NC distilleries that made hand sanitizer stunned by democrat proposed $14,060 federal fee

https://www.newsobserver.com/news/local/article248221505.html

Jonathan Blitz was shocked when he learned Thursday that the Durham 
distillery he co-owns, Mystic Farm and Distillery, would have to pay a 
$14,060 fee to the Food and Drug Administration.

The FDA was assessing the fee to hundreds of distilleries like his that 
pivoted from producing spirits to hand sanitizer to make up for the 
shortage when the coronavirus pandemic swept across the country in March 
and April.

In a notice published this week, the FDA said it was authorized to collect 
the fees under the Coronavirus Aid, Relief, and Economic Security or CARES 
Act that provided help to businesses, governments and individuals hurt by 
the pandemic. Distillers like Blitz never saw it coming.

“As soon as I saw that number, it was shock first. Second was panic. How 
are we going to pay it?” Blitz said in an interview. “How much sanitizer 
do you have to be selling a month to make it worth paying $14,000 plus 
dollars every year?”

An outcry from distillers and their trade organizations reached leaders of 
the Department of Health and Human Services, which includes the FDA. They 
issued a statement late Thursday saying the fee would not have to be paid.

“This action was not cleared by HHS leadership, who only learned of it 
through media reports late yesterday,” the statement said.

The statement said the department had ordered the Federal Register notice 
to be withdrawn, “meaning these surprise user fees will not need to be 
paid.”

“Small businesses who stepped up to fight COVID-19 should be applauded by 
their government, not taxed for doing so,” Brian Harrison, HHS chief of 
staff, said in the statement. “I’m pleased to announce we have directed 
FDA to cease enforcement of these arbitrary, surprise user fees. Happy New 
Year, distilleries, and cheers to you for helping keep us safe!”

That announcement was hailed by the American Craft Spirits Association and 
its president, Becky Harris of the Catoctin Creek Distilling Company in 
Virginia.

“We are incredibly grateful to HHS for opening a dialogue with us, and 
look forward to working more collaboratively together in 2021 with FDA to 
ensure our members are treated fairly for the challenges they face to 
support their hometowns via hand sanitizer production in the wake of 
COVID-19,” Harris said in a written statement.

COST OF PRODUCING HAND SANITIZER
In April, at least 35 distilleries in North Carolina were making hand 
sanitizer, said Carol Shaw, the executive director of Distillers 
Association of North Carolina.

Many of the distilleries that pivoted to producing hand sanitizer have 
struggled, Shaw said, including Dock Porters Distillery in Charlotte, 
which has since closed and lost its lease.

For Mystic, hand sanitizer production took over the entire facility, Blitz 
said. All the tanks were used to produce hand sanitizer, forcing the 
company to stop making its usual product, whiskey, for five months. The 
business will feel the impact of the pivot in 2023 or 2024 when it would 
be selling that whiskey, Blitz said.

The company has started producing whiskey again. Blitz said had the FDA 
told him about the fee before it started making hand sanitizer, he would 
have set aside the money to pay it or “not entered the business in the 
first place.”

Pete Barger, owner of Southern Distilling Company in Statesville, said he 
spent a lot of money to produce hand sanitizer, including hiring waiters 
and waitresses who had been laid off. He invested in capital and worked to 
meet FDA requirements for hand sanitizer, he said.

When he first saw the fee, he thought to himself, “Thank God it’s not 
$100,000,” he said. “But at the same time, that’s a lot of money for a 
small company where that (hand sanitizer production) is not the focus of 
what they do day in and day out.”

‘THESE FEES CAME OUT OF NOWHERE’
Durham Distillery began producing hand sanitizer in April, said its 
president and CEO Melissa Katrincic. She was “incredulous” when she first 
heard about the fee, she said.

Distilleries were in a unique position to produce hand sanitizer because 
of their equipment and alcohol, Katrincic said. Durham Distillery donated 
hand sanitizer to local restaurants, bars, first responders, health care 
workers and shelters, she said.

Not only did distilleries have to halt production of spirits, they also 
had to follow FDA guidelines and get approval, as well as source the 
plastic containers to hold the hand sanitizer.

Katrincic sat on the national task force for hand sanitizers for the 
American Craft Spirits Association, the industry trade group. They worked 
with businesses across the industry to make sure they were putting out met 
FDA requirements and kept people safe, she said.

“These fees came out of nowhere,” Katrincic said. She said if she knew 
about the fee, she would have informed distillers about it through the 
task force.

“They shouldn’t be charging this in the first place,” she said. “If we’re 
called to the carpet again … we have to start making hand sanitizer again, 
why would we?”



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