Department of State Health Services (DSHS) • Health and Human Services Commission (HHSC) • Local Health Departments (limited to non-licensing enforcement)
01
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.
Texans deserve food freedom. We are a community made up of farmers, ranchers, chefs, line cooks, home cooks, bakers, culinary and garden educators, beekeepers, homesteaders, restauranteurs, and food lovers.
S.B. 541 supports Texans from every walk of life, ensuring stronger local food systems, economic advancement, uplifting culturally diverse communities, and decreasing reliance on entitlement programs.
The passing of cottage food laws in Texas paved the way for Texans to enter and expand the workforce from home, opening job opportunities to more women, marginalized groups, home-bound citizens, and those with limited resources. Considering the COVID-19 public health emergency, cottage food production provides a source of income to those suddenly unemployed or underemployed and fulfills an exposed deficit in our food supply.
After passing the 2019 cottage food bill, S.B. 572, cottage food laws needed to evolve to the food supply and employment changes of 2020. Today, due to lessons learned from the pandemic, Texans want to better support local food systems that offer more transparency and food security.
The provisions in the 2025 bill address the changing landscape of home businesses, entrepreneurship, cost of living increases, food shortages, food transparency, and accessibility to larger consumer markets.
As proposed, S.B. 541 amends current law relating to cottage food production operations.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the executive commissioner of the Health and Human Services Commission in SECTION 3 (Section 437.0193, Health and Safety Code) and SECTION 7 (Section 437.01965, Health and Safety Code) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 437.001, Health and Safety Code, by amending Subdivision (2-b) and adding Subdivisions (3) and (5-a), to redefine "cottage food production operation" and define "cottage food vendor" and �"nonprofit organization."
SECTION 2. Amends Section 437.0192, Health and Safety Code, by amending Subsection (a) and adding Subsection (c), as follows:
(a)� Prohibits a local government authority, including a local health department, from:
(1) creates this subdivision from existing text and makes no further changes; or
(2) requiring a cottage food production operation to obtain any type of license or permit or pay any fee to sell food described by Section 437.001(2-b)(A) (relating to locations which are considered sites for a cottage food production operation) directly to a consumer or cottage food vendor.
(c) Prohibits a local government authority, including a local health department, from employing or continuing to employ a person who knowingly requires or attempts to require a cottage food production operation to obtain a license or permit in violation of Subsection (a)(2).
SECTION 3. Amends Section 437.0193, Health and Safety Code, by amending Subsection (b) and adding Subsections (b-1) and (e), as follows:
(b) Requires that the label required to be used on all food described in Section 437.001(2-b)(A) include:
(1)� makes a nonsubstantive change to this subdivision;
(2)� the words "prepared on" immediately followed by the date on which the food is prepared; and
(3) the following disclosure:
"THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE AND IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION."
Deletes existing text requiring that the label include a statement that the food is not inspected by the Department of State Health Services (DSHS) or a local health department.
(b-1) Provides that a cottage food production operation, notwithstanding Subsection (b)(1), is not required to include on a food label the address of the operation if the operation registers with DSHS in the form and manner DSHS prescribes.� Authorizes the executive commissioner �of the Health and Human Services Commission (executive commissioner) to adopt rules to implement this subsection.
(e) Requires a cottage food production operation that sells time and temperature control for safety baked goods to include on the food label or on an invoice or receipt provided with the food when sold the following statement in at least 12-point font:
"SAFE HANDLING INSTRUCTIONS: To prevent illness from bacteria, keep this food refrigerated or frozen until the food is prepared for consumption."
SECTION 4. Amends Section 437.0194, Health and Safety Code, by amending Subsection (a) and adding Subsection (a-1), as follows:
(a) Creates an exception under Subsection (a-1).
(a-1) Authorizes a cottage food production operation to sell food described by Section 437.001(2-b)(A), except baked goods, to a cottage food vendor at wholesale.
SECTION 5. Amends Chapter 437, Health and Safety Code, by adding Section 437.01953, as follows:
Sec. 437.01953.� REQUIREMENTS FOR SALE OF CERTAIN BAKED GOODS.� Requires a cottage food production operation that sells to consumers time and temperature control for safety baked goods to store and deliver the food at the air temperature necessary to prevent the growth of bacteria that may cause human illness and label the food in accordance with Section 437.0193(e).
SECTION 6. Amends Section 437.0196(a), Health and Safety Code, to redefine "time and temperature control for safety food."
SECTION 7. Amends Chapter 437, Health and Safety Code, by adding Section 437.01965, as follows:
Sec. 437.01965.� COTTAGE FOOD VENDOR.� (a) Authorizes a cottage food vendor to sell food described by Section 437.001(2-b)(A), except baked goods, directly to consumers at a farmers' market, farm stand, food service establishment, or any retail store.
(b) Requires a cottage food vendor who sells food described by Section 437.001(2-b)(A) to display in a prominent place near the location where the food is offered for sale a sign with the following disclosure:
"THIS PRODUCT WAS PRODUCED IN A PRIVATE RESIDENCE AND IS NOT SUBJECT TO GOVERNMENTAL LICENSING OR INSPECTION."
(c)� Requires a cottage food vendor that purchases food from a cottage food production operation at wholesale to register with DSHS in the form and manner DSHS prescribes. Authorizes the executive commissioner to adopt rules to implement this subsection.
Honorable Lois W. Kolkhorst, Chair, Senate Committee on Health & Human Services
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
SB541 by Kolkhorst (Relating to cottage food production operations.), As Introduced
No significant fiscal implication to the State is anticipated.
According to the Department of State Health Services, some small, licensed Food Manufacturers who are producing foods that would be allowed as cottage foods would not renew their licenses and instead, produce as Cottage Food Operators. Some existing and prospective small producers who may have obtained Food Manufacturer Licenses to wholesale their products would instead produce as Cottage Food Operators. It is assumed that any revenue implications associated with the bill would be insignificant.
It is assumed that any costs associated with the bill could be absorbed using existing resources.
Local Government Impact
The fiscal implications of the bill cannot be determined at this time.
Source Agencies:
529 Health and Human Services Commission, 537 State Health Services, Department of
LBB Staff:
JMc, NPe, ER, APA
Related Legislation
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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. Implementation Timeline Effective Date: September 1, 2025 Compliance Deadline: September 1, 2025 (All labeling, signage, and registration protocols must be active).
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 urgent is compliance with SB541?
The compliance urgency for SB541 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.
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.
Legislative data provided by LegiScanLast updated: November 25, 2025
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