FOR IMMEDIATE RELEASE: December 11, 2017

CONTACT: Shira Rawlinson, (703) 682-9320

New Report: Homemade Food Businesses Promote Entrepreneurship for Women, Rural Dwellers

But Restrictive State Laws Get in the Way

Arlington, Va.— Across the country, thousands of Americans are making food at home to sell in their communities. Together, they form the small but growing “cottage food” industry. According to a new report by the Institute for Justice, cottage food businesses promote entrepreneurship among women, residents of rural areas and people of modest means—but restrictive state laws can stymie this enterprising spirit.

This first-of-its-kind study, Flour Power: How Cottage Food Entrepreneurs Are Using Their Home Kitchens to Become Their Own Bosses, aims to change that. It surveyed 775 registered cottage food producers across 22 states about what their businesses mean to them and how they view their states’ cottage food laws. The results suggest that while laws allowing the sale of cottage foods can open up new opportunities for anyone who wants to start a business at home, regulations frequently get in the way of business expansion.

“Running a business out of one’s home is a basic American right, and cottage food businesses provide myriad benefits to cottage food producers and consumers alike,” said Jennifer McDonald, author of the report and research analyst at the Institute for Justice.

Key findings from the report include:

• Cottage foods provide an attractive avenue to entrepreneurship for women, particularly those living in rural areas or getting by on below-average incomes:
  • 83 percent of those surveyed are female.
  • 55 percent of those surveyed live in rural areas, compared to just 19 percent of the national population.
  • Median household income for those surveyed was $36,000 in 2016, compared to a national median of $59,000.
• Cottage food businesses provide their owners with flexibility, financial support and the opportunity to be creative while being their own bosses.
• Restrictive cottage food laws can hinder entrepreneurship. Producers are less likely to plan to expand their businesses if the government prohibits them from selling certain types of foods that they would otherwise like to sell.

Most states restrict homemade food sales in some way—for example, by limiting the types and quantities of homemade foods that can be sold, where they can be sold, or even who can sell them—but there is little evidence that these laws have anything to do with public health or safety. For example, New Jersey flat-out bans cottage food producers from selling cookies, cakes and muffins because powerful lawmakers have fought to protect brick-and-mortar bakeries from competition. North Dakota and Wyoming, on the other hand, have recently adopted “food freedom laws,” which allow the virtually unrestricted sale of most homemade foods. This report provides important insights that can better inform policy decisions regarding the cottage food industry.

McDonald continued, “Restrictive cottage food laws pose real difficulties for small-business owners. States can and should take steps to encourage entrepreneurship by easing restrictions on cottage foods.”

In November 2013, the Institute for Justice (IJ) launched its National Food Freedom Initiative. As part of that Initiative, IJ is currently suing New Jersey over its ban on selling home-baked goods. IJ has won similar constitutional challenges to Wisconsin’s home-baked good ban and Minnesota’s restrictions on selling home-baked and home-canned goods, among other cases.

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