Business · COVID-19

Calif. distillers helped overcome hand sanitizer shortage. Now the FDA is making them pay.

As confusion and panic set in over the spread of the coronavirus in mid-March, Americans were forced to reckon with with shortages of toilet paper, disposable wipes, hand sanitizer and face masks.

As major producers of hand sanitizer faced a shrinking workforce and sky-high demand in the spring, one unlikely group of businesses – craft distillers – stepped up to increase the supply for panicked consumers.

Now, the Federal government is expecting distillers who rose to the occasion to alleviate the shortage pay the piper.

Tuesday, the U.S. Food and Drug Administration unveiled a new set of fees for organizations operating as “monograph drug facilities” producing over-the-counter drugs.

Hand sanitizer is one of those over-the-counter drugs qualifying for fee assessments by its producers – including makeshift sanitizer producers like distillers.

Now, the annual fees assessed by the Federal government are serving as the final, crushing financial woe to close out an already dismal business year for distillers.

For Aaron Bergh, a craft distiller and owner of Calwise Spirits on California’s Central Coast, the onset of the coronavirus pandemic forced a complete rethinking of his business.

With California state public health rules closing his distillery’s tasting room in Paso Robles, Bergh split production between his array of spirits – rum, gin, vodka, whiskey, and liqueurs – and hand sanitizer.

Bergh’s distillery registered as a monograph drug facility with the FDA and began producing hand sanitizer in accordance with the agency’s monograph (or checklist of ingredients).

“At the beginning of the pandemic the FDA and our communities called out for help and distillers enthusiastically stepped up to the plate and provided an essential product to medical workers and first responders,” Bergh said in an interview on Wednesday.

“It’s apparent the FDA has decided they don’t need us anymore and it’s in their best interest to suck us dry when we’re already struggling during the pandemic’s business closures.”

The FDA’s facility fee for hand sanitizer producers runs $14,060 for fiscal year 2021.

Organizations that remain licensed as of New Year’s Day 2021 will also be assessed the fee again for fiscal year 2022.

For Bergh and other California distillers, their most profitable period of the year – the holiday season – was undercut by Gov. Gavin Newsom’s regional shelter-in-place order.

The FDA fee is likely to wipe out any year-end profit distillers earned in 2020, Bergh told The Sun.

That wipeout includes Bergh himself, who was relying on holiday sales of his spirits to carry him through extended shelter-in-place orders from Newsom.

“Even if you created only a few gallons or donated all of it, you’re on the hook for $14,000,” Bergh said.

“No good deed goes unpunished.”

Alex Tavlian is the Executive Editor of The San Joaquin Valley Sun and Executive Director of Valley Future Foundation. You can reach Alex at alex.tavlian@sjvsun.com.