UPDATE: The Department of Health and Human Services asked the FDA Thursday night to stop enforcing the fees described in this story. Full story below.
NEWPORT, Ky. (FOX19) - It’s ‘not-so-Happy-Hour’ at New Riff Distilling in Newport, Kentucky. A gesture, owners thought was helping in the COVID-19 pandemic response, is turning into thousands of dollars in government fees.
“It’s a bitter pill to swallow for sure,” said New Riff co-founder Jay Erisman.
New Riff was one of the hundreds of craft distilleries that temporarily switched from making spirits to hand sanitizer at the start of the pandemic.
“We had no intention ever before of making hand sanitizer,” said Erisman. “We make things that are delicious to drink, is our hope. Here we are making spirits that are terrible to drink.”
On Tuesday, the American Craft Spirits Association (ACSA) says hundreds of craft distilleries received a $14,060 fee, due Feb. 11, from the Food and Drug Administration.
“The FDA is treating America’s many small distilleries that made hand sanitizer as if we were drug-producing companies,” said Erisman, who said his fee was closer to $24,000.
The ACSA says a provision in the CARES Act designates the distilleries as “over-the-counter drug monograph facilities,” and allows the FDA to collect the tax. The only problem? They say nobody ever said anything.
“It never bubbled to the surface, where we would have clearly taken this issue and discussed it,” ACSA CEO Margie Lehrman told FOX19 NOW. “We cannot believe any legislative intent would have been to hit these small businesses.”
At Independence’s Boone County Distilling, they didn’t produce sanitizer, but rather bought and bottled it. They don’t believe they will have to pay a fee, but it’s still unclear.
“I saw that news last night and couldn’t believe it,” said owner Jack Wells. “Why the distilling industry got involved was to help people out. If you’re going to try to help your community, and the government is going to try to slap a fee on you because it is apparently some kind of over the counter drug fee? I think it’s a travesty.”
Making the sanitizer wasn’t cheap either.
New Riff says they donated countless 55-gallon drums to first responders. Boone County Distillery says they rarely even sell their bottles anymore, but rather just give them out.
“Many of these distilleries made hand sanitizer at their own expense,” said Lehrman. “With the ingredients, the time, the labor, they were already out of pocket literally thousands of dollars.”
For now, the ACSA is telling members not to pay the fee while they work with legislators, hoping there is a waiver process. Lehrman says they have been in communication with the FDA, but a meeting has not been set up yet. They’re also advising members to de-register with the FDA by 11:59 p.m. Dec. 31, or they may be liable for fees into 2021 if another bottle is sold.
“I think that people want to do the right thing here,” said Lehrman. “Our belief is this can’t possibly be intended to hit small business who stepped up to the plate when first responders, schools and postal services needed help, to be hit in a punitive way with this fee.”
“If people are as upset about this as we are, call your politician and let them know that this stinks,” said Erisman. “We are all in this together and we all need to survive this together. The nations’ distillers are doing their part, and the regulatory body should continue to do their part as well.”
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