Calwise Spirits Owner Aaron Bergh speaks out after receiving a hefty fee from the FDA for making emergency hand sanitizers back at the start of the pandemic.
PASO ROBLES – “No Good Deed Goes Unpunished,” owner of Calwise Spirits Aaron Bergh said after it was announced on Monday, Dec. 28, that all “monograph drug facilities” – which includes distilleries – owe the FDA a $14,060 facility fee in 45 days.
In March, when the COVID-19 pandemic hit the U.S., there was an extreme shortage of essential medical supplies such as face masks, hospital gowns, and hand sanitizer. In response, the FDA issued an emergency declaration that allowed distilleries to produce hand sanitizer.
“The FDA has made it clear that distilleries have outlived their usefulness and now it’s in their best interest to milk us for what they can, regardless of the fact that we’re already struggling during the pandemic’s continued business closures,” said Bergh, who is known for producing craft whiskey, gin, and rum at this distillery in Paso Robles.
As with hundreds of other distilleries throughout the country, Bergh converted his distillery into a hand sanitizer manufacturing facility overnight. In 6 weeks, he produced 5,000 gallons of hand sanitizer and prioritized distribution to medical workers, first responders, and public servants at the frontlines of the pandemic. Orders for pallets of sanitizer were coming from agencies and companies hundreds of miles away from his distillery – including the FBI, Department of State, and California Office of Emergency Services.
“Some of my hand sanitizer was donated. The rest was sold at a fraction of the market price. My goal was to get as much out as I could, at as low of a price as I could, while being able to bring my furloughed employees back to work. The hand sanitizer business saved me from bankruptcy – but I didn’t make an enormous profit.”
Whether a distillery produced 5 gallons or 5 million gallons doesn’t matter – all owe the FDA the $14,060 flat fee by Feb. 11, 2021. Even if the distillery donated every single drop of hand sanitizer, they are required to pay the $14,060 flat fee. In addition, if distilleries do not cancel their FDA facility registration by Dec. 31, only three days after the FDA’s announcement, they will be assessed an additional $14,060 fee for continuing operations in the year 2021.
Even though Bergh saw the announcement on Monday, he didn’t understand that it applied to his operations until Tuesday night, when he received clarification in an email from the Distilled Spirits Council of the United States, the top public advocacy group for the spirits industry.
“Per the FDA Over-The-Counter Monograph User Fee Program (OMUFA) webpage, these fees do apply to facilities that manufacture or process hand sanitizers under the Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-19) Guidance for Industry,” wrote Chief Legal Officer and Corporate Secretary Courtney Armour.
A month ago, Bergh was contacted by an FDA inspector who audited his hand sanitizer production records. Bergh learned that many other distilleries in his state were receiving random audits as well. “I respect and appreciate the FDA’s efforts to keep the public safe by making sure people aren’t marketing defective products. I would have understood if they were following up on complaints but selecting random law-abiding distilleries to visit during the resurgence of the toughest wave of the pandemic and business closures is unreasonable.”
Bergh said when the FDA inspector asked specific questions relating to the value of the hand sanitizer that was being made. “I thought it was odd he wanted to know how much I made, how much I sold it for, and the value of the hand sanitizer I still had on-hand. Now it seems to me that they were trying to assess how big the pie was so they could determine how big of a slice they could take.”
For Bergh and other distillers throughout California, their most profitable period of the year, the holiday season, was deeply impacted by Governor Gavin Newsom’s recent regional shelter-in-place order. The FDA’s $14,060 fee will most likely wipe out any holiday profits that were being relied on to keep businesses funded through the rest of the pandemic.
Now that we know how can the community can help
Now that distilleries have received their final punch from 2020, its ramifications have only just begun.
“On Monday, I thought I was going to take this week off. I’m going to ring in the new year. It looks like 2020 is not going to throw any more punches at me this year, and how wrong I was,” said Bergh.
As of now, there are still a lot of questions to be answered regarding the potential $28,000 charged to distilleries who made sanitizer while the country was in short supply and in desperate need of more.
Written in complicated legal language, many distilleries weren’t even aware the email sent to them on Monday, Dec. 28 even applied to them.
“I didn’t understand what it was saying. I thought it didn’t apply to me—I disregarded it because I receive emails from the FDA all the time—I emailed five distilleries in our area I knew making hand sanitizer, only one of them knew about this—so by telling them about it, I saved them a $28,000 bill.”
Distilleries owe $14,060 for making sanitizer in 2020, and if they don’t cancel their FDA facility registration on Dec. 31, 2020, they will owe another $14,060 for the year 2021.
“That’s what a lot of these agencies love to do— they announce this stuff right between Christmas and New Years because it gets lost in the shuffle—They try to sneak it in when they think that no one is paying attention, but people are paying attention right now, fortunately.”
So how can the community help our local distilleries?
“Right now, I think it’s important for people to be aware and understand what’s going on and prepare to contact your local congressman because ultimately, congress is going to be the one to put pressure on the FDA—the president or congress is going to get this changed. That’s the only action that can be taken,” said Bergh.
As of now, all we can do is be vigilant, do our research, which may seem simple and small right now, but could potentially mean much more very soon.
About Calwise Spirits Co.: As one of the youngest master distillers in the world, proprietor Aaron Bergh has created a line of premium spirits that embody the essence of the Golden State, infusing them with native ingredients that provide a pure taste of liquid California, showcased by their flagship Big Sur Gin. Visit CalwiseSpirits.com