In July of 2010, Michigan became the 18th state to adopt a Cottage Food law, which allows individuals to manufacture and store certain types of foods in an unlicensed home kitchen.  Six other states are currently considering cottage food laws, with bills introduced within the last two months.

This law brings new hope for entrepreneurs in a tough economy that may not have the start-up capital to purchase their own industrial kitchen, but have the culinary acumen to make money from their modest homes.  However, critics cite the risks involved, including different labeling requirements than for products sold in grocery stores, less regulation of the product itself, and because home kitchens are not inspected, there may be an increased risk of cross-contamination.  But, while these criticisms are noted, the Cottage Food law takes a number of these concerns into account by limiting which types of foods are able to be produced in order to minimize risk.

Foods permitted to be produced from the home include only non-potentially hazardous foods that do not require time and/or temperature control for safety.  Examples of such products include jams, jellies, dried fruit, candy, cereal, granola, dry mixes, vinegar, dried herbs, and baked goods.

Potentially hazardous foods that do have time and/or temperature requirements to ensure safety are specifically excluded from home production.  Some of these products include meat and poultry products, salsa, milk products, beverages, home-produced ice products, and canned fruits, vegetable or other products, excluding jams or jellies.

Additionally, Cottage Foods must be sold directly to the consumer, typically at a farmers’ market or a similar event. Because the Cottage Foods are in effect unlicensed and uninspected, these foods made in a home kitchen cannot be sold to a retailer to be resold or used in a restaurant.  For food to be approved for use in a restaurant or grocery store, the food handling practices must be evaluated to ensure food safety.  Because home kitchens are not regulated by the State in such a way, the foods produced from the home kitchen cannot be used for such retail purposes.  At a farmers’ market, for instance, the consumer is buying directly from the home manufacturer and the consumer can ask questions directly to the manufacturer about his or her food safety practices in the home.  In a restaurant or grocery store, this face-to-face interaction is lost and a patron is unable to know whether or not the food is safe for consumption.

While largely unregulated, labels are still required for Cottage Foods.  In addition to the name of your product and the location of your operation, Cottage Foods are to be labeled with the ingredients of the product, the weight or volume, any allergens, and with the specific instruction that the product has been “[m]ade in a home kitchen that has not been inspected by the Michigan Department of Agriculture.”

Lastly, gross sales for Cottage Foods are limited to $15,000 annually per household.

Please keep in mind the above commentary is only an overview. If you are thinking about starting a Cottage Food operation, you may want to consider setting up an LLC or other business entity to protect against personal liability.  And, the Cottage Food law does not exempt you from local zoning or other laws, so you may wish to contact a business attorney to ensure you are not only in compliance with the new Cottage Food law, but all other laws and ordinances as well.