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Emergency lifting of restrictions placed on Distilled Spirit Permittees—What Makes this Possible?

Emergency lifting of restrictions placed on Distilled Spirit Permittees—What Makes this Possible?

Disinfect Connect is not authorized to dispense legal advice. Please contact your compliance specialist for more information regarding the law.

On March 18, 2020, the U.S. Office of Communications posted vital information regarding the manufacturing of high-in-demand hand sanitizer. This post is an extension of the emergency lifting of restrictions placed on Distilled Spirit Permittees.

The word of the law is stretchy. Cornell Law records it as such under 26 U.S.C. 5562:

Whenever the Secretary finds that it is necessary or desirable, by reason of disaster, to waive provisions of internal revenue law with regard to distilled spirits, he may temporarily exempt proprietors of distilled spirits plants from any provision of the internal revenue laws relating to distilled spirits, except those requiring payment of the tax thereon, to the extent he may deem necessary or desirable. (Cornell Law)

The key words of this clause seem to be “any provision.” The suspension of any provision in this case is the manufacturing of sanitizer production without first obtaining expressed permission from the TTB. Thus, DSPs already permitted with the TTB (you’ll know who you are) can “immediately commence production of hand sanitizer or distilled spirits (ethanol) for use in hand sanitizer.”

However, distillers must still keep tight records of their operations, including the general process of producing sanitizer.

The exemption goes even so far as to forgive federal excise tax on sanitizers made with denatured alcohol, which means if it’s unsafe to drink, it’s also untaxable. The same cannot be said for undenatured alcohol, which can be consumed without added toxicity due to the forgoing of the denaturing process. This undenatured alcohol is still subject to federal excise tax.

I’ve posted a screenshot of the original source below:

Distilled Permittees Guidelines

Figure 1: Screenshot of TTB website with information regarding the authorization of hand sanitizers manufactured by distilleries permitted by the federal government.  Courtesy and property of TTB. Disinfect Connect in no way claims ownership or intellectual credit for the above information.

Distillery-made hand sanitizer must still follow guidelines posed by the World Health Organization (WHO).  That link is here: WHO Sanitizer Guidelines

WHO’s guidelines outline the ingredients necessary for two different formulas prepared in 10L containers:

Formula 1 uses Ethanol.

  • Ethanol 96%: 8333 ml

  • Hydrogen peroxide 3%: 417 ml

  • Glycerol 98%: 145 ml

Formula 2 uses Isopropyl Alcohol.

  • Isopropyl alcohol 99.8%: 7515 ml

  • Hydrogen peroxide 3%: 417 ml

  • Glycerol 98%: 145 ml

It is of utmost importance to note that these formulas, and WHO’s guidelines, are specific to hand-rub applications of sanitizer. Sanitizer dispensed from a spray bottle is still implied to be unauthorized for distillery production and will require further pressure on the TTB from all of us and our legislators to permit its production in the same way as previously described.

What’s more is that as of March 24, 2020, the FDA released a guidance document outlining the procedures and practices for hand sanitizer production. There isn’t much noteworthy that isn’t covered in the TTB report that I discussed previously bar one important detail: Any water used in the production process must be sterile.

Therefore, hand sanitizer will meet FDA guidelines if it uses “any water [used] to adjust the finished ethanol content in the alcohol API [that] is sterile (e.g., boiling the water, distillation, or reverse osmosis).” (FDA.gov)

The recent FDA issuance leans heavily on Section 701(h)(1)(C)(i) of the FD&C Act -- which sounds like legislative nonsense. I’ll break it down for you and attach it to my references below. Disclaimer: Disinfect Connect is not authorized to dispense legal advice.  Please contact your compliance specialist for more information regarding the law.

This section code gives the Secretary of Health and Human Services the power to enact guidance documents pertaining to a specific interpretation of statutes and laws. In this case, the guidance document relates to the manufacturing of hand sanitizer using ethyl alcohol (ethanol). What’s important is that this guidance document under this section allows the FDA to subvert public comment. In other words: committee department meetings, debate, and broad legislative consensus.

This is what enables the FDA and TTB to make such quick judgments with significant effects.

21 CFR 10.115(g)(2)) works in the same vein. By de-regulating the amount of public discussion prior to implementing a guideline, the FDA can react rapidly to disaster situations like the one we currently face due to COVID-19.

Another important note for distilleries interested in beginning production: this relaxation of TTB and FDA laws are subject to change on June 30, 2020. If the situation worsens, expect an extended period of legally authorized production. Let’s hope it doesn’t.

In this time of crisis, remember that you are not alone. The Disinfect Connect team is committed to providing valuable and reputable information for you. 

We are at once excited and nervous to enact positive good in our society for the people that need it most. We find it our responsibility as concerned citizens blessed with the time and creativity to help find solutions amidst a crisis.

I would like to reiterate: Disinfect Connect is not authorized to dispense legal advice.  Please contact your compliance specialist for more information regarding the law.

We will continue to update our community with relevant information regarding hand sanitizers and the impact we’re working to create alongside you.

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by Chris King / 3-25-20

Chris is an English Major at Cal Poly San Luis Obispo.  He is dedicating his time and energy to support Disinfect Connect by writing blog posts and producing content. 

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References:

Center for Drug Evaluation and Research. “Temporary Policy for Manufacture of Alcohol for 

Incorporation Into Alc.” U.S. Food and Drug Administration, FDA, Mar. 2020, www.fda.gov/regulatory-information/search-fda-guidance-documents/temporary-policy-manufacture-alcohol-incorporation-alcohol-based-hand-sanitizer-products-during.

Crawford, Monique S. “COVID-19 Hand Sanitizer.” TTBGov - COVID-19 Hand Sanitizer, U.S.

Office of Communications, 18 Mar. 2020, www.ttb.gov/news/covid-19-hand-sanitizer.

Guide to Local Production: WHO-Recommended Handrub Formulations. Guide to Local

Production: WHO-Recommended Handrub Formulations, WHO, 2010.

“21 CFR § 10.115 - Good Guidance Practices.” Legal Information Institute, Legal Information 

Institute, www.law.cornell.edu/cfr/text/21/10.115.

“21 U.S. Code § 371 - Regulations and Hearings.” Legal Information Institute, Legal 

Information Institute, www.law.cornell.edu/uscode/text/21/371 

“26 U.S. Code § 5562 - Exemptions from Certain Requirements in Cases of Disaster.” Legal

Information Institute, Legal Information Institute, www.law.cornell.edu/uscode/text/26/556