Do Cottage Food Laws Reduce Barriers to Entry for Food Manufacturers?

States have increasingly adopted cottage food laws across the United States. The laws allow small-scale food entrepreneurs to produce nonrefrigerated foods in home kitchens and sell them via direct-to-consumer outlets. Research has not yet established if the policies are, as intended, supporting start-up food manufacturing businesses nationally. We estimate a differences-in-differences model using state-level panel data to evaluate whether the passage of cottage food laws impacted the number of manufactured baked good establishments. We find a positive impact on the number of both employer and nonemployer businesses, with a relatively greater proportional impact for nonemployer businesses.

Automated summary

States across the United States are increasingly adopting cottage food laws, allowing small-scale food entrepreneurs to produce and sell food from home kitchens. Research shows a positive impact of these policies on supporting start-up food manufacturing businesses.