Distillers appear to be thrilled over the $2-trillion COVID-19 relief package passed by the U.S. Senate. The package included an important federal excise tax waiver for hand sanitizer produced by distillers.

Prior to this passage, distillers making hand sanitizer still had to pay excise taxes as if they were making whiskey. As the hand sanitizer shortage swept the nation, distillers immediately stepped up, many illegally, to make sure their communities had the proper provisions to survive.

Meanwhile, the Distilled Spirits Council of the United States is still urging FDA to update its Guidance to permit distillers to use undenatured alcohol in its hand sanitizer formula as directed by the WHO Guidance, DISCUS said.  Most beverage alcohol companies exclusively make products with undenatured alcohol and may not be able to access the required denaturing materials. Denatured spirits are those that are treated with bittering agents to make them unsuitable for human beverage consumption. 

“We greatly appreciate Congress’ efforts to make this important change regarding the federal excise tax and hand sanitizer production.  Hundreds of U.S. distillers are stepping up to produce hand sanitizer and they should not be hit with a huge tax bill for producing this much-needed item, especially at a time when so many of them are struggling,” said Chris Swonger, President and CEO of the Distilled Spirits Council of the United States, noting that for weeks DISCUS has been working with Congress and the Tax and Trade Bureau to try to resolve the issue. “We now need FDA to recognize the same and update critical guidance for distillers to ensure the tax provision can be implemented.”

The legislative package also  includes important assistance for small businesses in the hospitality industry including:

• $349 billion for Small Business Administration (SBA) loans to businesses
• $10 billion for SBA emergency grants of up to $10,000 for immediate relief for small business operating costs
• $17 billion for SBA loans to cover 6 months of payments for small businesses with existing SBA loans
• A retention tax credit for employers to encourage businesses to keep workers on payroll during the crisis
• 13 weeks of additional unemployment insurance for employees
• Up to $1,200 payments to Americans who make $75,000 or less (or $2,400 for a joint return for households making $150,000 or less) plus $500 per child with benefit tapering off for higher incomes  

Last week, DISCUS and other spirits association leaders sent a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, outlining measures that could aid U.S. distillers.