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No Good Deed Goes Unpunished
The Distillery Hand Sanitizer Saga 1/11/2021 | Jeff Jacobs, The Brand Protector
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It would be nice if trying to do good things meant good things could happen for you in return. Unfortunately, life doesn’t always work that way. You don’t even have to be a cynic, just look at 2020 to prove that one out. Or on second thought, don’t. Let’s instead focus on a story where efforts to do good things resulted in good things already this year in return. Hey, hope springs eternal in this new year after all!

You likely remember the early days of the pandemic, when hand sanitizer was about as hard to find as paper products or disinfectant wipes on a grocery store shelf. Remember also that dozens of distilleries around the country quickly pivoted, shifted operations, and modified their facilities in order to pitch in and try to meet demand? This was a Good Samaritan feat performed in March and April with some distillers swapping distilling tanks (and profits in 2023 and beyond) in order to manufacture hand sanitizer right then when it was needed most. In some cases, distilleries even hired out of work service industry workers to provide the labor needed to make this humanitarian act possible. In some areas, distillers gave away hand sanitizer away to anyone who stopped by in person, some distributed it throughout their local communities, and others donated it to hospitals just as quickly as they could put it in bottles.

This was no small undertaking. Not only did these small distilleries halt production of spirits, they also had to follow FDA guidelines and get approval, as well as source the containers to hold the hand sanitizer. The American Craft Spirits Association, a member-owner industry trade group, quickly got involved and set up a task force that worked with businesses across the industry to make sure they met FDA requirements.

Then, in a notice posted the first of this month, the FDA delivered the ‘good deed punishment’ part. Apparently, the Coronavirus Aid, Relief, and Economic Security Act (CARES), included some fine print effecting those good deed-doing distillers. While the CARES Act allowed distilleries to produce emergency quantities of hand sanitizer without "an approved drug application," it also said the FDA could "assess and collect user fees dedicated to OTC monograph drug activities," which you may have guessed by now included hand sanitizer. This meant that even if a distillery donated every drop of hand sanitizer it produced, it would still have to pay the FDA for its "monograph drug" production in 2020. If the distillery was still registered as a monograph drug maker as of January 1st, a fee would be due in 2022 as well. The requirements were that the 2021 fees, if applicable, were to be paid by February 12th.

It’s estimated 800 small distilleries jumped into action to make hand sanitizer, including Nippitaty in North Charleston, S.C. Founder Traxler Littlejohn tried to give it away, but has thousands of gallons leftover. And I’m sure that’s but one distiller of hundreds in a similar situation. So, it’s a good thing the news started to get better last week with Health and Human Services chief of staff Brian Harrison released a statement calling the whole thing a mistake.  "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," Harrison said in a statement. “Happy New Year, distilleries, and cheers to you for helping keep us safe!”

“This is such a relief to hundreds of distillers. We want to thank HHS leadership for quickly intervening and protecting distillers from these unwarranted fees” said Distilled Spirits Council President Chris Swonger. “Distillers were proud to help make hand sanitizer for their communities and first responders during their time of need.” Council chair Phil McDaniel added “the $14,000 fee being assessed could certainly have put many of these small family-owned businesses out of business.”

Unfortunately, like with many good deeds done by small businesses during the pandemic, the good news wasn’t enough. There were at least 35 distilleries making hand sanitizer in April of 2020 in North Carolina alone. One of them falling on hard times was Doc Porter’s Distillery in Charlotte, where even North Carolina law changes allowing them to sell beer and wine on site couldn’t help them make it into the new year, first closing in November, and then losing their lease. If you happen to be in the Carolinas, you can still help them out — while supplies last, Doc Porter’s spirits are still available at retail.

Jeff Jacobs has been an expert in building brands and brand stewardship for 40 years, working in commercial television, Hollywood film and home video, publishing, and promotional brand merchandise. He’s a staunch advocate of consumer product safety and has a deep passion and belief regarding the issues surrounding compliance and corporate social responsibility. He retired as executive director of Quality Certification Alliance, the only non-profit dedicated to helping suppliers provide safe and compliant promotional products. Before that, he was director of brand merchandise for Michelin. Connect with Jeff on TwitterLinkedInInstagram, or read his latest musings on food, travel and social media on his personal blog jeffreypjacobs.com. Email jacobs.jeffreyp@gmail.com.
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