Regulations

Food Freedom Law Appetizing to Entrepreneurs and Home-Based Businesses

By Sarah Curry, DBA

Everyone loves a good farmers’ market on a hot summer afternoon, and Iowa has a long history with these classic representatives of direct retail. The first one in the state began in 1858 at the Dubuque city hall building, where it still operates today. This summer, however, Iowa is home to only 172 farmers’ markets across the state, which is a drop from 216 the summer before COVID struck the United States.

Source: LSA

The pandemic affected many areas of our economy, but small, home-based businesses, like those that participate in farmers’ markets, were hit extraordinarily hard. Many Iowans look for ways to earn a living or grow a small business with relatively low start-up costs, and producing homemade food is an affordable, flexible, and safe way to do that. Unfortunately, cities and counties stand in the way of these dreams when they regulate home-based businesses and impose costly restrictions through a patchwork of outmoded zoning, licensing, and permitting requirements.

The Iowa Legislature and Governor Kim Reynolds addressed these obstacles this year with a law bringing more freedom to our hometowns: HF 2431. The legislation prohibits cities and counties from imposing unreasonable regulations on home-based businesses, such as having to pay application fees to register businesses. As inflation tightens family budgets, people who desire to work from home without disturbing their residential neighborhoods should be able to do so. It's common sense.

The new food freedom law clarified that all shelf-stable food can be sold direct-to-consumer, including online sales. Additionally, home bakeries can expand their menus to include a broad variety of foods that require refrigeration, bringing Iowa into step with comparable laws in Wyoming, Montana, and North Dakota. The law also increased businesses’ gross sales cap from $35,000, which was one of the lowest in the country for home-based food producers, to $50,000.

These changes to Iowa’s food freedom law fixed many of the prior rules’ problems while allowing producers to earn a living and grow their businesses. Other states that have adopted similar food freedom laws have seen great benefits. For example, within two years of neighboring Minnesota’s expanding its homemade food law, more than 3,000 home-based food producers registered with the state, each representing a small business. By July 2022, that number had more than doubled. Nebraska had a similar experience after the state enacted its home-based business or cottage foods law in 2019; during the pandemic, this industry grew to 963 registered businesses across the state.

With its own food-freedom law on the books, Iowa will hopefully see not only a return to the pre-pandemic number of farmers’ markets, but also growth in small businesses. As Iowans recover from disease-driven hardship and now turn to fighting inflation, lighter regulations on businesses and entrepreneurs will create jobs and expand food options, especially in rural areas.