TOPEKA — Kansas distilleries are toasting a decision by the federal government to waive a fee for producing hand sanitizer amid the pandemic — although the potential for a surprise bill has left some business owners uneasy.
The Food and Drug Administration said last week it would levy a $14,060 fee after determining a provision in the CARES Act would classify distilleries that made their own sanitizer as “over-the-counter monograph drug facilities.” As businesses were learning of the expense, the U.S. Department of Health and Human Services directed the FDA to waive the fee.
Boot Hill Distillery was blindsided by news of the fee for producing hand sanitizer, said Lee Griffith, director of sales at the Dodge City company.
“It came out of nowhere,” Griffith said. “When we decided to do this, there was no mention of the fee. Had we known, we would have accounted for that, but there was no information that there would be any fee associated with it.”
Distilleries and business owners in Kansas are hailing the decision to nullify the fee for protecting those who were simply shifting their business model or trying to help curb virus transmission. Still, the fee added unnecessary stress for some, like Griffith, in an already stressful time.
In March, Griffith said, Boot Hill made the proactive choice to shut down some parts of the business as the pandemic hit Kansas. Almost immediately, it began producing and distributing hand sanitizer at no charge.
The number of requests the distillery received far surpassed expectations, Griffith said. He estimated the business was able to donate more than 100,000 bottles to health care organizations and businesses in need.
Eventually, Boot Hill Distillery began selling the sanitizers, as well, although it has now ceased production.
“There are thousands of distilleries across the country that stepped up and made this happen, and now there is an almost putative fee we have to pay?” Griffith said. “We were just trying to help at a time when nobody else was.”
An outcry from these companies and trade advocates spurred HHS to reverse the fee Thursday after hearing about the action through news reports. The efforts of these distillers in affecting the policy change was praised by American Craft Spirits Association CEO Margie Lehrman.
“We are truly a community of craft distillers — who collectively sounded the alarm with legislators and local news outlets as ACSA worked around the clock to speak to regulators here in Washington — and that is more evident than ever tonight as we receive this news,” Lehrman said.
Lt. Gov. David Toland said he had been in contact with distillers to assist in any way possible.
“I was actually in touch with folks in Dodge City, because Boot Hill Distillery was one of a number of distilleries in the state that did exactly what we asked for, which was to pivot and help provide what was critically needed to fight the pandemic, and we don’t want to see them punished,” Toland said.
The Kansas Chamber of Commerce questioned why the FDA had imposed a fee punishing distilleries and breweries for doing the right thing in the first place. Sherriene Jones-Sontag, a spokeswoman for the Kansas Chamber, praised HHS for rectifying the situation.
“It is this type of burdensome government regulation that builds barriers to innovation, keeps businesses from expanding, and entrepreneurs from developing the next big thing,” Jones-Sontag said. “We applaud HHS for waiving the fees imposed on Kansas businesses who were just doing what Kansans do — helping their communities and our state provide much-needed equipment and sanitizer during a critical phase of the pandemic.”