After nearly 10 months of producing hand sanitizer for health care professionals and essential businesses, craft distilleries across the country are being asked to pay a $14,000 fee to the Food and Drug Administration.
“It kind of blindsided all the distilleries. Hopefully Congress will take another look at this because the only reason distilleries started doing this was to help out the local communities,” said Hirad Yaldaei, CEO of Dragon Distillery in Frederick. “And then to get hit with a $14,000 fee, when most of us didn’t make $14,000 in hand sanitizer, is ridiculous.”
When the FDA reformed regulation of non-prescription drugs earlier this year, they allowed businesses such as distilleries to produce hand sanitizer as “over-the-counter drug monograph facilities.” They then enacted fees to those facilities, meaning any registered business making sanitizer will owe the FDA $14,060 by Feb. 11, according to the FDA’s website.
Kevin Atticks, executive director of the Maryland Distillers Guild, hopes the fee is simply an oversight by the FDA. He said the fee is probably meant to target large drug manufacturers, not small businesses such as craft distilleries. Unfortunately, since the news came around the New Year’s holiday, the organization has not yet been able to clarify the policies with any officials.
“So our advice [for distilleries] was to de-register as a sanitizer producer until we figure out what’s really happening,” Atticks said.
Most distilleries registered with the FDA in the spring, but de-registering and ceasing production of hand sanitizer might be a way to evade the fee if small businesses are not named exempt.
Tyler Hegamyer, co-founder of McClintock Distilling on Carroll Creek, said the distillery is still weighing its options. They’ve slowed down production of hand sanitizer significantly since the spring, when they were producing tens of thousands of gallons a month for first responders, health care workers and essential businesses. Now, Hegamyer said, they are mainly supplying a few businesses in the area.
While much of their hand sanitizer was donated, the rest was sold at market cost.
“We had just enough money to keep our staff and everything rolling the way we [did],” Hegamyer said. “It helped subsidize a lot of income we had lost.”
But by no means did the distillery make a profit, he said. They were still at a loss from the weddings they had to cancel, in addition to the closure of the tasting room and the slowdown in tourism. While making hand sanitizer was a way to keep staff on board, it was also filling a need within the community.
“None of our distillers have entered the hand sanitizer business as a profit center, they’ve entered it as a public service,” Atticks said. “This is not truly the business they’re in. So we’re hopeful that all this is an oversight.”