86th LegislatureIssuesState HouseNew Legislation Expands Small Business Opportunities in the Food Industry

While the Texas Lemonade Stand bill (HB 234), which will allow children to run lemonade stands on private property without interference from local governments, gained national attention, there is another bill, SB 572, set to be voted on in the House today.

SB 572, sponsored by Sen. Lois Kolkhorst (R-Brenham), passed the Senate by a vote of 31-0 back in April. The legislation would expand the list of foods that can be sold by a cottage food operation, as well as extend the locations where sales may occur to include mail order and internet options.

Similar to a child’s lemonade stand, a cottage food operation is a home-based food business. Run out of home kitchens, these small businesses may sell a variety of items including baked goods, candy, jams and jellies, dried foods, and cucumber pickles.

While the owner of the business must have successfully completed a food handler safety program, as well as adhere to labeling requirements before they begin selling their products, they are not regulated by a local or state health department.

The cottage food law is intended to allow individuals to sell their products directly to consumers, the law currently allows for sales at the owners home, a farmers market, a farm stand, or a municipal, county, or nonprofit fair festival or event.

If a business grows to the point of having over $50,000 in sales, it is no longer considered a cottage food operation and must obtain commercial food business licenses and permits. For many Texans the money made from these small businesses allows them to meet the basic needs of their families.

SB 572 would expand the list of items allowed to be sold by a cottage food operation to specifically include pickled fruits and vegetables – beyond the currently allowed cucumber pickles – to be sold. Additionally, cottage food operators would be allowed to sell fermented produce, so long as the recipes used are from sources approved by the Texas Department of State Health Services, and frozen raw fruits and vegetables.

A second major provision in SB 572 would remove the prohibition on internet and mail order sales.

Peggy Higgins, a cottage food business owner, testified in support of the bill. She said that she is grateful for the opportunities she’s had since starting her cottage food business. She began selling her baked goods around the same time her husband became disabled and she became his primary caregiver. She testified that she uses her earnings from her small business to pay for necessities like groceries and medications.

She testified that the restrictions on internet sales, though, are inhibiting her ability to run her small business.

She told the committee that she had been advised by the Texas AgriLife Extension office at Texas A&M University that if she even accepts payment through a service such as PayPal for her products that would also constitute selling over the internet and would be a violation of the law. She added that this would be true even if the sale was made face to face at a local farmers market as specifically permitted by the law.

SB 572 aims to remove the prohibition on internet and mail order sales, thus allowing cottage food operators to use the internet to advertise and facilitate face to face transactions. Transactions could happen via internet processing, so long as the required food safety warnings are provided prior to the sale. However, unless amended, the bill would continue to require the business owner to personally deliver the food items to the customer.

If the bill passes the House, a simple concurrence by the Senate would send the legislation to the governor’s desk for signature.