I am part of an organization in northern California called "Free Soup". Once a week we take our surplus home grown veggies, cook them into a soup and then give the soup away to anyone that wants it. We were recently told that we can not legally sell food that is not prepared in a commercially licensed kitchen, by a commercially licensed chef. I see two problems: 1) we're giving the food away not selling it, & 2) organizations sell home made food all the time eg, bake sales, pancake breakfast, spaghetti dinners, etc. Plus we have a clearly displayed sign stating "Homemade / Not Inspected". Do we have any recourse?
It is unlikely that you have recourse for being told to stop. If you were violating a local ordinance, you are lucky that you were not arrested (see first link below).
Assuming that you were preparing and distributing the food in Arcata, you likely violated Section 5001 of Title V of the Arcata Municipal Code (see second link below), which requires an inspection and a permit to be issued before a space is used for the preparation of food that is meant for distribution (whether to be sold or "otherwise disposed of").
What is also interesting to me is that the City of Arcata has a public kitchen that your group could potentially use for this purpose (see third link below). However, it appears that you would need to be a formal organization with insurance, etc. in order to rent that kitchen space.
The bottom line is . . . if you want to be able to prepare food for distribution to the homeless, you need to do research (and/or work with an established group that has worked with the City -- such as Arcata Endeavor, Food Not Bombs, Saint Vincent DePaul, or Eureka Rescue Mission) to find out how you might be able to help without violating the local ordinances.
Please note that the City of Arcata has a 10-year plan for addressing the needs of the homeless (see the fourth link below), and the City anticipates that the organizations I mentioned will be part of the solution. Therefore, it could be a "win" for all involved if you could collaborate with one or more of those organizations and work together to find a way to legally make and get your soup to those in need.
Good luck to you and your group!
Any answer or other information posted above is general in nature and is not intended, nor should it be construed, as legal advice. This posting does not create an attorney-client relationship between you and the posting attorney, and you are urged to engage a qualified attorney who is licensed to practice in the relevant jurisdiction.