Feds say $14,000 fee for making hand sanitizer will be rescinded
UPDATE: On Thursday night, CNN reports the federal government said it will not impose the $14,000 fines on distillers.
Statement from Brian Harrison, Health and Human Services Chief of Staff: “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so.
“I’m pleased to announce we have directed FDA to cease enforcement of these arbitrary, surprise user fees. Happy New Year, distilleries, and cheers to you for helping keep us safe!”
At the height of the COVID-19 pandemic this past spring, distilleries across the country, including some in Rochester, halted their production of booze and pumped out countless bottles of previously scarce alcohol-based hand sanitizer. The businesses saw a need they could fill and rose to the occasion.
Their thanks from the federal Food and Drug Administration: a $14,060 bill and the threat of a similar charge in 2021.
“I liken it to if you ask your friends to help you move, and they bought the beer, and then they charge you for the beer they brought you,” said Jason Barrett, owner of Black Button Distilling in Rochester, which produced hand sanitizer through Nov. 30.
The distilleries made the sanitizer under emergency authorization by the FDA, which provided approved recipes for them to follow. Barrett said that at no point were distilleries told they’d have to pay a fee if they produced sanitizer.
But this past Tuesday, the FDA announced its fee schedule for facilities that produce over-the-counter drugs. And it also proclaimed that distilleries that produce hand sanitizer are now classified as “monograph drug facilities (MDF).” The newly approved fee schedule went into effect on Oct. 1, which is why sanitizer-producing distilleries are getting slapped with a charge now. And if they don’t unregister as an MDF by Jan. 1, they’ll be on the hook for another $14,060 for the next year.
Black Button produced hundreds of thousands of plastic bottles of sanitizer, which it often offered at no cost to first responders, hospitals, and New York polling stations. To Barrett, being charged for offering that service is a slap in the face.
“After all of that, you’re coming to us and telling us we owe you money?” Barrett said. “And it’s the same for the folks that made hundreds of thousands of bottles as the folks that made 100? There’s small distilleries that didn’t even make $15,000 in revenue this year.”
While distilleries are required to be registered with the FDA, the Alcohol and Tobacco Tax and Trade Bureau serves as the main regulatory authority for distilleries. In March, with a severe shortage of sanitizer sweeping the nation, the FDA offered guidelines for any capable facility to produce sanitizer.
If a distillery followed the recipe and told the FDA what it was doing, it wouldn’t need to go through the formal approval process for an over-the-counter drug. Barrett said at no time during that process was any fee mentioned.
“If they had said in March that, ‘Hey, there’s a $15,000 bill,’ every business could have made its own decision on if they were prepared to do this,” Barrett said. “But I can tell you that many of the smaller distilleries, ourselves included, probably wouldn’t have taken that offer.”
Barrett said he found out about the news around 4 p.m. Wednesday, less than a day and a half away from being charged an additional $14,000. Tommy Brunett, owner of Fairport’s Iron Smoke Distilling, had just gotten word of the new fees at noon on Thursday.
“I sent the information over to (chief operating officer) David (Ferguson). I’m going to need to talk to him to see if we can figure out what the actual f--- this is,” Brunett said.
Iron Smoke produced 10,000 bottles of sanitizer during the pandemic, all of which were donated to first responders, hospitals, and other services in need of the product. Brunett said the Greater Rochester Chamber of Commerce has been in touch, and communicating with Gov. Andrew Cuomo on next steps.
"They're all kind of calling BS on this too," Brunett said.
The Distilled Spirits Council of the United States has also expressed outrage over the fees, both in how they penalize businesses that provided a public service, as well as the little notice distilleries were given.
The Council is requesting that the FDA waive fees on distilleries that produced sanitizer.
“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,” said Distilled Spirits Council President and CEO Chris Swonger in a release. “This unexpected fee serves to punish already struggling distilleries who jumped in at a time of need to do the right thing.”
Gino Fanelli is a CITY staff writer. He can be reached at (585) 775-9692 or email@example.com.