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Hand sanitizer. Crystal Cox/Business Insider
- The FDA is imposing a $14,060 fee on distilleries for making hand sanitizer amid a worldwide pandemic.
- It's designating them as "monograph drug facilities" for making over-the-counter hand sanitizer.
- Craft distillery owners say it's yet another blow to their small businesses and is wiping away profits in an already difficult year.
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In the spring of this year, when the novel coronavirus struck, the world experienced a massive panic-buying of hand sanitizer. Even hospitals and other healthcare facilities in the US reported shortages.
Distilleries stepped up. They stopped producing liquor and used their alcoholic production prowess to produce hand sanitizer instead. Their actions helped meet demand and also ensured that some of their employees could keep their jobs in a once-in-a-century pandemic.
Now the federal government wants them to cough up $14,060 for the privilege.
As the San Joaquin Valley Sun reported, distillery owners are frustrated with a new fee announced by the US Food and Drug Administration. Because the distilleries made hand sanitizer earlier this year - and in many cases, are still producing it - the FDA is treating them as "monograph drug facilities" producing over-the-counter drugs. Facilities with that designation must pay a $14,060 annual fee. They will also be assessed for the fee next year if they continue operating on January 1.
"At the beginning of the pandemic the FDA and our communities called out for help and distillers enthusiastically stepped up to the plate and provided an essential product to medical workers and first responders," Aaron Bergh, the owner of Calwise Spirits, told the Valley Sun. "It's apparent the FDA has decided they don't need us anymore and it's in their best interest to suck us dry when we're already struggling during the pandemic's business closures."
Bergh told the Valley Sun that the fee would wipe out all of his craft distillery's profit for the year.
"Even if you created only a few gallons or donated all of it, you're on the hook for $14,000," he said.
In a statement to Insider, the FDA said its hands were tied by the CARES Act passed earlier this year.
"The statute does not provide any waiver provisions for any specific category of manufacturer or for the deadline for assessing those fees, however we stand ready to work with Congress on ways this can be addressed," an FDA spokesperson said in an email.
According to Reason, the rules around designating "monograph drug facilities" are part of the CARES Act. And as Reason pointed out, the FDA's website explicitly says facilities that produced hand sanitizer under temporary COVID-19 policies aren't exempt from the fee.
"This incredibly frustrating news comes as a complete shock to the more than 800 distilleries across the country that came to the aid of their local communities and first responders," Distilled Spirits Council President and CEO Chris Swonger told USA Today. "This unexpected fee serves to punish already struggling distilleries who jumped in at a time of need to do the right thing."
This article has been updated with a comment from the FDA.