The Cottage Food Sales Cap: What It Is
Most states limit annual gross sales from cottage food operations. These caps range from $7,500 (Delaware, Rhode Island) to $250,000 (Florida), with most states in the $15,000-$50,000 range. Several states — including Texas, Montana, Wyoming, North Dakota, South Dakota, and Montana — have no cap at all.
What "Exceeding the Cap" Means Legally
The sales cap in cottage food law is a condition of the cottage food exemption. When you exceed it, you are no longer operating legally as a cottage food producer — you are operating as an unlicensed food manufacturer, which is a violation of state food safety law.
Potential Consequences
- Warning notice — the most common outcome for first-time, discovered-by-complaint situations; the agency orders you to come into compliance
- Civil penalties — fines for operating an unlicensed food manufacturing operation; specific amounts vary by state
- Order to cease operations — stop selling immediately until licensed
- Product seizure — in extreme cases, regulators can seize product that was made and sold illegally
What to Do When You Approach the Cap
- Stop selling for the year — simplest option if you are near the cap late in the year
- Transition to a licensed commercial kitchen — obtain a food manufacturer license and produce in an inspected facility. Shared-use commercial kitchens make this feasible without buying your own equipment. Once licensed, there is no sales cap.
- Restructure your business model — some sellers move to a recipe development or consulting model, or pivot to products not covered by the cottage food framework
Keeping Records to Stay Within the Cap
State regulators generally do not audit cottage food producers proactively. But if a complaint is filed or you come to an inspector's attention, you may need to demonstrate that you stayed within the cap. Keep a running total of every sale from January 1 forward. A simple spreadsheet with date, venue, and amount is sufficient.