California cottage food Class A vs Class B: which permit do I need?

California's Cottage Food Operations Act splits home-based food sellers into two distinct classes — Class A and Class B — with different revenue caps, different sales channels, and different administrative requirements. Picking the right one matters: a Class A operator who sells to a coffee shop is technically violating their class designation, and a Class B operator pays for an inspection they didn't need to have if they only ever sell direct. This post walks through the difference, the revenue caps (~$86K vs ~$172K, both 2025 CPI-adjusted), when you should upgrade Class A → Class B, and how to track everything per-class without doing math on a spreadsheet.

The two classes, explained

Under California's Cottage Food Operations Act (originally AB 1616, codified in Health and Safety Code §§114365-114365.5, and substantially updated by AB 1144 in 2021), home-based food sellers fall into one of two classes:

Class A — direct sales only. You sell direct to the consumer. Farmers markets, your home, in-person events, online direct sales (your own storefront or platform). You do NOT sell to retail stores, restaurants, or any other intermediary. Class A operators self-certify with their county environmental health department (no kitchen inspection), complete a food handler training, and operate under an annual gross revenue cap of $86,206 in 2025 (CPI-adjusted; rises every year).

Class B — direct + indirect sales. You sell direct (same as Class A) AND you can sell to retail stores, restaurants, and other intermediaries (indirect sales). Class B operators register with their county environmental health department, undergo a kitchen inspection, complete the same food handler training, and operate under a $172,411 annual gross revenue cap in 2025 (also CPI-adjusted; round to ~$172K).

Both classes sell the same allowable-foods list (per the California Department of Public Health's approved list — baked goods, candies, jams, jellies, dry mixes, granola, dried fruit, popcorn, churros, fudge, and roughly 75 other items). Both classes use the same mandatory "Made in a Home Kitchen" label disclosure. The difference is sales channel + cap + inspection.

Sales channels and what counts as "indirect"

The Class A / Class B line is defined by sales channel. Class A is direct-only. So what counts as direct versus indirect?

Direct sales (allowed in both A and B):

• Farmers markets where you have your own booth and sell to end consumers
• Your home (someone picks up at your kitchen door)
• Online direct sales — your own storefront, your CottageOps page, social media direct sales to end consumers
• In-person events, festivals, fairs where you sell to attendees
• Your own delivery to the customer's address

Indirect sales (Class B only):

• Wholesale to a retail grocery store that resells to its customers
• Wholesale to a restaurant that uses your product as an ingredient or sells it as part of their menu
• Wholesale to a cafe or coffee shop that sells your baked goods to its customers
• Selling at a farmers market booth that's NOT your own (i.e., a market organizer takes consignment)
• Selling to a CSA or subscription box that bundles your product

The line gets fuzzy in cases like consignment ("I leave 10 jars at a friend's coffee shop and they pay me when they sell") — that's indirect. AB 1144 in 2021 clarified some of these edge cases, but the rule of thumb is: if there's a third party between you and the end consumer who profits from the resale, it's indirect, and you need Class B.

Revenue caps, $86K vs $172K

Class A is capped at $86,206 in annual gross sales in 2025. Class B is capped at $172,411 in 2025. Both caps are CPI-adjusted and drift upward each year — the figures above reflect the verified 2025 effective limits (the original AB 1616 statute set them at $50,000 / $75,000 / $150,000 over the years; AB 1144 in 2021 pegged them to annual CPI adjustments). The cap is gross, not net — cost of ingredients does NOT subtract.

The cap is rolling 12-month, not calendar year. If you grossed $90,000 from May 2025 through April 2026, you've crossed the Class A cap as of April 2026 — even though you might be under $86K in any given calendar year.

What happens if you cross your cap?

• Class A crosses the cap → not legal under Class A for sales past the line. You'd need to upgrade to Class B (county registration + kitchen inspection) or stop selling.
• Class B crosses the cap → not legal under Class B for sales past the line. You'd need to transition to a commercial kitchen license (a much bigger step — kitchen build-out or commercial-kitchen-rental, food handler permits, etc.).

CottageOps tracks your rolling 12-month gross sales against your class's cap and warns you at 75%, 90%, and 100%. The 75% warning is intentionally early so you have time to plan, not panic.

When to upgrade Class A → Class B

Two signals usually trigger the Class A → Class B upgrade:

Signal 1: A retail store wants to carry your product. Your local coffee shop tastes your jam, loves it, asks if they can stock it. Under Class A, you can't say yes. To say yes, you upgrade. The upgrade requires county registration paperwork and a kitchen inspection — typically a few weeks of process and a modest county fee.

Signal 2: You're approaching the Class A cap. If your direct sales are growing toward the Class A ceiling, the cap will limit your business unless you upgrade. Class B's cap is roughly 2x — material headroom. Plan the upgrade before you hit the cap, not after.

The upgrade isn't free. County registration fees run $50-200 (varies by county). The kitchen inspection is a one-time event with periodic re-inspection. You'll need a designated cottage food production area in your home kitchen that meets county standards.

Most California cottage food operators we work with start as Class A (lower friction, faster to launch) and upgrade to Class B in year 2 or 3 once one of the two signals fires. Some never need to upgrade — direct-only is plenty. It depends on your business shape.

How CottageOps tracks per-class

When you sign up and select California as your state, CottageOps's signup wizard asks three questions:

1. Do you intend to sell to retail stores, restaurants, or other businesses (indirect sales)?
2. Have you completed (or will you complete) the California Food Handler Card training?
3. Have you registered with your county environmental health department?

Based on your answers, the platform configures your account as Class A or Class B and applies the correct rules:

• Revenue cap. ~$86K for Class A, ~$172K for Class B (both 2025 CPI-adjusted). Tracked rolling 12-month.
• Sales channel guard. Class A accounts can't enable wholesale/indirect-sales features. The platform enforces the boundary.
• Label disclosure. "Made in a Home Kitchen" — required wording on every California cottage food label, regardless of class.
• Allergen disclosure required on every product before publish.
• Class change support. If you upgrade Class A → Class B, you switch the class designation in your settings, the cap auto-updates, and the wholesale features unlock.

The point: you pick the right class once at signup, and the platform enforces the right rules every time. You don't have to remember "wait, am I Class A or B?" when a coffee shop emails you about wholesale.