Blame It on the Alcohol

Remember back in 2020 when the alcohol distilleries started making hand sanitizer because there was a shortage? Thought to be essential in keeping us safe, people got desperate and began to make their own using Everclear and aloe. While some people were taking that chance, craft distillers tried their hand at it as well in an effort to provide the market with more product and began to produce sanitizer. Recall that this was during the beginnings of the COVID-19 pandemic, and it was hard to find any cleaning material let alone hand sanitizer. Well, the FDA had something to say about that last year they hit distillers who produced hand sanitizer with a $14,060 fee regardless of whether the sanitizer was sold or donated.

Who was impacted? Well, more than 800 distilleries across the U.S. will be hit with that fee. While $14K may not be a lot to a large corporation like Anheuser-Busch, $14K could mean shutting the doors for a small distillery, especially since this was not the first extra cost for distilleries that produced sanitizer. On March 18, 2020, the Alcohol and Tobacco Tax and Trade Bureau (TTB) encouraged distillers to make sanitizer. Then, on March 29, 2020, the FDA announced that sanitizers needed to be made with denatured alcohol despite the World Health Organization (WHO) recommending proceeding without needing to denature the alcohol. Then, on December 29, 2020, the first of many fees was introduced - the $14,060 Monograph Drug Facility Fee. At the same time, distilleries were slammed with the $9,373 Contract Manufacturer Facility fee. The kicker? Payment was due on February 11, 2021. To put logs to the fire, if the distilleries wanted to avoid the same fee in 2022, they had two days to cease and desist within 2 days of the announcement. And of course, all of the distilleries that continued to produce alcohol had to pay the fee again this year for last year's production.

How hard is it to make hand sanitizer anyway? Well, if you don't have to worry about denaturing the alcohol, it's as easy as Everclear + aloe. If you do have to denature the alcohol, there is a process that involves denaturing agents such that the sanitizer is not exactly desirable to consume (yes, that is a problem in children, animals, and people with alcohol addiction issues). What did that mean for distillers? They had to find and pay for the denaturing agents and if they do not have separate equipment for making alcohol for sanitizer, they have to clean their equipment to ensure that the denaturing agents are no longer present. It may come as no surprise that, like everything else, denaturing agents were scarce in 2020. Is this still an issue now? Unfortunately, yes. Distilleries that are still registered as Monograph Drug Facilities in order to produce sanitizer must also pay the fee annually regardless of the status of the COVID-19 pandemic. Since booze sales went down and sanitizer sales went up, some distilleries stuck with producing hand sanitizer while others called it quits in order to keep their doors open.

What is being done? Well, some level of lobbying in Washington D.C., but so far that has not borne any fruit. Hopefully 2023 will be a better year for everyone.