The Story of Kentucky House Bill 263

Filed on January 29th, by Representative Richard Heath during this year’s general session, this new law took effect on July 14, 2018. The bill changed Kentucky cottage food law to classify home-based processors as an person who “produces or processes whole fruit and vegetables, mixed-greens, jams, jellies, sweet sorghum syrups, preserves, fruit butter, bread, fruit pies, cakes, or cookies” our of his or her home. The best place to find out what the law states is by reading House Bill 263, which can be done here: http://www.lrc.ky.gov/recorddocuments/bill/18RS/HB263/bill.pdf

Before HB 263 was enacted, Kentucky only allowed farmers or people who grew their main ingredients to become home-based processors. Today, 743 home-based processors are currently registered with the Commonwealth. Since Kentucky has around 75,000 farms, that translates to roughly one processor for every 100 farms. Now that the program has expanded to potentially millions of non-farmers, hundreds, if not thousands, of new home baking businesses have the opportunity to be earning some serious “dough”. By using their own kitchens, home-based processors can avoid having to rent out commercial kitchen space. That rent can be prohibitively expensive, particularly for entrepreneurs just starting out.

With the passage of House Bill 263, Kentucky has joined 47 other states with similar laws in effect, according to the Institute for Justice, a libertarian nonprofit law firm. Previously, home bakers could be fined up to $5,000 if found selling their goods. One of those food entrepreneurs is Jennifer Lopez (not the singer), who started her own custom cake business out of her home in Missouri. But when she moved across state lines to Paducah, Kentucky, selling her cakes would suddenly turn her into a criminal. She started a website,  http://kentuckyhomebakers.com/, in July 2017 that features information about the cottage food bill, asks for support and features stories of everyday Kentuckians who bake and sell cookies, cakes, cupcakes, pies and other treats out of their homes.

HB 263 also greatly expands where home-based processors can sell their treats. Previously, sales were only permitted on one’s farm, at roadside stands, or at one of Kentucky’s 160 farmer’s markets. In addition to those venues, the new law allows sales anywhere that is directly to a consumer within the state, including out of a home (whether by pickup or delivery) and online. Wholesale, such as to grocery stores and restaurants are prohibited. The bill does not limit how much home-based processors can produce from their kitchen, but farmers who now qualify as home-based microprocessors, can only earn a maximum net income of $35,000 annually through the sale of homemade goods, jams and other processed food items. They can also sell acidified and low-acid canned foods, which home-based processors are not allowed to do, according to the altered law. Information regarding labeling requirements for home-based processors in Kentucky can be found here https://chfs.ky.gov/agencies/dph/dphps/fsb/Documents/LabelingRequirementsforHomeBasedProcessors.pdf

The new law does NOT require bakers to buy a permit, be inspected, or pay a fee before selling their non-potentially hazardous foods. If you have questions about starting a baking business in your Kentucky home, I hope you will reach out to me at the Louisville Small Business Development Center on how best to do that for your situation. I look forward to working with you!

Written by Vallorie Henderson Management Consultant

Written by
Vallorie Henderson
Management Consultant