How to Start a Class B Cottage Food Business in Arizona

Most cottage food producers start small — selling at farmers markets or directly to neighbors. But what if you want to supply that local café with your famous granola, or get your hot sauce into grocery stores across Arizona?

That's where Arizona's Class B cottage food license comes in. Unlike the basic Class A license that limits you to direct sales, Class B opens the door to wholesale — letting you sell to restaurants, retailers, and distributors throughout the state.

Who This Guide Is For

This step-by-step guide is for cottage food producers who want to:

• Sell wholesale to restaurants, cafés, and grocery stores
• Expand beyond farmers markets and direct sales
• Build a larger food business while working from home
• Take advantage of Arizona's generous cottage food laws

You'll learn exactly how to get licensed, what products you can make, and how to start landing wholesale accounts.

Understanding Arizona's Class B License

Arizona divides cottage food operations into two classes. Class A limits you to direct sales — think farmers markets, online orders shipped to consumers, or selling from your home. Class B adds wholesale privileges, meaning you can sell to businesses that will resell your products.

The key differences:

• Sales locations: Class B lets you sell to any business in Arizona, not just end consumers
• Online sales: Still allowed, with the same requirements as Class A
• Product labeling: More stringent requirements for wholesale accounts
• Food safety training: Required within 60 days of registration

There's no sales cap for either license class in Arizona, which makes it one of the most business-friendly cottage food states in the country.

Step 1: Choose Your Products Carefully

Not every food item qualifies for cottage food production. Arizona allows most non-potentially hazardous foods, but when you're selling wholesale, buyers will be pickier about what they'll accept.

Generally allowed cottage foods include:

• Baked goods (bread, cookies, cakes, pastries)
• Jams, jellies, and fruit preserves
• Dried herbs and seasoning blends
• Granola and trail mixes
• Candy and confections
• Pickled vegetables (high-acid only)

Popular wholesale cottage foods in Arizona:

• Artisan bread for restaurants
• Specialty cookies for coffee shops
• Hot sauce and salsas for grocery stores
• Granola for health food stores

Always prohibited:

• Fresh or cooked meats
• Dairy products requiring refrigeration
• Cut fresh fruits and vegetables
• Canned low-acid foods

When in doubt, check with the Arizona Department of Health Services (ADHS) before investing in ingredients or equipment.

Step 2: Set Up Your Kitchen

Your home kitchen needs to meet basic food safety standards, but Arizona doesn't require a separate commercial kitchen for cottage food operations.

Kitchen requirements:

• Clean, sanitary food preparation area
• Adequate refrigeration for ingredients
• Hot water for cleaning
• Proper storage for ingredients and finished products
• Separate areas for raw ingredients and finished goods

Smart wholesale setup tips:

• Invest in a commercial-grade scale for consistent portioning
• Create dedicated storage space for packaging materials
• Set up a labeling station with good lighting
• Consider a separate entrance if you'll have wholesale pickups

Document your kitchen setup with photos. Some wholesale buyers may want to see your production facility before placing large orders.

Step 3: Complete the Registration Process

Arizona requires registration, not a permit, which makes the process simpler than many states.

Registration steps:

1. Complete the application: Download form from ADHS website

2. Pay the fee: Currently $150 for Class B registration

3. Submit documentation: Include your product list and labels

4. Schedule training: Food handler training required within 60 days

Required information for registration:

• Personal contact information
• Home address (your production location)
• List of products you plan to make
• Sample labels for each product type
• Proof of food handler training (can be completed after registration)

Processing time: Typically 2-4 weeks if everything is complete. Incomplete applications take longer.

Step 4: Master Your Labeling Requirements

Class B operations face stricter labeling requirements since products go through retailers. Your labels need to include:

Required label elements:

• Product name
• Ingredient list (in descending order by weight)
• Net weight or volume
• Your name and address
• "Made in a home kitchen that has not been inspected by the Arizona Department of Health Services"
• Allergen warnings if applicable

Wholesale labeling tips:

• Include your business name and logo for brand recognition
• Add a "best by" date for quality assurance
• Include your phone number for buyer questions
• Consider adding nutritional information (not required, but helpful)
• Use professional-looking labels — avoid handwritten ones

Print labels in batches to maintain consistency. Many wholesale buyers will reject products with unprofessional labeling.

Step 5: Get Food Handler Training

Arizona requires cottage food operators to complete food handler training within 60 days of registration. This applies to anyone involved in food preparation.

Training requirements:

• ANSI-accredited food handler course
• Must be renewed every three years
• Certificate must be available for inspection
• Online courses are acceptable

Recommended training providers:

• ServSafe (widely recognized)
• Learn2Serve
• Always Food Safe

The training covers basic food safety principles that are especially important when selling wholesale — topics like temperature control, cross-contamination prevention, and proper handwashing.

Step 6: Build Your Wholesale Customer Base

With your license in hand, it's time to start selling. Wholesale is different from direct sales — you're dealing with business buyers who have specific needs.

Finding wholesale customers:

• Start with businesses you already frequent
• Attend local food trade shows and networking events
• Join your local restaurant association
• Use social media to showcase your products
• Ask existing customers for referrals

Preparing for wholesale meetings:

• Bring professional samples and pricing sheets
• Have liability insurance information ready
• Prepare a simple one-page product sheet
• Be ready to discuss minimum orders and delivery schedules

Typical wholesale margins:

Most cottage food producers sell wholesale at 50-60% of their retail price. So if you sell cookies direct to consumers for $12/dozen, you might wholesale them for $6-7/dozen.

Step 7: Manage Your Business Operations

Wholesale requires more business infrastructure than direct sales. You'll need systems for orders, invoicing, and delivery.

Essential business systems:

• Simple invoicing system (even a spreadsheet works initially)
• Order tracking method
• Production planning calendar
• Ingredient inventory management
• Customer contact database

Delivery considerations:

• Many wholesale customers expect delivery
• Factor delivery time into your production schedule
• Consider partnering with other cottage food producers for shared delivery routes
• Some customers will pick up orders — make this option clear

Record keeping requirements:

Arizona requires cottage food operations to maintain records of sales, but doesn't specify the format. Keep track of:

• All wholesale customer information
• Products sold and quantities
• Dates of sale and delivery
• Any customer complaints or issues

Common Mistakes to Avoid

Pricing too low: Remember that wholesale means selling larger quantities at lower margins. Make sure your pricing covers ingredients, labor, packaging, and delivery.

Inconsistent production: Wholesale customers need reliable supply. Don't take on more accounts than you can consistently serve.

Skipping contracts: Even simple agreements help prevent misunderstandings about pricing, payment terms, and delivery schedules.

Ignoring insurance: While not required by law, liability insurance protects your personal assets if someone gets sick from your products.

Class B License Checklist

Before you apply:

• [ ] Choose your product line and verify all items are allowed
• [ ] Set up your kitchen workspace
• [ ] Design and print professional labels
• [ ] Research potential wholesale customers

Application process:

• [ ] Complete ADHS registration form
• [ ] Pay $150 registration fee
• [ ] Submit product list and sample labels
• [ ] Schedule food handler training

After approval:

• [ ] Complete food handler training within 60 days
• [ ] Set up business systems for wholesale
• [ ] Create pricing sheets for wholesale customers
• [ ] Start contacting potential buyers

Next Steps

Arizona's Class B cottage food license opens significant opportunities for food entrepreneurs ready to grow beyond direct sales. The registration process is straightforward, and the state's lack of sales caps means your business can scale as much as your home kitchen allows.

Ready to start your cottage food journey? At Koti, we help cottage food producers across Arizona connect with customers and grow their businesses. Whether you're just getting licensed or ready to expand into wholesale, we provide the tools and marketplace to help you succeed.

Learn more about selling your cottage foods at koti.market/sell.