Economic Development of Microenterprise Food Businesses

Unlock the potential of your local food economy.

Helping regulators and consumers embrace standards that will allow their small food businesses to operate compliantly, profitably, and sustainably.

Compliance and food safety law for small operators are complex and inconsistent.

Laws for small operators are evolving rapidly and equally food safety laws are complex and nuanced. Smaller operators are facing barriers when accessing compliant kitchen spaces due to affordability and training requirements.

Tre’dish has been at the heart of this evolution over the last 2 years, becoming thought leaders on the regulatory standards, compliance framework and health & safety processes this industry needs.

Why create a framework to authorize and bolster the safe preparation and sale of meals in informal food facilities and independently run food operations, providing adequate regulations and requirements for food handling & safety?

Unlock social return on investment the hospitality industry badly needs.

A rapidly-growing, informal economy of locally prepared foods – meal prep services, pop up food tents, farmers markets, home chefs, and community-driven events involving food – exists today, due to the need for individuals to earn a living, and find affordable meals at a time where the food service industry is facing enormous pressures – particularly for small operators.

This industry has the power to unlock material social return on investment and food entrepreneurship and innovation, at a time where the hospitality industry needs it most.

Proactively establish compliance, health & safety regulations.

Despite the positive societal impact, the industry needs formal structure from a regulation, health and safety perspective. Thousands of private chefs, food festival vendors, caterers, and many other food micro-entrepreneurs cook out of private residences, outdoor public spaces, small local kitchens or unlicensed food facilities, with little access to best practices or safety guidelines and inability to afford expensive commercial food preparation space.

The lack of formal health & safety guidelines surrounding this informal market can be addressed by adopting best practices already developed across North America.

The complete case for change

Key arguments introduced in the AB-626 California Retail Food Code: microenterprise home kitchen operations.

Sustainable local food communities
Canadians have embraced the idea of supporting local agriculture, local businesses, and for finding sustainable solutions for food insecurity.
Challenging brick & mortar business models
Traditional restaurant, food service, and hospitality sector is simultaneously experiencing an unprecedented number of challenges – food inflation, labour shortages, closed businesses, thin margins, unattractive career opportunities, and the bar to enter the industry is high, and expensive.
Accelerated closures and labor / small business
COVID, food inflation increases, and labour cost spikes have exacerbated these problems greatly.
Forced to operate in informal or unlicensed facilities
These challenges are near impossible to offset without scale. Larger multi-national players can offset some of these issues through investment.
Little access to great space or standards
As a result, an informal economy of locally produced and prepared hot foods exists in the form of meal preparation services, food carts, and communally shared meals. Thousands of private chefs, food festival vendors, caterers, and many other food micro-entrepreneurs cook out of private residences, outdoor public spaces, small local kitchens or unlicensed food facilities, with little access to education for best practices or modern health and safety tools.
Sustainable food entrepreneurship
From an economic and societal impact perspective, this informal economy is a material part of the solution to these issues. This economy has created a wave of food entrepreneurship and community buying, as microentrepreneurs have been forced to find ways to provide access to food and offset the rising costs of food.
Diversity, equality and inclusion
Small-scale, community-based operations can create significant economic opportunities for Canadians that need them most — often women, immigrants, people of color, people with disabilities, family responsibilities, or lack of opportunity.
The next generation of hospitality
Additionally, food entrepreneurship creates compelling career opportunities which are essential to inspire a next generation of Canadians, whose interest in entering hospitality is waning.
Barriers of entry and investment needs are high
Under existing law, individuals can sell food through retail food facilities or cottage food operations, the latter of which being limited to a restricted list that primarily consists of non-perishable food items that can be prepared in the home. Both options make it difficult for most home operators to independently benefit from their labor, skills, and limited resources.
The Regulatory Model

Reforms for informal and homemade food businesses are expanding rapidly.

Current Challenge Food Reform is Happening Precedent Regulation Health & Safety Processes
Current Challenge

Kitchen space access, affordability, complex laws and dated standards, make it difficult for small food businesses to operate compliantly.

Commercial-level kitchen spaces are too costly for small operators to access. As such, food safety regulators have created a variety of alternative food programs and food laws that provide small businesses with opportunities to sell their food, but these are often limited.

Compliance laws for small businesses

These pathways have huge limitations, and compliance across North American food businesses are dated and inconsistent

Cottage food operations

Cottage food operations and laws for low-risk food preparation already exist widely across North America. Specific standards vary by geography but typically encompass baked goods, preserves, nuts & seeds and other specialty items that don’t include dairy, meat, produce etc.

Examples: Ontario – Cottage Food, Riverside – Cottage Food

Farmer’s markets

Farmer’s markets provide independent entrepreneurs with avenues to sell their prepared food for immediate consumption and takeout, with precedent standards for how high-risk foods should be prepared in advance of attending the market

Examples: Farmer’s Market Ontario

Informal ‘pop-up’ food tents

Many state and provincial standards enable temporary food facility laws for food festivals and food tents to operate for duration of the year.

Examples: Temporary Food Facility Rules – City of Toronto

Food truck operations

Food truck operations require municipal permitting and fall under a wide range of food safety rules and regulations to approve vendors and protect consumers. Health & safety standards provide some relevant precedents to help frame rules around small-scale kitchen spaces.

Examples: City of Brampton, City of Toronto

Home kitchen operations

Whether we choose to admit it, or not, the home is a part of the supply chain for a small food business or independent food operator. Whether its for prep, planning, or food sales, the home is a part of every independent food entrepreneurs supply chain. Laws to regulate food preparation at home is expanding rapidly as a result.

References: California MEHKO Laws, Vermont Home-Based Food Businesses

Best-in-class kitchen and food preparation standards

Compliant pathways for food operators are difficult to access and afford, therefore creating huge entry barriers for small operators.

Commercial-grade kitchen space

Commercial kitchen spaces built for professional food preparation would ideally be available to all. With limited ways to own such spaces, affordability challenges, and lack of access to such spaces versus larger food companies, it is insufficient to simply suggest that independent operators should be getting their own commercial spaces too.

Smaller operators need to build their business to a certain level of scale and profitability to afford such spaces, and need an avenue to scale their business until they can reach a size where commercial grade kitchen space makes logistical and financial sense.

Food Reform is Happening

There is a rapid expansion of homemade food reform occurring.

From 2015-2019, the United States of America witnessed a rapid expansion in cottage food laws and other homemade food laws, in attempt to foster local food communities and economic growth (this was prior to COVID). COVID accelerated adoption of these frameworks.

March 2020
South Dakota
(HB 1125)
South Dakota scrapped the state’s ban on selling homemade food from home and eliminated the sales cap of $5,000.
District of Columbia
(B23-0192)
Washington, DC had enacted a cottage food law so restrictive that by 2018 there were only 3 registered cottage food producers. IJ worked with entrepreneurs across the District to expand allowed venues, raise the revenue cap and streamline registration.
June 2020
Mississippi
(HB 326)
Mississippi raised the annual revenue cap to $35,000 and expanded the law to allow online sales.
March 2021
Utah
(HB 94)
Building on its 2018 legislation, Utah enacted a “microenterprise home kitchen” law to allow entrepreneurs to sell homemade meals with meat as long as they have a permit.
April 2021
New Mexico
(HB 177)
IJ and a coalition of home bakers worked to pass a bill that eliminated Albuquerque’s ban on selling homemade foods, the permit requirement across the state, and the requirement that foods may only be sold at farmers markets and events, allowing sales from home, online, and by mail delivery.
Montana
(SB 199)
Building on the success of its 2015 legislation, Montana passed the Local Food Choice Act to allow producers to sell almost all foods, except certain meats, directly to consumers.
Arkansas
(SB 248)
SB 248, which allows online sales and sales to retailers and expands the types of shelf-stable foods that can be sold, was successfully passed with support from IJ.
May 2021
Alabama
(SB 160)
A coalition of home bakers worked with IJ to pass SB 160, which removed the revenue cap, allowed online sales, and expanded the types of shelf stable foods that can be sold.
Minnesota
(SF 958)
IJ and the Minnesota Cottage Food Producers’ Association successfully advocated for SF 958, which allows cottage food producers to form as LLCs, raises the $18,000 revenue cap to $78,000, and allows producers to sell pet treats.
Oklahoma
(HB 1032)
IJ teamed up with a coalition of home food entrepreneurs to successfully advocate for HB 1032, which allows the sale of most homemade food and drink, except meat and seafood, up to $75,000 in revenue, and allows sales in more venues with less red tape.
June 2021
Florida
(HB 663)
Supported by IJ and a coalition of home bakers, HB 633 raises the revenue cap to $250,000, allows sales to retailers and by mail delivery, and prevents local governments from adding additional regulations for cottage food producers.
August 2021
Illinois
(SB 2007)
Aided by IJ, this bill eliminated the requirement that cottage foods be sold only at farmers markets and prohibits home rule governments from enacting rules inconsistent with state law, while keeping a wide range of allowed foods and no sales cap.
September 2021
California
(AB 1144)
IJ worked with a coalition of home food entrepreneurs across California to pass AB 1144, which raises the revenue cap, allows the sales across county lines and allows sellers to ship their foods to customers by mail delivery and at retail stores.
October 2021
New Jersey
(53 N.J.R. 1711(A))
Prompted by an IJ lawsuit, new state agency rules lift the ban on homemade food and allow people to sell any shelf-stable homemade food, making New Jersey the 50th and last state to allow the sale of homemade foods.
March 2022
Indiana
(HB 1149)
With help from IJ, Indiana legalized selling homemade food online, via mail delivery, and from home.
South Dakota
(HB 1322)
Working with IJ, South Dakota legalized the sale of home-baked goods that require refrigeration and fermented foods.
April 2022
Tennessee
(SB 693)
Tennessee legalized retail sales and hiring full-time employees for cottage food businesses, and also banned municipalities from imposing additional regulations.
May 2022
Connecticut
(SB 187)
With help from IJ, Connecticut doubled its revenue cap from $25,000 to $50,000 for cottage food businesses.
Maryland
(HB 178)
Maryland doubled its revenue cap from $25,000 to $50,000 for cottage food businesses.
South Carolina
(S. 506)
With help from IJ, South Carolina greatly expanded the types of shelf-stable foods that can be sold and legalized selling cottage food products at grocery stores and other retail outlets.
June 2022
Missouri
(HB 1697)
Missouri lifted its sales cap and allowed online sales for cottage food businesses.
Louisiana
(HB 828)
With help from IJ, Louisiana raised the sales cap for cottage food businesses to $30,000.
Iowa
(HF 2431)
Working with IJ, Iowa greatly expanded opportunities for homemade food businesses by allowing the sale of pickled and fermented foods, as well as certain meat products.

Since 2015, 34 states have either created new homemade food programs or expanded their existing laws. Five states have legalized the sale of home cooked meals that contain meat, since 2019. For more information on these laws, the Institute for Justice has published an excellent portal on this development in the USA.

Precedent Regulation

What is the regulatory model to activate home kitchens that prepare high risk foods for sale and consumption?

In 2019, The Microenterprise Home Kitchen Operation (MEHKO) regulation was established in Riverside County, California. The California Department of Public Health’s MEHKO portal tells the story of the regulation’s developments.

The MEHKO is a type of food business regulation that allows individuals to legally prepare and sell food from their home kitchens in certain states and localities within the United States. This regulation is designed to support small-scale food businesses and entrepreneurs who may not have access to commercial kitchen space, and places smart regulatory restrictions to mitigate the risks of these businesses. The Cook Alliance’s FAQs answer many of the common questions one would have about the MEHKO regulations.

Highlighting Specific / Critical MEHKO Features

Food managers / handlers certificate required
Standards to qualify home kitchens as approved food facilities
Meal volume caps to limit overproduction in undersized kitchens
Standard operating procedures (SOPs) and facility inspections
Practical criterion adjustments / additions to replace traditional commercial food service checks (e.g, commercial dishwashing, HACCP)

California is setting a precedent with rapidly expanding MEHKO laws

First adopted within Riverside County, CA, MEHKO law has rapidly expanded across California counties:

Alameda County
Berkeley
Imperial County
Riverside County
San Diego County
San Mateo County
Santa Barbara County
Solano County

The domino effect has started, as MEHKO laws (with advancements and regional-specific differences) are systematically being added to existing home-based food laws:

California — MEHKO
Utah — MEHKO
Iowa — Food Freedom
Wyoming — Home Food Processing
Vermont — Home Caterer

Health & Safety Processes

Breakthrough health & safety tools, systems and processes for operators and regulators.

Daily check-in, during cook, and check-out SOPs

Tools for small operators to provide a window of transparency – a daily digital log to provide to regulators as proof of best compliance, and to protect consumers and operators alike.

SOP guidance for high risk & low risk foods

Gain the ability to provide operators with custom SOPs for the preparation of foods with different risk profiles. Custom built for cities, provinces and states.

Allow regulators to simulate better inspections

In-person inspections can only be done on a limited cadence with minimal inspecting resources. Our product enables regulators to initiate real-time inspections to complement traditional inspection.

Seamlessly build into any existing food safety law

These processes are meant to be in addition to Food Handler Certificate Requirements, and other food safety laws already in place in your area.

This is just the beginning of a large movement that needs direction.

The expertise and systems we’ve developed equip us to be the regulatory & technology leaders to make this movement better and long lasting and work with regulators across the world to do so. Contact us to help tackle the challenges in our industry and learn more about our Health and Safety Portal.

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