Selling Soap Archives - Soap Startup

When you are ready to turn a profit from your soap making skills, an important question needs to be answered… Do you need a license to sell homemade soap? In general, the answer is that a specific soap selling license is not required, but there are often other credentials required. We will look at licensing and credential regulations across the United States, Canada, and the European Union. First, however, let's define "license." Licenses, Permits and Other Credentials Even if you find you do not need a license to sell soap specifically, most places in the world require some form of permit to sell anything. That said, this article focuses on the credentials needed to sell soap. Please understand that you likely need a permit of some sort to be a vendor of any type. These permits and licenses will vary by in-store retail sales, street fairs, online shops, and even some craft shows. In summary, we will just be talking about the credentials explicitly needed for the sale of soap. Increased Popularity of Homemade Soap Brings Increased Oversight On the popular site Etsy, the term "homemade soap" brings up over 22,000 results. With so many small businesses and hobbyists trying their hand at selling homemade soaps, it begs the question: how is this market regulated, and what are the specific licensing requirements? For handmade soap makers trying to turn from hobbyist to pro, the process can be dizzying. What regulations am I subject to? What are the specific requirements? How do I stay out of hot water and ensure I am following the proper regulatory frameworks? Unfortunately, or fortunately, however you look at it, legislators across the globe have taken a wide-ranging approach to license requirements. Soap Licensing in the United States In the United States, for example, the FDA does not license cosmetic firms. Nonetheless, local or state authorities may potentially require licensing or other requirements small businesses should know about. The FDA suggests checking with the Small Business Administration to determine the specific requirements. It's well worth it to invest ten minutes and check-in with the SBA. Is Your Product "True Soap"? If your soap qualifies as "true soap" in the U.S., your labeling requirements (and oversight) falls under the Consumer Product Safety Commission instead of the FDA, which oversees cosmetics. This is how the FDA and CPSC define "true soap": "To meet the definition of soap in FDA's regulations, a product has to meet three conditions:"What it's made of: To be regulated as "soap," the product must be composed mainly of the "alkali salts of fatty acids," that is, the material you get when you combine fats or oils with an alkali, such as lye."What ingredients cause its cleaning action: To be regulated as "soap," those "alkali salts of fatty acids" must be the only material that results in the product's cleaning action. If the product contains synthetic detergents, it's a cosmetic, not a soap. You still can use the word "soap" on the label."How it's intended to be used: To be regulated as soap, it must be labeled and marketed only for use as soap. If it is intended for purposes such as moisturizing the skin, making the user smell nice, or deodorizing the user's body, it's a cosmetic. Or, if the product is intended to treat or prevent disease, such as by killing germs, or treating skin conditions, such as acne or eczema, it's a drug. You still can use the word "soap" on the label."- FDA.gov Insider Tip: Don't Make ANY Cosmetic Claims Regardless of where you live in the U.S., if you make cosmetic claims you will need to comply with FDA regulations. Cosmetic claims can be as innocent-sounding as "moisturizing." Even if you don't sell cosmetics, there are still other regulations governed by the Consumer Product Safety Commission and the Federal Trade Commission. Some states have excellent websites with a lot of information, while others are sparse. For questions, it's usually either the Agriculture or Health Department that oversees food, and cosmetics are typically handled in the same place. At the same time, some states use the Board of Pharmacy. Soap Licensing and Regulations in the European Union In Europe, however, things are much different as the seller must abide by a series of regulations defined by law. The same regulations apply to imported products, which means any U.S. or other worldwide distributors must follow suit. The legislation was previously known as the Cosmetics Products (Safety) Regulations, which has since been replaced by the new E.U. Regulation 1223/2009 (Cosmetics Regulation) and been in force since 2013. It is enforceable within the boundaries of the European Union. The seller must hold a valid CPSR / CSA (Cosmetic Products Safety Report / Cosmetic Safety Assessment) for all products sold. This is issued by a certified cosmetic chemist. It stipulates the ingredients that are allowed in a product with maximum percentages. Every product's details must be uploaded to the EU CPNP (Cosmetic Product Notification Portal) and notified accordingly. This allows disclosure to authorized personnel, like toxicologists, should someone suffer an adverse reaction to a product. Additionally, it enables trading standards to keep tabs on producers and sellers. The information is not available to the public, so the producer's specific recipes are protected. Also note that a full ingredients list is required to be available at point of sale as well as the weight/volume of the product. This should be laid out according to E.U. regulations with ingredients listed as their INCI name (although the common name may also be included for ease of understanding). Selling Soap in Canada All soap is considered a cosmetic product in Canada. This means all soap labeling must strictly adhere to the use of approved INCI terms. Although not technically a license, if you make soap in Canada, intending to sell it, you need to first register with Health Canada (web link below). Among other things, you are required to provide HC with the complete ingredient listings for all publically sold soap products. Simply put, in Canada, producers need to complete the Cosmetic Notification Forms. You will also have to comply with the Canadian Food and Drug Act and other guidelines for cosmetics (including soap) on the Health Canada website. It’s not difficult, but there are a lot of “I’s” to dot and “t’s” to cross before you can sell your soap. Canadian Resources: Cosmetic Notification Forms (how to complete)Canadian Food and Drug ActCanadian Cosmetics LegislationHealth Canada website Best Practices for Selling Soap Anywhere So, what are the best practices for handmade soap producers that want to turn from hobbyist to professional? Here are some tips to avoid issues with regulations and licensing. Understand all the ingredients in your products and list them out. This will ensure that you understand any potential issues as you go through the regulation process and are transparent with regulators. Determine your target market, particularly your ideal selling location(s), to determine what national, state, and local regulations you may be subject to. Based on the locations in step 2, search for cosmetic regulations related to handmade soaps for each of the locations to determine the requirements you are subject to. It may be helpful to engage an attorney at this stage to help determine the full extent of your regulatory exposure. Read through the regulations to determine specific requirements related to licensing in that local market. As stated above, some countries and regions have vastly different regulatory requirements. Apply for licensing as required and comply with the regulatory stipulations as outlined. Prepare a document with all the compliance requirements by region and periodically update as new regulations are introduced. Keep on top of any changes by checking the cosmetic regulations for the local market you are interested in. Soap Making Popularity and Progress As homemade soapmaking continues to increase in popularity, more hobbyists are turning this into a viable small business. That said, there exists a need to be diligent about regulatory and licensing efforts. While there is a vast amount of information online, it can be a dizzying process for small business owners. From lax regulations in the U.S. to a robust process in the E.U. and Canada, it can be confusing for those who seek to sell locally or internationally. Depending on the size of your operation, it may be useful to consult with an attorney to determine your risk exposure. It is all about the risk tolerance of the business owner. Certain markets will be stricter than others, and this may impact the sales and marketing strategy for business owners. With 195 countries, multiple regions, states, and local governments, businesses need to stay abreast of the changing regulatory landscape. Licensing is a cost of doing business, and owners must understand this. Homemade Soap is a Growth Industry! You Picked a Good Business! The handmade soap market remains a viable market as it is expected to grow 5% CAGR over the next several years. With consumers potentially moving from mass-marketed soap products to companies that produce in-house, this is an attractive market for small business owners. However, when getting started as a business owner, it is crucial to consider the risks inherent to your business. Cosmetics introduce a series of health risks in the form of allergens, adverse reactions, and other potential health issues. This brings us to a whole different topic when selling soap; labeling. >>> Get the Inside Edge Properly labeling your soap in ANY state, province, or country is critical. We have a quick post about it on this blog – How Do You Label Soap? It is well worth a few minutes to check this out.