California: New Law Allows People Who Make Food At Home To Sell It To Restaurants And Grocery Stores

California’s Newest Business Craze: Homemade Food (Bloomberg, Jan 2, 2013):

Granola makers, homemade vinegar producers, and other foodies in California have cause to rejoice today. As of Jan. 1, a new state law allows people who make food at home to sell it to restaurants and grocery stores.

Leave it to California to upend decades of public health consensus that food businesses need commercial licenses to ensure their food is safe and free of harmful contaminants. The California Homemade Food Act creates a new category of food production called a “cottage food operation.”

To qualify for a state permit under the law, aspiring cottage food operators must attend a food safety class and pass an exam developed by the California Department of Public Health. They have to label their products, pay a small fee, and submit to an annual kitchen inspection by health officials. Like commercial enterprises, the food producers aren’t allowed to smoke or keep pets in the kitchen. When you consider the slim margins most commercial food businesses operate on, this streamlined regulatory process is probably a good deal for food sellers.

In many cities, the cost of rent itself can be crippling for entrepreneurs. New York has even offered city property free to aspiring restaurateurs through its “kitchen incubator” program.

Unfortunately for meat lovers, cottage food operators are prohibited from selling certain foods that could be hazardous, such as sausages and dairy products. The list of approved items includes jams, baked goods, dried pasta, granola, candy, chocolate, nut butters, mustard, vinegar, and roasted coffee.

The bill was the result of protests from a Los Angeles bread baker-turned activist who did a brisk business selling to local groceries until health regulators cracked down on his operation. And like pot growers, another spottily regulated cottage industry in California that’s also been subject to crackdowns, the food producers have limits on how profitable they can be before they no longer count as small time. In 2013, the revenue limit is $35,000, and it rises to $50,000 by 2015—not enough to get rich, but enough to supplement income without having to leave home.

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