The cottage food industry is a popular and growing slice of Mississippi’s economy. But as is usually the case, the state has not kept up with consumer demands in new markets and current laws are holding entrepreneurs in Mississippi back.
Of course, we are using the word “new” loosely. People have been selling food they make at home longer than we’ve had stores or restaurants. Still, it was just in the past few years that Mississippi “legalized” the industry.
But in a world where the economy has changed, where millions are out of work, and where we’re still a little unsure about going back to the office, home-based businesses like cottage food operations stand to grow even faster. If government allows the market to work.
The Mississippi cottage food law has an annual sales cap of $20,000. Most operators don’t approach the cap, but why is it there? This is the third lowest cap among states with a cap, something the majority of states, including Arkansas and Tennessee, do not even have. All the cap does is restrict an entrepreneur’s ability to earn a living, which then negatively impacts the state’s tax base. If a single mom can sell $100,000 worth of goodies she bakes in her kitchen while trying to homeschool her child during the pandemic, she should be able to.
The state has already said it is okay for her to make up to $20,000 in her kitchen, why can’t she make more? If “health and safety” is the concern, as established restaurants and bakeries would like to claim, it doesn’t matter whether they are making $5 a year or $10,000 a month.
But, of course, we know there’s no real health concern. There has not been evidence to suggest that the lack of comprehensive regulations pose a threat to public health as some indicate. Consumers know what they are purchasing, where they are purchasing it from, and that it does not come from a government-inspected kitchen. They willingly accept the so-called risk.
And as we know, today’s technology makes it easy to find high-quality food, read reviews from happy (or unhappy) customers, and make knowledgeable decisions. Online reviews and apps are doing the job of a government inspector. The free market is the most effective regulator. Instead of needing the cookie police, we know an individual who sells an awful-tasting cookie or cake won’t remain in business long.
The other unnecessary regulation on cottage food operators is a prohibition on internet sales. Initially, the Department of Health interpreted this to mean that you couldn’t even post a picture of the food you just made on Facebook or Instagram. We clearly had a lot of outlaws on the streets in Mississippi.
They even went so far as to send cease and desist letters to home bakers who dared to post pictures on social media. They’ve said that’s no longer their practice, but the vague law remains. Cottage food operators are also currently prohibiting from selling to restaurants and retail stores.
Fortunately, the legislature has shown an interest in expanding and updating the current law. While we don’t know exactly what bills the legislature will be tackling for the remainder of this session, the House passed a bill, House Bill 326, that would remove the internet prohibition and expand the cap to $35,000. While there is no reason for a cap other than protectionism, this is a step in the right direction. That bill passed the House unanimously and awaits action in the Senate.
By eliminating the current restrictions on the cottage food industry in Mississippi, we can give consumers new options, grow the economy, and encourage entrepreneurship. Barriers to economic liberty have long existed in Mississippi, but this is something we should be interested in removing, especially during the current times.
We need to embolden small business growth, even the smallest of businesses. Freeing home-based businesses like cottage food operators is the right thing to do.
This column appeared in the Starkville Daily News on May 19, 2020.