• warning: Parameter 2 to ed_classified_link_alter() expected to be a reference, value given in /home/soloneconomist/www/www/includes/common.inc on line 2968.
  • warning: Parameter 2 to ed_classified_link_alter() expected to be a reference, value given in /home/soloneconomist/www/www/includes/common.inc on line 2968.

No good deed goes unpunished

Regulators spring sudden $14k fee on Cedar Ridge and other distillers for making hand sanitizer to combat COVID-19
Jeff Quint, owner of Cedar Ridge Winery and Distillery (shown here in a file photo), recently learned distillers who produced hand sanitizer in an effort to combat COVID-19, would have to either cease production and distribution, or pay the FDA a $14,060 fee for manufacturing an over-the-counter drug.

SWISHER– Jeff Quint called it “The final kick in the pants from 2020.” Quint, owner of Cedar Ridge Distillery, was referring to news of a $14,060 fee the Food and Drug Administration (FDA) was demanding for producing hand sanitizer in response to the COVID-19 pandemic.
Cedar Ridge, located near Swisher, began manufacturing hand sanitizer in March and has produced about 30,000 gallons of the product (in five-gallon buckets, one-gallon jugs and small pocket-sized bottles), which utilizes 65 percent alcohol as a disinfectant. During the month of December, Quint wrapped up production and donated an estimated $16,000 worth to area schools and medical providers. Overall, Quint said, “We gave away more than we sold.” His plan for the remaining product was to continue selling and/or donating until the stockpile had been exhausted.
However, on Wednesday, Dec. 30, Quint learned of a provision in the federal CARES (Coronavirus Aid, Relief, and Economic Security) Act, which was causing great consternation, concern and confusion among 800 or so fellow distillers who also had pivoted their production from spirits to sanitizer.
The FDA, on Monday, Dec. 28, made a change in regulations pertaining to non-prescription, over-the-counter drugs (OTC) to include hand sanitizer. Distilleries making the product had now become “over-the-counter drug monograph facilities” and were suddenly subject to an annual $14,060 fee due on Feb. 11. Quint, and his fellow distillers, were faced with two choices: de-register with the FDA (on Dec. 31), and immediately stop selling/donating their sanitizer; or plan on paying the new annual registration fee to be able to continue as before.
“What do you do with it?” Quint asked rhetorically about the “few thousand gallons” of sanitizer he still had on hand. “You don’t want to have to dispose of it,” he said, adding the alcohol had been denatured, rendering it undrinkable, and unusable for anything else but sanitizer. He called the FDA’s move “pretty reckless,” and a “strange way to say thank you to all the distillers who stepped up (to produce sanitizer).”
It was the second time the FDA had waded into the production of sanitizer. When Quint first started production, it was a joint effort with Steve Shriver, a co-owner of Eco Lips (a Marion-based lip balm producer). Shriver and fellow business partner Ryan Sundermann, MD, had a formula, but needed Quint’s alcohol. Within a few weeks however, the World Health Organization and the FDA came out with specific regulations pertaining to the composition and manufacturing of hand sanitizer (including the requirement for denaturing). At that point, Quint’s Cedar Ridge took over all production, bottling and distribution.
On Dec. 31 Quint, via a telephone interview, said the American Craft Spirits Association (ACSA) and the Distilled Spirits Council of the United States (DISCUS) were working on the issue, while he was going to take a wait and see approach. Quint did send an inquiry to the FDA, however the agency’s website stated a reply could take up to three weeks.
About two hours later, Quint received an urgent email from the DISCUS reporting that after extensive conversations with legislators and key agencies, Health and Human Services (HHS) Chief of Staff Brian Harrison had issued a statement withdrawing the notice of the fees, and directing the FDA to cease any enforcement of the fees, “meaning these surprise user fees will not need to be paid.”
Harrison added: “Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so. 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!”
Back at Cedar Ridge, with the regulatory encumbrance removed as quickly as it was enacted, Quint said he’d sell as much of the remaining sanitizer as he can, and donate whatever’s left.