Santa Cruz, CA Home Business: Cottage Food Operations (2026)

Cottage food operations (home-prepared, low-risk foods such as baked goods and jams) are protected by state law that preempts local prohibition. California Government Code Section 51035(a) provides that a city 'shall not prohibit a cottage food operation, as defined in Section 113758 of the Health and Safety Code, in any residential dwellings,' and must either classify it as a permitted residential use for zoning purposes or grant a nondiscretionary permit upon certification of compliance with reasonable local standards (spacing, concentration, traffic, parking, and noise). A cottage food operation is defined in Health and Safety Code Section 113758, with Class A sales capped at $75,000 and Class B at $150,000 per year and no more than one full-time-equivalent nonfamily employee. In Santa Cruz, a cottage food business still completes a home occupation zoning clearance (the city's published fee is about $142) and otherwise operates within the SCMC Section 24.10.160 home occupation standards, but the city cannot prohibit the use.