Texans Created Over A Thousand Local Businesses After Texas Eased Restrictions On Selling Food Made At Home

Nick Sibilla , Contributor

Come and bake it.

Texas is enjoying a burst of entrepreneurship after enacting laws that let anyone turn a home kitchen into a business incubator. Under “cottage food” laws, people can sell food baked or cooked at home, like cookies, cakes and jams, if it’s deemed to have a very low chance of causing foodborne illnesses. Crucially, cottage food laws exempt home bakers from having to rent commercial kitchen space.

After winning Austin’s Best Chocolate Cupcake in the city’s Cupcake Smackdown, Amy Padilla decided to open a cupcake bakery in 2009. “At that time, a commercial bakery was my only option,” she said. But with rent averaging around $25 an hour, “it almost became cost prohibitive to continue.”

Not being able to bake at home posed other problems as well. Kelley Masters, a baker based in Cedar Park, found a rental kitchen for $15 per hour, but that rate was only available after 10 p.m. “So I would put my two-year-old son to bed,” she said, “pack a large laundry basket with supplies, and drive out to the commercial kitchen, and start baking, coming home around 1 or 2 a.m.”  Sometimes she even had to waste time cleaning up after the previous renter.

After learning that other states had enacted cottage food laws, Masters became an activist, recruiting and rallying people to back legislation that would legalize selling homemade food. Their efforts paid off when Texas passed it first cottage food law in 2011.

Come and Bake It. ® (Credit: Kelley Masters.)

Under the new cottage food law, Padilla reopenedBellissimo Bakery, so she could carry on customizing children’s birthday cakes and selling her cupcakes, in flavors like Kona Kahlua or Death by Chocolate. Since 2011, her sales have increased by 25 percent every year, and she’s predicting an increase of up to 50 percent this year. “Not only do I love creating custom cakes and cupcakes, but I love that my cottage food bakery has the ability to financially make a difference,” she added. “I couldn’t be happier that this law is in effect.”

The Texas cottage food law does not extend to“potentially hazardous” foods, like dishes that have meat or shellfish, so consumers have had few problems with home bakers. After contacting both the Texas Department of State Health Services (DSHS) and environmental health departments for the 25 largest cities and counties in Texas, the Institute for Justice found no complaints regarding foodborne illnesses from a cottage food business.

An exact number of just how many of these operations have sprung up is rather hard to come by. Since Texas does not issue permits or licenses for cottage food production operations, the state does not have a precise way to track them.  However, anyone who wants to operate a cottage food business is required to become a certified food handler. In Texas, there are at least two organizations that offer courses specifically designed for cottage food: Texas Food Safety Training and Texas A&M AgriLife Extension. Between the two of them, over 1,400 individuals have purchased and completed courses over the past year. Given that cottage food entrepreneurs can also comply with the state’s regulations by taking a general food handler course, the true number of home baking businesses may be even higher.

For bakers like Masters and Padilla, complying with the state’s regulations is relatively painless. Aspiring entrepreneurs need only pass a “food handler”course to learn common-sense information about food safety, hygiene and cross-contamination. Not only are these courses available online, home bakers can finish one in two hours and for as little as $8. Additionally, Texas requires cottage food businesses to properly package and label their products.

Under the first cottage food law (SB 81) passed back in 2011, Texans were limited to selling only baked goods, jams, jellies and dried herbs. But the state’s second cottage food law (HB 970), enacted September 1, 2013, redefined “cottage food” to make it more encompassing. Now Texans can legally create and sell candy, coated and uncoated nuts, fruit butters, cereal, dried fruits and vegetables, vinegar, pickles, mustard, roasted coffee and popcorn out of their homes. Moreover, HB 970 allows modern-day homesteaders to sell their treats at more locations, including at farmers’ markets, roadside stands and events like county fairs. Previously, the law only permitted selling out of the home directly to consumers.

With HB 970, Texas lawmakers also closed a loophole in the state’s first cottage food law. By enforcing zoning ordinances, local governments could essentially ban bakers from operating out of their homes. One woman in Frisco was told her home-based gluten-free bakery violated the town’s zoning laws. Now state law explicitly bans cities and counties from using zoning to stop cottage food businesses.

By lowering regulatory barriers, the Texas cottage food law has made it easier for budding entrepreneurs to start their own businesses. Take Janette Roth, who runs the Sweet Butter Bakery from her home in El Paso. Roth has been baking for years as a hobby, mostly for her friends and her church. But when a friend paid her to bake cupcakes for his birthday party, Roth decided to research selling homemade food and came across the cottage food law. “I was floored,” she said. “That law was so accessible.”

Since the end of May, her kitchen now doubles as a bakery where she freshly makes and bakes all her treats from scratch. To keep up with the demand, sometimes Roth bakes hundreds of cookies a week. “Without this law, we wouldn’t have opened our own business,” she noted.

Unfortunately, cottage food laws in other states needlessly restrict entrepreneurs. In Minnesota, home bakers can only earn up to $5,000 a year, one of the lowest caps in the nation. That comes out to less than $100 a week. Selling too many cookies or cakes, or selling at a venue that isn’t a farmer’s market or community event could mean up to 90 days in jail or fines of up to $7,500. Arguing these regulations “restrict or defeat the ability…to earn an honest living,” Jane Astramecki and Mara Heck, two home bakers, filed a lawsuit with the Institute for Justice to challenge the Minnesota cottage food law (as shown in the video below). In June, a Minnesota judge dismissed the case, and IJ is now appealing that decision.

While Texas certainly is ahead of states like Minnesota, there is room for reform. The Lone Star State doesn’t allow home bakers to sell over the Internet, by mail order or through wholesalers. In order to operate under the law, cottage food businesses must have an annual gross income of $50,000 or less.

Allowing online sales “could open up more doors” for home bakers, noted Amy Padilla. Texas could also follow the lead of states like California, which does allow some cottage food businesses to sell indirectly to third-party retailers. Lifting the sales cap entirely would be another welcome reform. Nearly 20 states don’t limit how much entrepreneurs can earn under their cottage food laws. Finally, many home bakers want to sell more types of pies. Currently, the Texas cottage food law doesn’t extend to pumpkin, key lime and cream pies, merely because they require refrigeration.

In a rare nexus of agreement, both California and Texas—widely considered polar opposites on the political spectrum—have some of the better cottage food laws in the nation. Lawmakers in both states overwhelmingly voted in favor of easing restrictions on selling food made at home. In California, reform passed the state assembly 60 to 16 and the state senate unanimously, while a mere two lawmakers voted against HB 970 in Texas.

The local food movement “transcends so many of the typical categorizations and boundaries,” noted Judith McGeary, Executive Director of the Farm and Ranch Freedom Alliance and a driving force behind liberalizing home baking in Texas. “Whether people are passionate about personal liberty, the environment, human health, local economic development or any one of a dozen other important issues,” she added, “they can find benefits in the local food movement.”