March 24, 2020 1:30PM

From Spirits to Sanitizer

By Jeffrey Miron and Erin Partin

Extreme circumstances often inspire innovation. One current example is the pivot by distillers from making spirits to making hand sanitizer.

The transition was not without government hurdles, but in this instance government cooperated with common sense. First, the Alcohol and Tobacco Tax and Trade Bureau waived requirements to obtain permits in order to legally manufacture hand sanitizer and agreed to waive the federal excise tax for alcohol‐​based hand sanitizer products. In addition, the Food and Drug Administration issued temporary guidance saying, “the agency does not intend to take action against manufacturing firms that prepare alcohol‐​based hand sanitizers for consumer use and for use as health care personnel hand rubs during this ongoing public health emergency.”

Prior to these actions, distillers were forced to use creative workarounds:

Distillers had been finding ways to work around restrictions, including donating rather than selling sanitizer, or calling it something other than hand sanitizer. For instance, Los Angeles spirits maker Amass was selling “alcohol‐​based hand wash” on its website… The company will now call the product hand sanitizer.

Before the new guidance distillers were also scrambling to find distribution channels that would not run afoul of FDA or TTB regulations, frequently donating products to local healthcare organizations or providing small quantities to customers as free gifts with purchases.

Even with the relaxed regulations, distillers could still face challenges. In the shift from spirits to hand sanitizer, distilleries are taking on substantial financial burdens. Though some have plans to eventually sell the hand sanitizer in order to defray costs of production and lost spirits revenue, determining a legal way to do so is challenging. Fears of running afoul of the FDA, or price gouging regulations, have slowed the transition.

Although the FDA and TTB have, correctly, relaxed the rules surrounding the production and distribution of hand sanitizer, private businesses should not have faced regulations discouraging them from increasing the supply of a vital public health resource. Private altruism should not be discouraged by government regulations.