Tuesday, September 23, 2014

Deregulation begets Entrepreneurship in Texas

"And may the Lord make you increase and abound in love to one another and to all, just as we do to you,"
1 Thessalonians 3:12

We'd heard about the cottage food movement from some of the libertarian circles in which we hang out in Austin, but this is a fantastic write up:
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.


Under the new cottage food law, Padilla reopened Bellissimo 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.

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