At the beginning of the COVID-19 pandemic, distilleries were among many businesses switching from making booze to hand sanitizer amid a shortage. They stepped up to fight COVID-19 and were applauded by their government for doing so. Now, they are being taxed $14,000 by the Food and Drug Administration for ‘user fees.’
Hand sanitizer was cranked out and pushed alongside other necessities such as toilet paper and flour back in March. It was only until last month that distillery owners started getting emails from the FDA alerting them about new fees for companies and saying they were due within 45 days of being published in the Federal Register.
User fees were enacted under the Over-the-Counter Monograph Drug user fee program established by the CARES Act back in March. It punished struggling distilleries who jumped in to do the right thing and provide health care supplies for their communities. While the U.S Department of Health and Human Services has indicated that a reprieve was in order to cease surprise user fees, some agencies are still receiving emails that the fee is due February 12.
Jason Barrett, owner of New York’s Black Button Distilling, said distilleries were at no point told they’d have to pay a fee if they produced sanitizer. “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 Barrett.
Black Button Distilling produced hundreds of thousands of hand sanitizers for first responders, hospitals, and New York polling stations this year. With a shortage of supplies, distilleries were able to quickly operate under recommended guidelines and register under the FDA, Alcohol and Tobacco Tax, and Trade Bureau.
“After all of that, you’re coming to us and telling us we owe you money? 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,” said Barrett.
Thousands of distillers in the country just donated hand sanitizers to first responders or other groups in the communities. Others used the money to employ workers instead of laying them off and didn’t even profit from the losses.
Distilled Spirits Council President and CEO Chris Swonger called the FDA’s move a “complete shock” and that it would completely bankrupt struggling businesses. They could end up owing another year’s fees for operating in 2021 as well.