My state and local county is VERY strict about licensed and commercial kitchens. I want to get the word out about my home-based baking, however, I'm leary to hand out business cards or post notices at stores, churches etc., for that reason. But I need the exposure!! What do YOU do?

Well, you would have to be cautious. Some areas allow absolutely no advertising. Some folks have gotten around this by making up cards with just their names and telephone numbers, no mention of cakes. They leave these beside cakes that they have made at various functions. Donating to charitable functions and family and friends functions will likely result in business for you.
I am assuming it is not illegal for you to make cakes as long as you do not advertise?
Hugs Squirrelly Cakes