LAKEWOOD, Ohio (WOIO) - Mired in a pandemic, small businesses continue to look for revenue streams to stay afloat. For all intents and purposes, the FDA just cut one off for a Lakewood distillery.
“We were doing probably $50,000 - $60,000 a week in hand sanitizer,” said Kevin Thomas, the owner of Western Reserve Distillers on Madison Avenue in Lakewood.
Early on in the pandemic he converted his operation to produce thousands of gallons of sanitizer a week.
It kept his business afloat and helped the community as well.
“Cleveland Public Library, Cuyahoga County, the Town of Berea. We’ve had a number of larger customers and clients,” he said.
Businesses flocked to him for his quick turnaround and easy access.
“A lot of the local gyms - a lot of the local churches will use it because it’s an easy way go through and spray.”
The ethanol-based product he is manufacturing can be used as a hand sanitizer or spray.
He got the formula from the FDA. Now that same agency essentially telling him to pay up or stop making it.
“There’s a $14,000 facility registration fee, and then there’s another $100,000 after that,” he said.
Hence, he’ll stop producing the product in the new year, losing that revenue and forcing other small businesses to look for a new supplier.
What’s worse, Kevin is sitting on approximately 10,000 gallons of sanitizer.
He’s unsure if he’ll be able to sell it in 2021—even though it was produced in 2020.
19 News asked the FDA about the fee, and if there will be any consideration of waiving it. Its response is below:
“The FDA appreciates industry’s willingness to help supply alcohol-based hand sanitizer to the market to meet the increasing demand for these products during COVID-19, and we are grateful for their efforts. We understand the concern that manufacturers have about the fees they are being asked to pay, especially from small businesses during this difficult time. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) enacted by Congress and signed into law in March 2020, imposes user fees for fiscal year 2021 (and thereafter) to be collected from over-the-counter (OTC) monograph drug facilities, such as hand sanitizer manufacturers. The statute does not provide any waiver provisions for any specific category of manufacturer or for the deadline for assessing those fees, however we stand ready to work with Congress on ways this can be addressed. The FDA has made information regarding its planned implementation of this new user fee program publicly available on the agency’s website, beginning in May 2020. As with our other user fee programs, we anticipate that these user fees will provide additional resources to help the agency conduct our important regulatory activities in a timelier manner and ultimately help provide the public with access to innovative OTC monograph drugs.”
In the meantime, Thomas will go back to producing spirits exclusively. The adjoining restaurant, the distillery and gift shop remain open as well. More information can be found at https://www.westernreservedistillers.com.