During a public health crisis, distilleries across the country pumped hand sanitizer to cover a national shortage.
Now, those same distilleries are being told to pay more than $ 14,000 to the Food and Drug Administration (FDA) for the production of over-the-counter drugs without a proper license.
“I feel like the FDA received me when they needed me, now they let me close the door on the exit,” said Calwise Spirits & Co. distillery owner Aaron Bergh.
For distilleries such as Calwise Spirits & Co. in Paso Robles, the manufacture of disinfectants was an opportunity to bring back accompanied employees and avoid bankruptcy during the pandemic.
He says that in March, the FDA contacted distillers to help make more products and dropped the drug registration and approval process to quickly remove the disinfectant.
In a six-week period, Bergh and his team made more than 5,000 gallons of germ-killing formula and shipped it statewide to government agencies and front-line workers.
Now he and nearly 800 U.S. distilleries owe $ 14,080 to the FDA in facility fees.
“I feel that no good deed goes unpunished,” Bergh said. “What could I have done that others did and not register with the FDA and start doing it without registering, but because I followed the rules and registered, I am now audited and charged.”
Shock and frustration occur in the industry.
“There must be a mistake. We’re good boys. We are the boys who [the FDA] we wanted to help and we jumped and helped, ”said Central Coast distillery owner Eric Olson. “That was our whole goal and there was no talk of us paying later for help.”
The CARES law passed in March amended the regulation of over-the-counter drugs, which allowed distilleries to produce the product in accordance with FDA guidelines.
However, in the review, distilleries are classified as “non-prescription monograph”, which means that business owners must pay the fees for the fiscal year by February 12th.
On Thursday night, the US Department of Health and Human Services sent a recommendation on Twitter stating that the FDA “ceases to apply these arbitrary, surprising user fees.” However, the FDA has not yet received a response.
BREAK IN: @HHSGov Act quickly to protect small businesses from arbitrary taxes
Statement by Brian Harrison, Chief of Staff of HHS
“Small businesses that have stepped up to fight COVID-19 should be applauded by their government, not charged for it. (1/2)
– HHS Office of Public Affairs (@SpoxHHS) December 31, 2020
Olson says many distillers have lost money or even broken the sale of hygiene products.
Many local business owners like him have even donated bottles to homeless shelters and first responders.
“It simply came to our notice then. Nobody even tried to make money. These guys were just trying to shake people’s hands. I mean, honestly, it was goodwill, “Olson said.
In an email to KSBY, an FDA spokeswoman says the fee information was posted on the agency’s website in May. On Tuesday, December 27, he announced the tax.
In a statement, the FDA said it “appreciates the industry’s willingness to help supply alcohol-based disinfectants to the market to meet the growing demand for these products during COVID-19 and we are grateful for their efforts. We understand the concern that producers have about the taxes they are required to pay, especially from small businesses at this difficult time. “
The owners of the distilleries have until the end of 2020 to decide whether they want to continue the production of disinfectant in the new year, which would cost them another $ 14,000 in registration fees and facilities.
For Bergh, it’s not worth it.
“I had to cancel my FDA registration this morning. I would have liked to stick to it, so I have everything ready if there is another massive shortage and we can start production, but the FDA has created too much risk, ”said Bergh.
The United States Distilled Spirits Council said in a press release that the FDA announcement came without warning and asked the agency to waive these fees.