Distilleries won't face $14K fee for making hand sanitizer during COVID-19 pandemic

SEATTLE - When it was nearly impossible to find hand sanitizer at the peak of the COVID-19 pandemic, distilleries stepped up to help. So, they were surprised to see a hefty fee the government charged them earlier this week. Now, federal officials said the charge was a mistake and business won’t have to pay.

At the height of the pandemic, Heritage Distilling Company was one of many local distilleries in Washington making alcohol-based hand sanitizer. CEO Justin Stiefel said government agencies all the way to the federal level asked them to help fill the high demand.

"You saw lines out the door, around the block with people waiting to get it because the store shelves were empty. Our staff was proud to play a small part in that," said Stiefel.

That small part to support the community would later come as an expensive shock for Stiefel. He said the FDA sent him an email, Tuesday, announcing facilities have to pay a $14,000 dollar fee for producing the sanitizer. The deadline for payment was scheduled for February. A blindsided Stiefel said that fee would have cost a month’s salary for three of his employees.

"More emotionally painful than fiscally painful. But for many distilleries right now it might have just pushed them over the edge to close their doors forever," said Stiefel.

The fee is part of the FDA’s Over-The-Counter Monograph User Fee Program. Stiefel said he didn’t think this applied to distilleries. 

"We’re not the big pharmaceutical companies that are engaged in making these kinds of products every day. We did it on an emergency basis because the government asked us to," said Stiefel.

Distilleries nationwide shared those concerns with the U.S. Department of Health and Human Services. In a tweet, DHHS said it directed the FDA to stop enforcement of the "arbitrary fees." It continued with the chief of staff saying, "Small businesses who stepped up to fight COVID-19 should be applauded by their government, not taxed for doing so."

It was a huge relief for Stiefel, his team and distilleries everywhere.

"I described 2020 as a dirty diaper. And so when we finally got the notice from the Secretary of Health and Human Services last night saying we’re voiding this fee for the distilleries, it was almost like putting a bit of whip cream on the dirty diaper," said Stiefel.

A clean slate is what Stiefel said everyone looks forward in the New Year, as they continue recovering from 2020.

"We’re going to hit some hiccups along the way. And what I’m asking people to do is just—if there’s a few hiccups along the way somewhere out there, don’t lose faith in the promise of 2021. Don’t go back into your shell. Well just figure out how to move past whatever those hiccups are," said Stiefel.

He said Heritage Distilling Company has some exciting new things planned for 2021. This includes new products and collaborating with the Chehalis Tribe to build a new brewery and restaurant.