions. These records may be requested during inspections or audits by local health departments or environmental health agencies. Additionally, operators exceeding the sales cap must upgrade their permit, which may involve additional fees and adherence to more stringent operational requirements.
Ultimately, keeping these income and sales limitations in mind is crucial for Cottage Food Operators in California. Complying with the law can ensure their businesses' longevity and foster a safe, transparent environment for consumers and producers alike.
Business Considerations
When starting a cottage food business in California, there are several important aspects to consider. In this section, we will discuss two key areas: insurance and taxation.
Insurance
To protect themselves from potential liability, cottage food business owners should consider purchasing insurance. One type of insurance to consider is general liability insurance, which covers claims related to bodily injury, property damage, and personal injury that may occur in connection with the business. In some cases, homeowners' or renters' insurance policies may include coverage for cottage food businesses; however, it is important to review the specific policy terms to ensure adequate coverage.
Another insurance option to consider is product liability insurance. This type of coverage is specifically designed to protect businesses from claims resulting from the sale of defective or harmful products. In the context of a cottage food business, this could involve a customer becoming ill after consuming a product or discovering a foreign object in the food item.
Taxation
Cottage food business owners in California must be aware of the various taxes that may apply to their operations. These typically include:
Income Tax: Business owners must report their net income from the cottage food business on their personal income tax return. They may also need to pay quarterly estimated tax payments throughout the year.
Sales Tax: California imposes a sales tax on the retail sale of tangible personal property. Cottage food products are generally considered taxable, so business owners must collect sales tax from customers and remit it to the state. It is essential to maintain accurate records of sales tax transactions.
Self-Employment Tax: If the cottage food business is organized as a sole proprietorship or partnership, the business owner(s) must pay self-employment tax on their net earnings from the business. This tax includes Social Security and Medicare contributions.
