Ajdrew, I agree! You probably already know this but I have had a certified plant nursery for 29. I get inspected multiple times a year, am specially certified for certain states that require nematode certifications, and then, I deal with endangered species of plants which requires CITES permits and overseen by federal fish and wildlife. So, bottom line, I deal with a lot of requirements.
So, farming and working with peppers. I had to ask more than once just to make sure I had it right.
There is nobody that inspects the pepper plants and what I pick. Nobody wants to know what poisons I use to grow peppers. (I don't use any, but just saying) If I was organic certified, then you get inspected. So fresh peppers, no restrictions. Cut a pepper in half for whatever reason, can't do that. Dry them, doesn't matter. Grind them into powder, I can sell them again, but with circumstances. Can't ship powders. They must be delivered or picked up at my location, or I can sell them in other locations, as long as I am there, like flea markets or pepper festivals. Can't sell to restaurants. They have to have a special label explaining they are cottage industry. You can't sell more than $15,000 worth in a year. I figured if I sell $15k worth in a year, I can build a structure out back and have my own certified kitchen. Sort of a pain, but I sell out of all the peppers and powder I can make each year.