To meet the growing need for hand sanitizing products, various federal agencies including the Alcohol Tobacco Tax and Trade Bureau (TTB), Federal Drug Administration (FDA), Health and Human Services (HHS) and Congress have been rapidly updating and providing guidance for alcohol manufacturers interested in producing or supplying alcohol for the production of these important products. The below neatly summarizes the key issues surrounding the production of alcohol for use in or production of hand sanitizers for distilled spirts plants (DSPs).
- Tax Treatment: Denatured and undenatured alcohol may be withdrawn from the bonded premises after December 31, 2019 and before January 1, 2021 free of tax for use in or contained in hand sanitizer made in accordance with FDA guidance.
- Formula requirements: No prior formula approval is required for DSPs or industrial alcohol users if:
- the hand sanitizer is produced in accordance with World Health Organization (WHO) guidance; and
- the alcohol is denatured according to TTB regulations contained at 27 CFR parts 20 and 21 and uses Formula Nos. 40-B (27 CFR § 21.76) or Formula No. 40-B (27 CFR § 21.75) for production
- Labeling: Both alcohol for use in hand sanitizers and the hand sanitizer product itself must be labeled in accordance with FDA’s guidance. These products are not subject to labeling requirements under either the Federal Alcohol Administration Act (FAA) or the Alcoholic Beverage Labeling Act of 1988
- Buyers: Alcohol, both denatured and undenatured, may be sold tax free to the following entities if they hold an appropriate TTB license: DSPs, state and local governments for non-beverage purposes, hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit claims and qualifying educational institutions
- Additional Permits: NAdvance approval no longer required for Alcohol Fuel Plants (AFPs) and beverage DSPs if the application relates to altering production for these purposes
- Transfers in Bond: Advance approval no longer required if providing alcohol for use in these products. However, record of receipt must be maintained.
- FDA Registrations: If producing hand sanitizer products, the manufacturing facility and list products must be registered in the FDA Drug Registration and Listing System
- Limited Immunity: HHS Declaration under the PREP Act provides a potential shield for those manufacturing hand sanitizer against future claims
- Recordkeeping: Records sufficient to identify that the alcohol sold was intended for use in hand sanitizing products.
New License Holders: If you are an alcohol manufacturer, such as a brewery or winery, that is interested in becoming involved in this effort our recommendation is to apply for a Specially Denatured Spirits – User permit, or alternatively a Distilled Spirits Plant (DSP). The application process for both permits is being expedited by TTB with a 1-2 day turnaround.
TTB Updates and Guidance on COVID-19
FDA’s Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products
FDA’s Policy for Temporary Compounding of Certain Alcohol-Based Hand Sanitizer Products
HHS’ Declaration under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19
CARES Act Section 2308, Temporary Exceptions From Excise Tax for Alcohol Used to Produce Hand Sanitizer