Update: The FDA has announced that it is reversing course and will no longer assess these fees against distilleries.
Remember back during the early days of the pandemic, when massive hand sanitizer shortages gripped the nation, and distilleries stepped up to fill the void by manufacturing hand sanitizer? According to Reason, those distilleries are receiving a rude surprise to end the year: A letter from the Food and Drug Administration informing them that they owe over $14,000 in fees, thus proving the adage that no good deed goes unpunished, especially by the regulatory state.
As Reason notes, the alcoholic beverage industry has been hit hard by the coronavirus pandemic due to the fact that when people do not travel and go out with their friends, they consume less alcohol. Since the primary ingredient in hand sanitizer is ethanol, and distilleries suddenly found themselves with excess ethanol capacity, over 800 distilleries are reported to have manufactured some amount of hand sanitizer during the early days of the pandemic.
Unbelievably, the law that enabled the FDA to levy these fees was the CARES Act, which was designed to help businesses stay afloat during the pandemic. That act characterized distilleries that produced hand sanitizer as "over-the-counter drug monograph facilities," and specifically empowered the FDA to levy "user fees" on such facilities in order to keep the FDA funded.
The FDA readily complied, and has sent letters to these distilleries informing them that they owe a fee of $14,060, due on Feb. 11 — a blow that may put many already-struggling distilleries out of business.
Becky Harris, president of the American Craft Spirits Association (ACSA), told Reason that many distillers have hope that the FDA can be persuaded to waive these fees, even though the FDA's website already states that distilleries who produced hand sanitizer will not be exempted from paying the fees.
"We recognize that this bill [the CARES ACT] was not written specifically for the issue of sanitizer," Harris said. "The problem that we have right now is that [the fee assessment] is going out to a whole lot of small businesses who are struggling in the pandemic."
However, since the letters landed during the holiday season, it has been difficult for many distillers who have been hit with the fees to reach anyone from the FDA to protest or get an explanation.