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Editorial: Welcome relief from a tone-deaf fee on distilleries

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Federal bureaucrats shouldn't penalize small businesses that shifted gears last year to help protect their communities amid the pandemic. 

Yet that's what the U.S. Food and Drug Administration tried to do to American craft distilleries, including several in Charleston, that jumped in to supply scarce hand sanitizer when COVID-19 began to rage last spring.

The distilleries' often generous decision unwittingly turned them into over-the-counter drugmakers in the eyes of the officious FDA. And the agency began demanding that the distilleries pay the fee required from such businesses by the 2020 CARES Act — a $14,000 fee to help pay for pandemic relief.

This fee not only would apply to large companies that could afford it but also to often low-margin small businesses that cater to local markets. Of the more than 30 craft distilleries in South Carolina, at least seven were caught in the FDA’s net as over-the-counter drug manufacturers, according to Scott Blackwell, owner of High Wire Distilling on Charleston's Huger Street and president of the South Carolina Craft Distiller’s Guild.

For them, the fees were hard to swallow.

The FDA rule made no sense: Craft distillers are not over-the-counter drugmakers just because they stepped up to meet a public health need by distilling alcohol for use as hand sanitizer during a national emergency. And let's not forget: The government encouraged them to make it when shelves emptied as Americans correctly became compulsive hand-washers.

Mr. Blackwell expects few if any South Carolina distillers will remain in the hand sanitizer business. “Most of us didn't make any money making it; we just made it as a public service and to help the community," he told The Post and Courier.

In December, a commonsense initiative by U.S. Health and Human Services Secretary Alex Azar led the FDA to withdraw its demand that distillers who made hand sanitizer in 2020 register as over-the-counter drugmakers and pay the fee.

That's welcome news to the public-spirited distilleries that came to the aid of their communities in a time of need. Companies shouldn't be penalized for ingenuity, especially as they try to survive a pandemic, and especially when they're helping to protect people from that public health threat.

The unfortunate episode also highlights the attention to details and unintended consequences that small businesses owners must maintain even when times are good. It's been a tough year for many of them — and their employees — and it was a rotten idea to punish them for their ingenuity, grit and public service. We all should be glad that they can wash their hands of it.

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