Your best bet might be to just set up a nonprofit and then set up a gift shop or other retail operation that helps support the nonprofit. An example of this is a gift shop within a museum.
If you are out to make a living from your classes and sales, I would just leave the whole thing as a business. It is difficult to set up a nonprofit and fulfill all the regulations. I suggest you seek the counsel of a lawyer that has experience in nonprofit incorporation for definitive advice. Meanwhile, read our articles such as: