California AB626 Home based Business Food Business

Posted by Damian Robert on

I've had a lot of questions about the following content that I'm going to give to you guys today. And it's about California's new bill, the Ab six two six, which is allowing homes to open their doors, almost like restaurants. And we're going to get right to it on marketing food online.

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So I've had a lot of requests and questions and a little bit of confusion mixed in with it as well. About what exactly is a B six to six and what is it allow home businesses, home food businesses, food entrepreneurs to really do in their homes and what can they make and what can't they make? And is it even a law that's actually going to benefit food entrepreneurs? So here is exactly, uh, here's a little bit of a rundown of what it is. It's considered a microenterprise home kitchen operation. That's kind of a long title for this type of a business, but it's basically a home based restaurant in a sense. And the state of California has the bill passed. It was initially started in January 1st of this year. Um, it was passed back in September, actually, I believe the date was the 18th, September 18th, 2018, if I'm not mistaken.

And there's a lot of people who are looking towards, uh, towards this as what they may call kind of a, a new endeavor, a new direction for home-based food businesses, um, giving almost pretty much a green light to open a restaurant in a sense from your home. So what I'm going to do in this podcast, I'm going to call it cover and go over a handful a bit of information about what it is and then, uh, the gist of some of the drawbacks to it. Plus also some of the benefits. Um, and then I'm going to leave a link in the description down below. That'll take you to some, uh, official, uh, website pages that will be a little more descriptive. I don't want to necessarily spend two hours talking about that here in the podcast, but I just want it to answer a few questions that I received from some subscribers and kind of figure out exactly what it is that this bill will allow you to do.

Okay, and what opportunities that opens up the doors for. Okay. So here's the thing. The state of California has started the bill. They've initiated the bill, it goes into effect January 1st, which of course we already have passed that date.

Now there's quite a few things that could hold this up from allowing you to partake in the bill. And what I mean by that is it's going to be up to local municipalities to create ordinances that allow this law to go into effect locally. Okay. The state can create a bill. Okay. But local city and counties have to create ordinances in order for this to be effective where you live specifically. Okay. So I know it's a little bit confusing and you're probably thinking why in the world would deal with the state of California creative bill and then the cities and counties have to create additional ordinances to allow the bill to be effective. Well, there's some good reasons and bad reasons for them to do this. Okay. So you've got to understand from the county and cities perspective, um, that there's a lot that goes on to initiate an initializing an initiating these new or a new laws, um, on a local level, uh, whether it might be a health department inspection, if, you know, if you've got a community where there are a thousand new businesses that are selling from their homes and if they happen to have ordinances that, uh, make it effective that the health department and, or the Department of Agriculture has to come in and inspect it, you have to understand that they have to hire new inspectors.

I got to train them. You know, there's a lot that, that when they roll out these laws that potentially, I'm not saying that that is, but that's just one aspect that the county and city would have to come up with a figure out. You know, who's going to be monitoring this and how do we monitor it, monitor it if it is in need of monitoring, they have to have the staff to do it. Um, so here is a handful of items, uh, to, to be aware of. Okay. I guess you can say the catches to this law. So number one, you need to live in a county or city that creates the ordinance, as I just spoke about. Okay. So you have to actually be in that county or city. You have to have your domain, your residency there.

Um, said yet to sell directly to customers. Now, this is very similar to cottage food laws as you may or may not know, creating baked goods and such and bring them to like a farmer's market. You know, you have to sell directly to your customer and the transaction has to kind of transact to between you two. Okay? There can't be somebody in the middle. Like for instance, you create food and then drop it off at a restaurant and then the customer comes and buys it from the restaurant. There's nothing like that involved. You cannot do that. So you have to be prepared to kind of almost allow people to come to your home and either pick up their food or even literally, you know, eat it there on the premises. Now, I don't know how many people would really be interested in doing that per se.

Um, but you can deliver it. You can bring it to the customer directly. But again, uh, you'd have to do that. Okay? You'd have to bring that to them. You can't, Eh, kind of employ one of these delivery services, uh, based upon what I have read about the bill that you cannot do that. It has to be from the producer, you to the person consuming it. So now the food that you create on a daily basis has to be sold. And you have to sell that on the same day. That's another criterion. So you can't make a big pot of let's say some type of a Gumbo or something, right? And you want to keep that in your refrigerator and you're going to be warming it up all week long. That is something that's not allowed. So in other words, you're, you're really gonna need to almost advertising, promote and get yourself out there as far as letting people know where you are and what you're doing.

Which would also include having a menu. And then when a customer or a person happens to come into your home or they call and say, can you make this or this? And they want to order something, it has to be made and sold on the same day. So that is going to, I don't want to say that creates a problem, but that does also create a situation where you have to have ingredients. Okay. So if you're really going to get into this and you're going to offer a restaurant-style experience in your home, you need to be aware of having ingredients on hand. And having a quantity of those ingredients, enough to fill orders if you're going to really do this. Okay. And again, keep in mind that the only drawback is again is that you got it. We, you'd have to figure out, you've got to get your local city or county to create these ordinances.

Um, but I don't want to backtrack real quick, but you would almost want to, I don't necessarily say petition them, but you would need to contact them and say, look, you know, I'm interested into state passes the law. Do you know of anybody or are we going to get this ordinance passed? Or is this something locally that we can begin to do in our city and county? So you might have to dock on some local commissioners doors and in a sense and try to see who was in charge of making these ordinances and such and then bring this idea to them if they're unaware of it. So, okay. So we got direct sales. So you've got to sell directly to your customers. You got to make and sell the product to the same day. You got to live in the county. Now the other thing is that you can make up to annually $50,000 a year.

Now a lot of people may frown upon that, but I'll be honest with you, if you are just starting a restaurant-style business from your home, an additional $50,000 a year in income is not a bad situation. Now that is gross sales. Okay? So whatever you can net, whatever you can profit from, that is going to be what you actually put in your pocket. Now, that's going to be dependent upon obviously the cost of running your business. And that's a whole nother podcast. So I'm not gonna get too deep into that. But here's the thing. If you have a passionate desire to open a restaurant someday, let's say five years from now, you want to really open a restaurant and your passion is making food, okay? But you don't have any experience doing it. Yeah. You Cook every day or you make some stuff on the weekends for your friends and family that's not running a restaurant.

Um, I can tell you firsthand, when I was in high school and through college, I've worked at a restaurant and it's not like you're making a, you know, chicken wings on the weekend for your friends. It is a much bigger endeavor. But the reason why I say this is that this gives you a great opportunity to experience the idea of having your own restaurant. So if you don't want to jump into getting a $250 thousand or $300,000 loan to open a restaurant, which I would not recommend if you've never done it before. Um, this is actually a great law for people who want to get their feet wet and kind of get a sample and no pun intended, but kind of get a taste for having their own restaurant. Okay. Cause if you can run one successfully from your home is a pretty good chance that you could probably run one out into, you know, somewhere in the real world where you're not necessarily in your home, but you've got your own restaurant.

So it's a great opportunity to get a, experience on how to do it right because you've got to get it. You have to have ingredients, you've got to have packaging, you have to have a menu. You know, there's a lot to doing this. This is not something where you can open your front door and cross your fingers and hope people know that you're there. So when you want to market your restaurant, you've got to figure out how to do that. How do I promote it? How do I create a recipe? How to create menus, all of this stuff. Okay? Now the other drawback and, and this one is really kind of out of all of the restrictions. In my opinion, this is kind of the most restrictive for this new, uh, law. And again, this is the California bill ab six to six. So this one is that you can't make any more than 60 meals in a week.

Okay? So that kind of caps you off at 60 a week. Now granted, that's 240 meals a month. Now, to be honest with you, if you're doing that many meals within, you know, you, you might be able to run a successful restaurant. It sounds like something you could definitely do, but you can't produce more than 60 meals. Okay. Um, and lastly, the other thing, it cannot be considered a cottage food operation. So this is a totally separate type of business from your home. Okay. When you're running a cottage food business that's preparing things like jams or jellies or, or things like musters or condiments, um, nuts and snacks, and then bring it into a farmer's market, go into a fair, going to a festival, selling it out of a booth to a customer that's a totally different business. And I believe from what I've read about this, I've done quite a bit of research about it.

Um, the two of them, if I'm not mistaken, cannot be operated at the same address. Um, if you know something other different than that, please do let me know down in the description below, uh, down in the comment section. But I don't believe you can run both of those things from your home. So now the other thing is there's a few other where you can sell these and where you can't, so where you can sell them, you can definitely sell them through your home. And now this would mean that somebody, of course, has to come and pick it up or you could bring it directly to them. Now you can also do it online. So if you were to create some type of a website that's interactive where someone can create a menu for you, um, and you sold products through the Internet, like a lunch or something, someone clicked and point and basically purchased a product a from you as far as like a meal or something.

You can, you can do that, but you still again, have to deliver it to them. Okay. Or have them come and pick it up. You have to really honestly be very comfortable with strangers coming to your home and picking up lunch if that is something that you were okay with. Now. Now, some of the prohibited places that you can't is obviously events, farmer's markets, or if you do, or like roadside stands or retail stores can't resell these foods. So if you're making a hamburger fries and you're having literally like a lunch menu, you can't sell that product to a retailer. You can't sell that at a farmer's market. That's something that's not allowed. Okay.

Now the other thing is a mail order and wholesale. Obviously, if you're making lunches and things, you're not going to sell launches at a wholesale price, but you also can't ship anything through mail order. Like you can't ship a product or ship your food if you're making a steak and potatoes. Obviously, you don't ship that, but you can't do that anyway. So, and the other thing was that was interesting is under, if you've got this, if you're taking advantage of this specific law, you cannot operate a catering business from your home in that sense. So you can't prepare a whole bunch of foods from your home and then bring it to an event and say, you know what, I'm, I'm just, I'm utilizing that bill ab six to six. That's not exactly what the bill is about. You can't do that. So now the types of foods that are allowed, the list is quite extensive. And again, I'll have resources for much more in-depth information. Again, I don't want to take up two hours of time here, but I, I'm going to give you a list of a handful of things that you can do. Bread, cookies, and rolls or Tias and scones, doughnuts and cakes, but cells sweetbreads and things

are allowed, really quick, kind of a side note. Keep in mind the delivery must be made within a certain period of time and what they kind of call a safe period. Um, because the thing is when you're creating, you're working with meats and such or even any type of a steak or something to that effect, it's time and temperature sensitive. So you have to be aware of that. So delivery may only be made by you or your employee or a family member, uh, of the household. So keep in mind that if you want it to have an employee, and I believe you're allowed to have one full-time employee, but you can have family members assist you. They have to be someone who lives at the residency, not somebody who just a friend that comes over and wants to do deliveries. So it has to be someone there who can make deliveries as well.

Again, there's a lot of stipulations, there's a lot of little things that are part of this law and it's gonna really be up to hopefully if you guys are listening to this, you have to kind of petition in a sense, go to your local county and zoning planning in such a departments and you know, let them know, look, I'm really interested in this wall. Can we get something going in our county? So keep that in mind. So let's see. Let's check out the next couple of things that you would have to do. So, um, the great thing is that you can really almost make almost anything with this business, uh, as far as the types of foods you know, but you must prepare and serve it on the same day. Like I mentioned before, um, the law is mostly a for people who were operating a food service establishment for meals. Um, so these are really full-blown lunch meals and such that you're making or dinner or whatever it may be. Um, and that's really the goal. That's the aim of,

okay.

This bill. Okay. I'm just double checking some of my notes here. Okay. So the other thing I wanted to mention is there, of course, the limitation like I mentioned about the 30 meals. Now the type of you, you cannot have as many employees as you want. Usually, the state will have some specific information about how many you can have, how many full-timers were part-timers you may have. So keep that in mind. You can't just bring on a board, you know, 20 people in your house to be cooking meals. That's something that I would highly doubt that that amount of people can assist you with. Now, working from home creates a few issues. If you happen to have pets, obviously you know, animals and pets, dogs, cats and birds and things, they cannot be in the kitchen or even I would not even allow them near the kitchen because you don't want any type of issues with a dog hairs or something to that effect. Uh, coming into food when you're trying to prepare it. So if you do have paths, but you're really interested in, in doing this, you may want to think about some specially designated place in your home, far enough away from your kitchen that this won't become an issue.

Okay.

Now, so the other thing you want to keep in mind is it, once you have a, what are these restaurants set up at your house? You have to use what's known as your primary residence. Okay? So what I mean by that is that this has to be the home that you specifically you live in. Um, and it can't be 10 or 15 houses down the street with your friend or your buddy you are where you're just preparing food there and then bring it to your own home. Obviously, that doesn't make sense, but that's something that you can't do. So you want to keep in mind that you have to use what's known as your primary residence.

Um, so a few other things that you may want to keep in mind. So the permits business permits. Now the business permit, uh, in, in some counties is different than the type of state, uh, permit of the, um, that you want to apply for when you have a, each county's basically each county's health department will have its own permit or process. So, um, you need to be in mine. Um, all types of food products you're willing to handle, needs to be made aware to them. They need to know what you're making, uh, the different ways that you prepare the food that a, that you'll be using during the food preparation. So basically what it's known as, they're like preparation time. So the time it takes to prepare products and the procedures you use to make them, you want to basically be aware of that as well.

Now the other thing, excuse me, that the health departments we'll probably want to know, and normally this is a kind of a normal procedure, is also how are you cleaning and disposing of certain types of equipment? How are you clean those, uh, pieces of equipment that you're using for your restaurant cooking? They'll need to know about that. Um, how do you plan on during delivery or pickup once your food is prepared, how are you maintaining that proper food temperature too? So that's something that needs to be spelled out and more or less the health departments will want to know basically that you understand the process. Okay? So if you've got an understanding of the temperatures of how the food will be kept because they don't want it to fall below any temperatures where bacteria could potentially form or become something hazardous, they're going to want to know how are you, you know, to, Hey Damien, how are you? How are you keeping these foods at certain temperatures? You'll need to let them know as well.

The other thing is that many of the homes, uh, this is kind of a normal thing also through cottage food business, but I would definitely be sure that this would happen is that you need to have a home inspection. Uh, normally the health department will determine if your home meets the requirements for this law. Uh, there may be certain types of maybe equipment, maybe there are certain types of how your kitchen is laid out or is there how it's arranged that may either limit you or hinder the idea and they could, they could give you some ideas about making improvements to allow this law to, to be used at your residence. Okay. Uh, cause not every single scenario or kitchen, you will get a checkoff and then, you know, get the thumbs up to do it. There may be a few things that you may have to do, so keep that in mind as well. Now, the other thing is that there are food safety certification exams and, and there that's something that as a food business owner, to be honest with you, you should, everybody should have it anyways. Um, and you'll be required to take one of those. And normally those are not very expensive and they don't take very long to take, but it's basically about letting you know, um, that you have certain ways to handle food. You have certain ways to handle certain things at certain temperatures, cleaning and that type of thing.

And lastly, what I'm going to do is I'm going to cover just a few more,

essential things that you need to know about the facility. Now, normally when you, when you talk like a commercial facility or commercial kitchen, uh, has tons of different equipment, um, and a lot of other types of required equipment that must be in place in order for it to be considered a commercial kitchen, you will actually be exempt from those in, in many of the other standards that are normally put on commercial kitchens or something that won't apply to your residency. But they do have quite a few things that you need to be aware of and that you'll have to follow in order for this to work for you. Okay. So, uh, some of the basic things like your, your food preparation area must be well lit, uh, while you're preparing your food. Of course, this would be something to make sure that you, you can see exactly what you're doing. Um, in case something like hair falls into food or something, you're, you're aware of that because of the lighting. Um, some restaurants display foods.

Okay.

And if you have like a display case, if you've got food sitting in that all day, showing your customer what type of foods are available, which there are some restaurants that do this, you obviously can't sell that specific food to customers. Uh, clothing and personal items not typically found in a kitchen should be replaced, um, from your kitchen. Anything that's got like a hat, it could have hair in it and that type of thing. Anyway, some of these are, and a, again, I'll put some links to the websites where you can read more about these. Some of these things are kind of common sense, but they are definitely rules that may make sense in order for you to really make this work in your home. So I'm going to wrap up the podcast. Uh, as I said, I'm just giving you some really super basics about this.

I wanted to make sure that some of this information was covered. I had a lot of subscribers asking and I'll have some really helpful, um, links down below in the description. You can click on those and read more about that. But I think at the takeaway, my big takeaway from this is that this is a big step forward in the state of California. I just hope that of course, counties and cities, uh, create ordinances that allow a local residents to take advantage of this law because it would be a great opportunity to create a lot of entrepreneurs and a food entrepreneurs that have, may have never wanted to obviously investor take a plunge in, in, in 200, $300,000 and buying a restaurant. Try it out at home, see if it fits. If it's what you want to do, it's going to give you a great opportunity to do that. And I think that's the greatest idea, the biggest takeaway from this entire law. Even though there are restrictions, even though there's a lot of hoops to jump through, this is an opportunity for you to experience owning a restaurant. And if that's your passion, then if it's successful at home, I would highly doubt you would have any failures in the real world by opening a restaurant. I think you'd be really successful because you've got some experience. So with that being said, I hope this was informative. And again, that's California So really great tips and some information, tidbits of information about how the bill works. And as always, I will see you guys on the next youtube video or on my next podcast, do take care.

 

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