9th Circuit Ruling Creates Liability for Ag Lenders

The 9th Circuit (sitting en banc) recently overruled established case law and expanded trust rights under the Perishable Agricultural Commodities Act (PACA). The court now requires a “threshold true sale inquiry” focusing primarily on the transfer of risk between the parties. If there is no true sale (as with secured loans) then the court’s inquiry stops there and the assets remain in the trust. If there is a true sale then the court will consider whether the transaction is commercially reasonable: those not commercially reasonable remain in the trust while those that are both true sales and commercially reasonable will provide buyers with assets free and clear of the trust.

You can read more about this ruling here.

If you poke an alligator with a stick, expect to get bitten!

Now I know it can be frustrating when someone says “no,” but even my grade school-aged children know better than to respond “well, I’m going to do it anyway.” This is even more so when the person saying no is in a position of authority (i.e., dad). However, not all of us remember the lessons of our childhood and because of that some pay for the consequences of their actions. As such, I expect some FDA enforcement actions will be forthcoming soon.

Two days ago the FDA notified Industrial Chemicals, LLC (and it’s related company INI Botanicals) that it must advise the FDA on its intention to launch its product Mitrasafe, a product containing an extract of mitragynine (i.e., kratom). If that wasn’t enough, FDA Commissioner Scott Gottlieb, M.D. issued a press release noting that Industrial Chemicals’ “claims are unproven and dangerous” and the FDA intends “to take appropriate steps to protect the public health against kratom products that try to circumvent the law.” My interpretation…you just poked the gator, now get ready for its bite!

So how did this situation come about? The FDA previously denied Industrial Chemicals’ request for Mitrasafe to qualify as a new dietary ingredient and notified them that the FDA considers the product an unapproved drug. However, Industrial Chemicals apparently didn’t like the answer they received and instead issued a press release stating that Mitrasafe is “a New Dietary Ingredient that has complied with notification and safety requirements.” In fact, their website is still up and running, advertising the product available for sale starting February 28th.

This is a pretty brazen statement since Industrial Chemicals is opening themselves up not only to FDA enforcement, but also false advertising claims enforced by the Federal Trade Commission. In fact, last month the FDA and FTC jointly issued warning letters to 11 marketers and distributors of opioid cessation products making drug claims similar to Mitrasafe. Industrial Chemicals’ actions may have even possibly exposed themselves to consumer lawsuits for unfair and deceptive advertising.

While Industrial Chemicals is now represented by an attorney (see letter from FDA mentioned above), it is unclear if they are being provided sound advice or if they are just ignoring counsel’s advice. But either way, I don’t expect things to end well for them.

When you’ve spent considerable time, effort and money on a idea or product, it can be hard to handle rejection. But just because a regulator stops you forward progress, it doesn’t mean the end. This being said, there are right and wrong ways to go about overcoming obstacles. In my experience, taunting a 5,000 lbs alligator (i.e., flagrantly disobeying an order) never works out favorably in the long run.

If you have questions about kratom or dietary supplements containing kratom, please contact us here at Morsel Law.

 

FDA Issues Health Advisory for Kratom

The U.S. Food and Drug Administration (FDA) issued a public health advisory that warned consumers not to use the botanical substance kratom, which the agency said “affects the same opioid brain receptors as morphine” and “appears to have properties that expose users to the risks of addiction, abuse and dependence.” In addition to being used to treat pain, anxiety and depression, FDA Commissioner Dr. Scott Gottlieb noted, kratom is “taken recreationally by users for its euphoric effects” — in part because the substance “has similar effects to narcotics like opioids” — and carries “similar risks of abuse, addiction and, in some cases, death.”

Gottlieb also said, it was “very troubling to the FDA that patients believe they can use kratom to treat opioid withdrawal symptoms,” despite the fact that “there is no reliable evidence to support the use of kratom as a treatment for opioid use disorder.” Gottlieb stressed that there are “clear data on the increasing harms associated with kratom,” including a tenfold increase in the number of calls to poison control centers regarding kratom.”

In addition, the FDA has received reports of 44 deaths associated with the use of products containing kratom, and use of the products has been associated with seizures, liver damage, withdrawal symptoms and other serious side effects. Gottlieb stressed, “there are currently no FDA-approved, therapeutic uses of kratom.”

The FDA public health advisory warns consumers not to use any products labeled as containing kratom or its psychoactive compounds, mitragynine and 7-hydroxymitragynine.

This isn’t the first time the FDA has taken action to prevent kratom from distributed and sold to consumers. The FDA issued an Import Alert in 2012 for kratom as an unapproved drug and an Import Alert in 2014 for kratom containing dietary supplements. The FDA has worked with U.S. Marshals Service to seize kratom products from several U.S.-based businesses, including 25,000 pounds of raw kratom, 90,000 bottles of dietary supplements containing kratom, and 100 cases of products containing kratom.

Kratom is listed as a controlled substance in 16 countries. Two of those countries, Thailand and Malaysia, are among kratom’s native countries of origin. The botanical also is sourced from Indonesia and Papua New Guinea. In addition, six states — Alabama, Arkansas, Indiana, Tennessee, Vermont and Wisconsin — have banned the substance; several more have legislation pending.

If you have questions about kratom or dietary supplements containing kratom, please contact us here at Morsel Law.

FDA Label Review to Prevent Food Import Refusal

Labeling violations are one of the leading causes of food import refusals to the United States. In fact, more than 7,000 labeling violations for food products were cited by the U.S. Food and Drug Administration (FDA) in 2017 alone.

If an imported food product is stopped by the FDA for a labeling violation they have three choices: detention, seizure or refusal of admission. None of these are good options for food importers. Know what to avoid to make sure this doesn’t happen to your business.

Below is a list of the top five labeling violations for food imports.

Nutrition information

 

More than 1,000 import refusals in 2017 were due to missing nutritional information. The FDA requires that most food and beverages are labeled with a specifically formatted nutrition facts panel. However, often import food labels include a nutrition facts panel from a foreign country. Unfortunately for the importer these panels don’t meet the FDA requirements and are therefore deemed misbranded under the law.

This will be even more important now that FDA has changed the Nutrition Facts panel to a new format. It is important to make sure you utilize the new format going forward to avoid potential labeling errors.

Ingredients

FDA requires that every ingredient included in a food or beverage be disclosed on the label in descending order of the prominence by weight. The FDA will not only review labels, but will sample products to ensure the labels are what they say they are, which is why it’s important to follow the rules when listing ingredients.

FDA regulations also require ingredients to be listed by specific  names. Imported food products, which often contain ingredients know by different names in their home country, frequently fail to list certain ingredients by the required name under FDA regulations.

Labeling in English

FDA requires that all information on labels appear in English. Labels may include other languages as well, but if a foreign language is used all of the information on the label must appear in that language as well.

Net Quantity

FDA requires a statement that provides the amount of food in a container or package. This statement must include both the U.S. and metric measurement and must be listed in the front of the package.

 

Manufacturer Name

The name and address of the manufacturer, packer or distributor must be listed on a food label. If the importer is not the manufacturer, or if the product is made for the importer, the name and address of the importer may be preceded by “Manufactured for” or “Imported by” if applicable.

 

If the FDA discovers that your food product has one of these labeling violations, the FDA will refuse entry or detain your product. This will end up costing you a lot of money and could potentially damage your relationships with buyers.

FDA is now also required to increase the number of routine inspections overseas at foreign food facilities. If a non-compliant label is found during an inspection, FDA can charge you to reinspect the facility to ensure the labels have been brought into compliance at a rate of $305 USD per hour.

Morsel Law can help assure your labels are FDA compliant through our label review service. Our experts will review and markup your labels to make sure they meet FDA regulations. Order your FDA import label review today and keep your import business running smoothly!

Support Our Heroes – Buy Veteran Made Beer

Discovering Veteran-Owned Breweries

This is the first in a series of articles where we highlight breweries throughout the country owned by military veterans. Our veterans have made sacrifices for our nation and the best way you can say thanks is by supporting their businesses. Next time you’re at the store picking up some cold ones, try a beer from one of the breweries on our list. It’s our way of saying thank you!

NOLA Brewing

Founded in 2008 by former Naval officer Kirk Coco, NOLA Brewing is located in New Orleans, Louisiana. Kirk was on active duty and deployed when Hurricane Katrina unleashed massive destruction across the gulf coast. After leaving active duty, he returned to New Orleans to help rebuild his hometown and shortly thereafter opened NOLA Brewing.

The brewery has a taproom where you can sample or drink as much beer as you want. True to the New Orleans heritage, the beers are named after all things New Orleans. From a Mardi Gras seasonal beer named after a krewe (Muses) to a beer named after the brewery’s neighborhood (Irish Channel Stout) to an IPA made with six type of hops that pays tribute to the street the brewery sits on (Hopitoulas).

If you get hungry, don’t worry they’ve got you covered. Co-located inside the taproom is McClure’s BBQ, one of New Orleans best BBQ joints. While New Orleans isn’t typically well-known for BBQ, McClure’s is no joke and can hold its own against any Southern competition. And if you like sauce with your ‘que, they’ve got just about every style from Alabama white sauce to sweet and tangy Kansas City style sauce.

Tours are offered weekly. Check their events page to learn more.

Bayou Teche Brewing

Credit: Bayou Teche Brewing

Located in Arnaudville, Louisiana, Bayou Teche Brewing was founded in 2009 by U.S. Army veteran Karlos Knott and his brothers. Karlos developed an appreciation for the finely brewed beers of Europe while stationed in Germany. He learned to appreciate the regional foods and beers of many countries, and how they had evolved to complement each other. He decided to brew beer that does the same with with the cuisine and lifestyle of Cajuns and Creoles he grew up enjoying. This is how Bayou Teche was born.

The taproom is open daily where you can enjoy some unique flavorful beers. Bayou Teche pays homage to its Cajun and Acadian roots (Full Disclosure: author shares similar cultural heritage and may have been biased in this review!) when naming their beers, such as LA-31 Bière Pâle their flagship pale ale named after the rural highway near the brewery, LA 31 Acadie a farmhouse ale named in memory of their Acadian homeland in Eastern Canada, and Loup Garou Stout named after the mythical Cajun werewolf rumored to roam the swamps of Southwest Louisiana.

Unique is that visitors can tour the brewery in either English or French. Tours are available every weekend. Check their events page for more info.

Railhouse Brewery

Credit: Railhouse Brewery

Founded by three veterans (Navy, Army and Air Force), Railhouse Brewing opened it’s doors in 2010. Located in small town Aberdeen, North Carolina, Railhouse is Moore County’s first craft brewery. The owners promote their commitment to our country not only by using bottles that feature American Flag bottle caps, but they recently partnered with the KA-BAR knife company to co-brand an English brown ale. As a former Marine, not only were KA-BAR’s standard issue for troops in the field, but I can attest that KA-BAR’s also make excellent bottle openers as well, among other things!

In their pub, you can now only enjoy their wide-selection of beer, but you can grab a bite to eat and shoot some darts. Some of their year round beers include Free yourself from Corporate America (i.e., FCA IPA), Mastiff Oatmeal Stout and Pineland Pale Ale. Their beer has received several awards, including first place for Stout in the North Carolina Brewer’s Cup 2013 and Best in Show at the 2013 Blues N’ Brews Festival. The KA-BAR Brown Ale not only won a gold medal at the 2013 International Craft Beer Awards, but Marines stationed at Camp Mujuk in South Korea (one of the largest U.S. Marine Corps bases in the world) can find it readily available.

The pub is open daily and tours of the brewery are offered regularly, but they suggest to call in advance for the schedule.

New Tax Cuts for Craft Breweries and Distilleries

The sweeping tax overhaul law passed last week by the U.S. Congress included the Craft Beverage Modernization and Tax Reform Act of 2017 which will lower excise taxes for small brewers and distillers starting January 1, 2018. The tax cuts give small producers more profit that can be used to help them expand, experiment, market or even lower prices. As mentioned in an earlier article, the legislation has been widely supported throughout the alcohol beverage industry as a means to further growth.

Small producers of distilled spirits (i.e., rum, gin, vodka or whiskey) will pay a tax of $2.70 per gallon on the first 100,000 gallons, then $13.34 per gallon thereafter.

Craft breweries will pay a tax of $3.50 per barrel on the first 60,000 barrels. Large producers brewing more than 6 million barrels will continue to pay $18 per barrel, the current level for beer.

While craft beer makes up about 12.3% of the beer market and craft distillers about 12.1% of the spirit sales, the tax savings will probably not translate into cheaper alcohol beverages. Most likely craft brewers and distillers will use the money to expand operations by adding additional employees and move into more markets. But regardless the outcome, this new law is certainly a win for all small alcoholic beverage producers.

How to Read Whiskey Labels

The demand for whiskey (or “whisky” without the the “e”) has grown at a tremendous pace over the past decade, especially American whiskey which grew at almost 7 percent in 2016 according the the Distilled Spirits Council. This growth has led to new brands being launched and existing brands to reinvent themselves to hold onto or capture more of the increasingly competitive shelf space. But with so many bottles to choose from how can consumers tell one from another?

Now if you want to read the technical definition of the Standards of Identity, you can read them in the federal regulations. But if reading legal jargon makes your stomach feel like it does when you get home at 7 a.m after partying all night in Tijuana with a bunch of Marines, then we’ll break down what you need to know when shopping for that precious brown liquid.

1. What makes “whiskey” legally whiskey?

Whiskey may be made from any type of grain (from anywhere in the world) and distilled up to 190 proof, but bottled at no less than 80 proof. It must be aged in oak barrels (except for corn whiskey) and you can add caramel color, sugars and other things to it to get it to look, smell and taste like whiskey.

2. How about “bourbon whiskey”?

Bourbon whiskey (which includes in the definition “rye whisky”, “wheat whisky”, “malt whisky” and “rye malt whisky”) is whisky produced at least 51% of the specified grain for type of whiskey, distilled at no more than 160 proof, and stored in a brand new charred oak barrel at less than 125 proof. No other ingredients are permitted to be added to the whiskey except water (or other bourbon). Oh and by the way, it doesn’t need to made in Kentucky…although Kentuckians will probably disagree!

3. …and “corn whiskey”?

To be able to call a whiskey “corn whiskey” it must be at least 80% corn, distilled at no more than 160 proof, and stored in a used charred oak barrel or a brand new uncharred oak barrel.

4. “Straight” whiskey

This means that the whiskey is aged at least 2 years in charred new oak barrels (straight corn whiskey in either used charred oak barrels or new uncharred oak barrels). It can be a blend of more than one straight whiskey type (i.e., bourbon, rye, wheat, corn), provided all the whiskey comes from the same state.

5. Bonded or Bottled-in-Bond

To be labeled “bonded” or “bottled-in-bond”, the whiskey must be the product of one distilling season (January to December) and one distiller at one distillery. The whiskey must be aged for a minimum of 4 years under U.S. government supervision and bottled at 50% ABV (100 proof). The bottled product’s label must identify the distillery where it was distilled and, if different, where it was bottled.

6. “Distilled”

This is a confusing term, but is key to understanding who is actually making the whiskey. TTB regulations require a statement disclosing where the whiskey was distilled, so you can look on the label for either “distilled by” or “distilled in“. If a distillery makes the product, then they can state on the label “distilled by” or “distilled and bottled by” followed by the name of the distillery. If the whiskey is the product of a rectifier (people who buy and bottle whiskey from distilleries), then the label may read “distilled in Kentucky”, or “distilled in Kentucky, bottled by” (followed by the name of the company). If the label list terms, such as made, bottled, produced, handcrafted, etc., this is done to make it appear they distilled it, when in fact they didn’t.

7. Small Batch

There is no legal definition for this term, so it could mean anything from 5 barrels to 5,000 barrels in a batch. The brand themselves determine what this means, so it really is only helpful to differentiate between the products the brand makes from each other.

8. Single Barrel

Single barrel is a batch from one barrel. The whiskey is then bottled it one barrel at a time, therefore each bottle is going to be a little bit different. This is unlike small batch where the whiskey would taste the same each and every time.

9. Barrel Proof

When the label states barrel proof this means the whiskey was bottled at the actual proof that an aged whiskey was barreled at with no added water. The whiskey is filtered to make sure to clean all of the char, but it is bottled at that proof. Since some of the whiskey is lost to evaporation as ages in barrels, the proof in the barrel can go up. So if you like high proof whiskey, look for those bottled at barrel proof.

The holidays are quickly approaching and there is no better time to pick out that special bottle of whiskey as a gift. After reading this article you are armed with the knowledge to make your shopping experience more meaningful and selection more informed.

Happy drinking from all of us here at Morsel Law!

 

Top 3 Provisions Food Businesses Need in LLC Agreements

A limited liability company (LLC) is an attractive option for food and beverage entrepreneurs because it provides liability protection similar to a corporation and favorable income tax treatment similar to a partnership. Plus an LLC affords its owners flexibility to structure their operations and business relationships with their partners.

The terms of how the business operates is usually established in an operating agreement. While not all states require an operating agreement, it is highly recommended for businesses with 2 or more members. Most state laws contain default provisions for the many organizational issues that arise, but not all. Regardless of what state you operate in here are the most important provisions you should include in your operating agreement to make your business run smoothly.

1. Management Deadlock

Many food businesses begin with two partners excited to bring their new concept to fruition. Since this relationship is often formed out of a friendship, the owners frequently decide to split ownership 50/50. This situation usually works fine until the relationship sours and the owners disagree on a matter. If neither side will relent, then deadlock occurs. The remedy for deadlock in many states is for a court to order dissolution of the LLC, meaning that the business can no longer operate and must liquidate.

In a recent case, celebrity chef Gordon Ramsey sought dissolution of an LLC that that developed and operated burger-themed restaurants in Las Vegas. Ramsey owned 50% of the LLC and asked his partner to withdraw, but he refused. Since the operating agreement lacked a tie breaking mechanism, the result was a deadlock. In the end the court ordered the LLC to dissolve because deadlock between the parties rendered it no longer reasonably practicable for the LLC to operate in accordance with its operating agreement.

The Ramsey case should serve as a warning to other food businesses on the importance of addressing management issues upfront when the relationship between the parties is strong. A well-drafted operating agreement can avoid this potential fatal flaw and keep the business operating.

2. Transferring Ownership

You cannot predict the future so its important to plan for potential life changing events. The default rule in many states is that members may freely transfer a membership interest in the LLC to anyone, but the new owner may be treated differently, including not be entitled to vote unless a majority of members agree to make them full members. If members are freely allowed to transfer their interests they may find themselves faced with new business partners they do not want. In certain circumstances a member’s interest could be transferred involuntarily, such as death, divorce or bankruptcy. To avoid uncertainty in these situations members may want to put restrictions on transferability in the operating agreement.

3. Additional Contributions

As the business grows it may require additional capital. Many businesses turn to their members to supply the money, which is referred to as additional capital contributions. The law in most states provide flexibility in how LLCs deal with the need for additional capital in their operating agreements, such as members are not required to make additional contributions, or it may require additional contributions and permit one member to make an additional capital contribution for another member that fails to make a contribution in exchange for a portion of the member’s membership interest.

There are many possibilities to choose from, but members should consider the effect the additional capital contribution language has on the limited liability of the LLC. Some courts have interpreted the additional capital contribution language as requiring the members to pay LLC debt that the LLC cannot pay itself. This would therefore defeat a major benefit utilizing an LLC where members are not individually liable for the debts of the LLC. However, the members may avoid this by stating in the operating agreement that additional capital contributions are never required and the members have no personal liability for the debts of the LLC. But by taking this course of action it may cause problems later if the LLC needs additional capital.

 

The important takeaway here is to consider and plan for the potential needs of the LLC, and to do so in a way that doesn’t result in unintended consequences for the LLC or its members. An operating agreement is a road map and tool to navigate through difficult challenges and obstacles.

If your have questions about your operating agreement, please contact our attorneys at Morsel Law.

How to Start a Home-Based Food Business in Michigan

So you’ve got a killer recipe for double fudge peanut butter cookies you promised your grandmother never to reveal to anyone. When you put them out at parties they disappear quicker than the Cleveland Browns chances of making the playoffs. Your friends and family have told you countless times that you could make a killing selling these cookies, but you never took them seriously. But, while recently watching your favorite showing on the Cooking Channel, you finally realize you can do what these cooks are doing and decide to launch your own cookie business. But you’ve never started a business before, let alone a food business, so where do you begin?

Since you are working with a limited budget, you rule out starting your own manufacturing facility or hiring a contract manufacturer produce the cookies for you. You narrow your options down to renting space in a shared commercial kitchen or baking out of your home. Although your friends and family rave about the cookies you give away (which they should!), you’re uncertain whether people are willing to pay for your delicious product. Based on this analysis, you decide baking in your own kitchen is the most cost effective way to go until you prove there is a market for your cookies.

Now that you’ve decided to start a home-based food business (commonly referred to as a Cottage Food business), you ask yourself: “what do I do now?” The laws and regulations governing food businesses are difficult to navigate and can seem a bit daunting, but don’t let that discourage you. In this article we will walk you through the steps to start a home-based food business under the Michigan Cottage Food Law.

Where You Can Sell

In Michigan, cottage foods may only be sold by the producer directly to the consumer at farmers’ markets, farm stands, roadside stands and similar venues. Cottage foods cannot be sold to a retailer for resale or to a restaurant for use or sale in the restaurant. Cottage foods cannot not be sold over the Internet, by mail order, or to wholesalers, brokers or other food distributors for resale. Cottage Food businesses may take orders over the phone as long as the cash transaction and delivery of the product is face to face; however, Internet orders are prohibited. Shipping or third-party delivery of cottage food products is also prohibited.

Permitted Foods

Under the Cottage Food Law, only non-potentially hazardous foods that do not require time and/or temperature controls for safety are permitted to be made in a home-based kitchen. “Potentially hazardous food” is food that can be safely kept at room temperature and do not require refrigeration. Examples of permitted foods include: Breads; Similar baked goods; Vinegar and flavored vinegars; Cakes, including celebration cakes (birthday, anniversary, wedding); Sweet breads and muffins that contain fruits or vegetables (e.g., pumpkin or zucchini bread); Cooked fruit pies, including pie crusts made with butter, lard or shortening; Fruit jams and jellies in glass jars that can be stored at room temperature (except vegetable jams/jellies); Cookies; Dry herbs and dry herb mixtures; Dry baking mixes; Dry dip mixes; Dry soup mixes; Dehydrated vegetables or fruits; Popcorn; Cotton Candy; Non-potentially hazardous dry bulk mixes sold wholesale can be repackaged into a Cottage Food product (similar items already packaged and labeled for retail sale cannot be repackaged and/or relabeled); Chocolate covered pretzels, marshmallows, graham crackers, Rice Krispies treats, strawberries, pineapple or bananas; Coated or uncoated nuts; Dried pasta made with eggs; Roasted coffee beans or ground roasted coffee; Vanilla extract (Note: these products require licensing by the Michigan Liquor Control Commission); Baked goods that contain alcohol, like rum cake or bourbon balls (Note: these products require licensing by the Michigan Liquor Control Commission).

Prohibited Foods

Potentially hazardous foods are not permitted to be made in a home-based kitchen. Examples of prohibited foods include: Meat and meat products like fresh and dried meats (jerky); Fish and fish products like smoked fish; Raw seed sprouts; Vegetable jams/jellies (e.g., hot pepper jelly); Canned fruits or vegetables like salsa or canned peaches; Canned fruit or vegetable butters like pumpkin or apple butter; Canned pickled products like corn relish, pickles or sauerkraut; Pies or cakes that require refrigeration to assure safety like banana cream, pumpkin, lemon meringue or custard pies, cheesecake, and cakes with glaze or frosting that requires refrigeration (e.g., cream cheese frosting); Milk and dairy products like cheese or yogurt; Cut melons; Caramel apples; Hummus; Garlic in oil mixtures; All beverages, including fruit/vegetable juices, Kombucha tea, and apple cider; Ice and ice products; Cut tomatoes or chopped/shredded leafy greens; Confections that contain alcohol, like truffles or liqueur-filled chocolates; Focaccia style breads with fresh vegetables and/or cheeses; Food products made from fresh cut tomatoes, cut melons or cut leafy greens; Food products made with cooked vegetable products that are not canned; Sauces and condiments, including barbeque sauce, hot sauce, ketchup, or mustard; Salad dressings; and Pet food or treats.

Limitations

Currently, Cottage Food businesses are limited to $20,000 per year in gross sales. The limit will increase again December 31, 2017 to $25,000 per year. You need to maintain sales records and provide them upon request to a food inspector.

Licenses and Permits

Under Michigan law, if you qualify to operate as a Cottage Food business, you are exempt from obtaining a food establishment license. There are no application forms to complete, no registration process and you do not need to obtain a food license or permit. However, the Cottage Food Law does not exempt you from the requirements of the Michigan Food Code, such as not distributing adulterated (unsafe) food.

Local Zoning

Home-based food businesses should be aware of local laws and ordinances, including zoning and small business permitting. It is important to check with your local health inspector to determine whether your home is properly zoned for a home-based food business.

Labeling

If your product is only sold within the state in which you operate, then you are exempt from federal labeling requirements. However, your label must comply with the labeling requirements under the Cottage Food Law.

In Michigan, your product label must contain the following:

  • Name and physical address of the Cottage Food operation (P.O. Box addresses are not allowed)
  • Name of the Cottage Food product (all capital letters or upper/lower case)
  • Ingredients in descending order of predominance by weight. If you use a prepared item in your recipe, you must list the sub ingredients as well (For example: soy sauce is not acceptable; soy sauce (wheat, soybeans, salt) would be acceptable).
  • Net weight or net volume (must also include the metric equivalent)
  • Allergen labeling (as specified in federal labeling requirements)
  • Must include the following statement: “Made in a home kitchen that has not been inspected by the Michigan Department of Agriculture & Rural Development” in at least the equivalent of 11-point font (about 1/8″ tall) and in a color that provides a clear contrast to the background (all capital letters or upper/lower case)

Hand-printed labels are acceptable if they are clearly legible, written with durable, permanent ink and printed large enough to equal the font size requirements listed above.

Below is an example of an approved label:

MADE IN A HOME KITCHEN THAT HAS NOT BEEN INSPECTED BY THE MICHIGAN DEPARTMENT OF AGRICULTURE & RURAL DEVELOPMENT

Chocolate Chip Cookies

Joe’s Cookie Company
123 Chocolate Lane
Dessert City, MI 48009

Ingredients: Enriched flour (Wheat flour, niacin, reduced iron, thiamine, mononitrate, riboflavin and folic acid), butter (milk, salt), chocolate chips (sugar, chocolate liquor, cocoa butter, butterfat (milk), Soy lecithin as an emulsifier), walnuts, sugar, eggs, salt, artificial vanilla extract, baking soda

Contains: wheat, eggs, milk, soy, walnuts

Net Wt. 3 oz (85.05g)

If you have questions about starting a cottage-food business, please contact one of our attorneys at Morsel Law.

Avoid Ice in Your Cocktails at All Costs

Everyone has a favorite go-to cocktail they order when they visit their favorite watering hole. But if the drink is made with ice, you may want to reconsider.

While it’s not new news, a recent article described interviews with several bartenders who noted that restaurants may not clean their ice machines regularly. While the Food Code in most states govern the cleaning standards for ice, these standards vary. Mold and bacteria have regularly been found in ice machines, which can lead to serious illness. Even bartenders who fail to wash their hands can contaminate ice, which can spread disease.

The key for restaurants and bars to avoid contamination is to treat ice with the same safety precautions that they would treat food. This includes training employees on how to properly handle and store ice.

If you have questions about food safety for your business, contact our attorneys at Morsel Law.