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Signed Into Law
Signed May 30, 2025Effective 2025-09-01
SB541

Regular Session

Relating to cottage food production operations.

Government Affairs & Regulatory Compliance Analysis

SB541: Government Affairs Overview

Effective September 1, 2025, SB541 transforms cottage food production from a limited hobby exemption into a regulated commercial tier by raising the revenue cap to $150,000 and authorizing wholesale distribution to retail outlets. This legislation strictly preempts local municipal authority, shifting oversight to the Department of State Health Services (DSHS) and introducing new liability risks for retailers entering the cottage food supply chain.

Sen. Lois Kolkhorst·Senate Bill·Regular Session

Moderate
Low Cost
Effective:2025-09-01
Enforcing Agencies

Department of State Health Services (DSHS) • Health and Human Services Commission (HHSC) • Local Health Departments (limited to non-licensing enforcement)

Business Impact

Who SB541 Affects

This legislation has regulatory implications for the following Texas businesses and organizations:

Regulatory Priority: moderate

Notable regulatory updates (effective 2025-09-01). Consider how these changes may affect your operations.

🏥

Healthcare

Affected business types:

  • Hospitals
  • Healthcare systems
  • Medical practices
  • Health insurance providers
View all healthcare legislation
🏭

Manufacturing & Business

Affected business types:

  • Manufacturers
  • Industrial facilities
  • Supply chain companies
  • Logistics providers
View all manufacturing & business legislation

Key Operational Considerations

  • 1Cold Chain Management: CFPOs selling TCS foods direct-to-consumer must train staff on maintaining and documenting air temperatures during transport.

Estimated Cost Impact

lowMinimal cost impact anticipated.

Enforcing Agencies

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SB541
Moderate
Relating to cottage food production operations.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2025-09-01
Enforcing Agencies
DSHSHHSCLocal Health Departments
Primary Author: Sen. Lois Kolkhorst
89th Texas Legislature
jdkey.com
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Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025
  • Compliance Deadline: September 1, 2025 (All labeling, signage, and registration protocols must be active).
  • Agency Rulemaking: DSHS/HHSC must establish registration portals for Time and Temperature Control for Safety (TCS) foods, wholesale buyers, and address privacy prior to the effective date.
  • *Regulatory Gray Zone:* If DSHS fails to launch registration portals by August 1, 2025, operators face a compliance gap. Businesses must document "intent to register" to mitigate enforcement risks during this lag.

Immediate Action Plan

  • 1. Retailers: Determine immediately if you will accept uninspected cottage foods into your inventory. If yes, draft standardized vendor indemnity agreements now.
  • 2. CFPOs: Audit product lines against the new "blacklist" (Sec. 437.001). If selling perishables (TCS), prepare to implement cold-chain logging and DSHS registration.
  • 3. Municipalities: Issue a "Cease and Desist" on all local cottage food enforcement actions effective 9/1/2025 and revise employee disciplinary handbooks to reflect the statutory termination requirement.
  • 4. Labeling Teams: Redesign packaging templates to include the new mandatory disclosure: *"THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE THAT IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION."*

Operational Changes Required

Contracts

  • Retailer Vendor Agreements: Retailers (Cottage Food Vendors) purchasing cottage foods must execute written agreements with producers. These contracts must include strict indemnification clauses, warranties of compliance with the $150k cap, and recall procedures.
  • Municipal Employment Contracts: Local governments must update HR policies. The law mandates termination of employment for any municipal employee who knowingly requires a Cottage Food Production Operation (CFPO) to obtain a local license or permit.

Hiring/Training

  • Retail Intake Protocols: Receiving staff at grocery stores or coffee shops must be trained to reject wholesale TCS foods (e.g., cheesecakes, meat-based items), as wholesale is restricted to non-TCS items only.
  • Cold Chain Management: CFPOs selling TCS foods direct-to-consumer must train staff on maintaining and documenting air temperatures during transport.

Reporting & Record-Keeping

  • State Registration (New): Mandatory DSHS registration is required for:
  • 1. CFPOs selling TCS foods.
  • 2. Retailers purchasing cottage foods at wholesale.
  • 3. CFPOs seeking to use a Unique ID number instead of a home address on labels.
  • Temperature Logs: CFPOs dealing in TCS foods must maintain logs proving the product was stored and delivered at safe temperatures.
  • Wholesale Invoices: Retailers must retain invoices tracking the source ID and production date of all cottage food inventory.

Fees & Costs

  • Local Fees Eliminated: Municipalities are prohibited from charging permit or license fees to CFPOs.
  • Insurance: Due to the introduction of TCS foods and wholesale liability, CFPOs must secure product liability insurance; homeowners' policies will likely exclude these expanded business activities.

Strategic Ambiguities & Considerations

  • TCS Definitions: The statute permits TCS foods generally but excludes specific categories based on processing. DSHS rulemaking will need to clarify the borderline between allowed perishable baked goods and prohibited processed foods.
  • "Cottage Food Vendor" Scope: The definition of a vendor is broad. It is currently unclear if third-party delivery platforms (e.g., DoorDash, UberEats) fall under the "Vendor" registration requirement if they facilitate the sale of these goods.
  • Registration Mechanics: The law requires registration "in the manner prescribed by the department." It is unknown if this will be an instant automated issuance or a reviewed application subject to processing delays.

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

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Legislative Timeline

This bill's path through the Texas Legislature

Filed
Dec 6, 2024
Passed Senate
Apr 10, 2025
Passed House
May 13, 2025
Signed
May 30, 2025
Effective
Sep 1, 2025
TopicsHealthHealth--generalOccupational RegulationOccupational Regulation--other Trades & ProfessionsFoodHealth & Human Services CommissionBusiness & CommerceBusiness & Commerce--small Business & Minority BusinessSafetySignsPackaging & Labeling Requirements
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Senate Authors

Sen. Lois KolkhorstRepublican · Primary Author
Coauthors (2)

House Sponsor

Rep. Lacey HullRepublican · Primary Sponsor

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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More from Sen. Lois Kolkhorst

View all bills by Sen. Lois Kolkhorst

Related by Topic

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Quick Reference

Frequently Asked Questions

Common questions about SB541

Q

What does Texas SB541 do?

Effective September 1, 2025, SB541 transforms cottage food production from a limited hobby exemption into a regulated commercial tier by raising the revenue cap to $150,000 and authorizing wholesale distribution to retail outlets. This legislation strictly preempts local municipal authority, shifting oversight to the Department of State Health Services (DSHS) and introducing new liability risks for retailers entering the cottage food supply chain.

Q

Who authored SB541?

SB541 was authored by Texas Senator Lois Kolkhorst during the Regular Session.

Q

When was SB541 signed into law?

SB541 was signed into law by Governor Greg Abbott on May 30, 2025.

Q

Which agencies enforce SB541?

SB541 is enforced by Department of State Health Services (DSHS), Health and Human Services Commission (HHSC) and Local Health Departments (limited to non-licensing enforcement).

Q

How significant are the changes in SB541?

The regulatory priority for SB541 is rated as "moderate". Businesses and organizations should review the legislation to understand potential impacts.

Q

What is the cost impact of SB541?

The cost impact of SB541 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB541 address?

SB541 addresses topics including health, health--general, occupational regulation, occupational regulation--other trades & professions and food.

Q

What are the key dates for SB541?

Key dates for SB541: Effective date is 2025-09-01. Rulemaking: Adopt rules requiring CFPOs to label foods with specific disclosures. (Not specified (Operational necessity dictates prior to 2025-09-01)); Establish registration forms and procedures for CFPOs seeking address privacy (unique ID numbers). (Not specified). Consult with legal counsel regarding applicability.

Q

What are the penalties under SB541?

SB541 establishes the following penalties: administrative/employment penalty of Termination of employment for Local government employees knowingly requiring or attempting to require a CFPO to obtain a license or permit in violation of state law.. Consult with legal counsel for specific applicability to your situation.

Q

Which Texas businesses are affected by SB541?

SB541 primarily affects healthcare providers and medical facilities, Texas businesses and commercial enterprises. These businesses should review the legislation with their legal and compliance teams to understand potential impacts.

Need Strategic Guidance on This Legislation?

JD Key Consulting is an Austin, Texas-based government affairs firm led by James Dickey, former Chairman of the Republican Party of Texas. We specialize in Texas regulatory compliance and legislative strategy for data centers, energy, banking, and manufacturing.

Legislative data provided by LegiScanLast updated: January 11, 2026