Homemade Food Act a Big Win for Small Bakers in CA

Food entrepreneurs have a reason to celebrate this holiday season!

The California legislature recently passed Assembly Bill 1616, California’s first Cottage Food Law, which legalizes home-based food operations in limited circumstances.

For small time bakers, this is a huge win! Much of the cost of starting a food business comes from obtaining permits and leasing commercial kitchen space for baking your products legally. This bill attempts to lower the barriers to entry and – fingers crossed – may help stimulate small business growth in the state.

Let’s examine this bill in a little more depth together. My analysis comes directly from the text of AB1616.

When is this Law Effective?
The provisions of this bill become effective January 1, 2013. (However, regulators have indicated they may need additional time to comply.)

Defining a “Cottage Food Operation” (CFO)
This bill amends the Health and Safety Code to call out a “Cottage Food Operation” as a distinct entity from “Food Processing Facilities” and their more rigorous safety requirements.

Business Structure
The bill defines two distinct categories of Cottage Food Operations (CFOs):

Class A – a “Class A” CFO may only sell directly to consumer. Eligible sales are limited to farmer’s markets, bake sales, holiday bazaars, in-person transactions.

Class B – a “Class B” CFO may sell both directly and indirectly to consumers. Those with Class B status can have their products sold at third-party retailers (like a grocery store) and to restaurants for immediate consumption. This is in addition to selling products directly to consumers.

Note: It appears counties may have the right to allow / disallow indirect food sales from other counties. We’ll see how that sorts itself out.

Business Income Limitations
Since this bill is geared towards stimulating small business, it puts gross annual sales caps on the Cottage Food Operation.

2013: $35,000
2014: $45,000
2015: $50,000

Businesses which exceed the cap will need to comply with existing regulations for commercial food production.

Business Size
A CFO may have one full-time equivalent employee, in addition to the Cottage Food Operator. Family or household members are not included in this count, so they can be enlisted to help.

Permitting Process
Direct enforcement, will likely come from our local County Health Department. However, the California Department of Public Health is charged with outlining and overseeing this enforcement statewide. We’ll see how it all shakes out.

Class A cottage food operations will need to register with their local enforcement agency and complete a self-certification checklist prior to opening for business. Inspections of Class A operations will only occur if warranted by a consumer complaint.

Class B cottage food operations will need to meet the above requirements and also obtain a permit from their local enforcement agency. This will include passing an initial site inspection by an enforcement officer. Class B inspections will occur annually thereafter.

All Cottage Food Operators and employees will need to pass a food processor course instructed by the California Department of Public Health.

Permitting costs and regulatory fees may not exceed the reasonable costs incurred by local enforcement agencies. There may be additional permits required for operating at specific venues or within your geographic area.

Labeling Requirements
The Cottage Food Operation must comply with FDA labeling requirements. In addition, labels must include the following:

• Name of the Food Product
• Name of the Cottage Food Operation
• Class A: Registration/Permit number of the Cottage Food Operation
• Class B: Permit number and the name of the county that issued the permit
• Words “Made in a Home Kitchen” in 12-point font on the primary display panel
• Ingredients in descending order by weight
• Products sold without packaging (in a restaurant) must be labeled as ‘Homemade‘ on the men

Operational Requirements
Most of these requirements are no-nonsense, and meant to keep food prepared safe for the consumer.

• No domestic activities may occur in the kitchen during cottage food preparation
• No infants, children or pets may be in the kitchen during cottage food preparation
• Kitchen equipment must be clean and in a good state of repair
• Anything in contact with food must be cleaned and sanitized prior to use
• No rodents or insects in the kitchen or food storage areas
• Smoking is prohibited in the kitchen during cottage food preparation
• Employees with contagious illnesses must refrain from working
• Employees must wash their hands properly
• Water used must be potable

Eligible Foods
Only foods classified as “not potentially hazardous” may be produced by a Cottage Food Operation. This is to limit the risk of contamination to the consumer. A list of these foods is to be maintained by the California Department of Public Health. The initial list includes:

1. Baked goods without cream, custard, or meat fillings, such as breads, biscuits, churros, cookies, pastries, and tortillas.
2. Candy, such as brittle and toffee.
3. Chocolate-covered nonperishable foods, such as nuts and dried fruit.
4. Dried fruit.
5. Dried pasta.
6. Dry baking mixes.
7. Fruit pies, fruit empanadas, and fruit tamales.
8. Granola, cereals, and trail mixes.
9. Herb blends and dried mole paste.
10. Honey and sweet sorghum syrup.
11. Jams, jellies, preserves, and fruit butter that comply with the standard described in Part 150 of Title 21 of the Code of Federal Regulations.
12. Nut mixes and nut butters.
13. Popcorn.
14. Vinegar and mustard.
15. Roasted coffee and dried tea.
16. Waffle cones and pizelles.

Resources
FAQ Provided by CCDEH
Text of Assembly Bill 1616
FDA Food Labeling Requirements
Santa Clara Dept of Environmental Health, Food Safety Program (for my local readers)

My Takeaways
Keep in mind I’m not an expert. The analysis above is just my two cents. Overall, this law is a net positive for talented food entrepreneurs with more limited resources.

This new law may also bring current black-market operations into the fold.  The revenue generated for the state is a no-brainer. And the limitations protect both existing commercial food operations and the consumer through income caps and exempted higher-risk food categories.

One thing’s for sure: the home food industry is about to get busy in California! If you think it may be for you, I recommend contacting your local county health department for additional information. And keeping checking back here for detailed updates!

– Beth