Right now several states allow the sale of food out of ones home with very few restrictions. This is even allowed at the federal level within certain limits (sales volume, typically). We've been throwing around a new startup idea that would likely cause the selling of food out of a person's home to be quite easy and probably pretty lucrative. While I'm not against this personally, this IS illegal in some states (to include California). We could try to free ourselves of the liability through a Terms of Service agreement, but we're afraid it will appear that we're encouraging people to break the law.

Am I thinking too far into this? Should I, as a small startup, be concerned with such legal issues when just starting out?

Point to consider: Supper-clubs continue to gain popularity (even in California where it's almost certainly illegal) and despite how easily the activity could be stopped, they seem to enjoy a worry-free existence.