Feeding Entrepreneurship by Starving Regulation

Texas citizens are eating and working a whole lot better since it enacted “cottage food” laws in 2011 that let private citizens turn their kitchens into business incubators without having to rent commercial kitchen spaces.

With high commercial rents former Texas food entrepreneurs were effective priced out of the market, so private bakers and chefs rallied the legislature to legalize homemade foods. As the Institute for Justice explains in Forbes:

By lowering regulatory barriers, the Texas cottage food law has made it easier for budding entrepreneurs to start their own businesses. …

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. …

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. …

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.

As IJ sums up elsewhere: “Delicious things happen when the [government] gets out of the way.”