NORTH KANSAS CITY, Mo. — Kansas City area distilleries, who were already struggling because of the pandemic, got a shock over the holiday. That’s when they learned they were going to be slapped with a $14,00 bill from the federal government for making hand sanitizer.
Benay Shannon, owner of Restless Spirits Distillery, said her company started making the sanitizer as a public services and initially gave much of it away for free to hospice organizations and other non profits dealing with the pandemic.
“But more and more people started reaching out who really needed it and we couldn’t afford to just give it away completely,” said Shannon whose distillery charges about $9 for a half-gallon container of sanitizer.
Restless Spirits quickly became one of several hundred craft distilleries nationwide producing hand sanitizer after major suppliers of the product could not keep up with demand.
It was a welcome new income stream for Shannon’s distillery which had lost 65 percent of its sales for vodka, whiskey and gin after the pandemic shut down its tasting room and curtailed restaurant and bar business.
“Small distillers could do it and meet the need without having to charge an arm and a leg to do it,” Shannon said. “So it worked out pretty well.”
Until last week that is. That’s when her distillery and hundreds of other received an alert from the American Craft Spirits Industry Association warning them that could be hit with an annual fee of more than $14,000 from the Food and Drug Administration for selling hand sanitizer. The fee would be due in February.
“I was basically in shock,” said Shannon who had to lay off much of her staff just to keep her distillery afloat.
The craft alcohol industry fought back against the FDA fee through the media and a public campaign. Late last week, they appeared to have won. Health and Human Services announced it was withdrawing the fee, stating that the way the fee was announced and issued was inappropriate.
Restless Spirits is breathing easier. However, Shannon said she has no idea how much longer her distillery will stay in the hand sanitizer business now that major producers have ramped up their supplies and the demand for craft distilled sanitizer is slowly slipping away.