Hand Sanitizer from GNS

[DrDistillation]

I'd personally have no issue using H2O2 regardless of supplier if I could get it.  It should be cheaper to transport as well.  I see it available still from many suppliers.

It would be almost impossible for H2O2 not to fall into footnote 7 on the FDA document. https://www.fda.gov/media/136118/download

"Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP. Technical grade hydrogen peroxide falls within this policy if the concentration is within that of Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP."

It surely is when you dilute it!

Take for example: https://growershouse.com/h2o2-hydrogen-peroxide-34-5-gallon?utm_source=google&utm_medium=cpc&adpos=&scid=scplp9483&sc_intid=9483&gsacid=952889933&keyword=&gclid=CjwKCAjwvZv0BRA8EiwAD9T2VTKMenEZtMtMdSoKvt2TjwtITTZKmBe87MovWnhsak5GK16-Hb8YJxoCq2gQAvD_BwE

It's 34% not 3% or 12% as you typically purchase Hydrogen Peroxide.  It's a much purer form.

1 Gallon of 34% when diluted would be the same concentration as 11.33 gallons of 3% or enough to make approximately 1030 liters or 272 gallons of sanitizer per FDA recipe.

[Classick]

45 minutes ago, Madspeed said:

My day job is supplying packaging materials to manufacturers all over the place. I have access to a few suppliers that have availability of various sized containers and closures that will work. What sizes are you guys seaking? I assume an 8 oz clear PET with white or black sprayer and perhaps a 16 oz as well?  Are most of you guys producing liquid or gel sanitizers?

Im not sure PET makes a difference between HDPE, but we're using the latter currently in 8oz capacity and with 24-210 neck/fine most sprayer cap

Thanks much for checking

[Thatch]

1 hour ago, DrDistillation said:

It would be almost impossible for H2O2 not to fall into footnote 7 on the FDA document. https://www.fda.gov/media/136118/download

Great Job Dr D.  This makes me breath easier.  We're all just trying to help out and dissecting specs is not my long suit.

[Pour Decisions]

1 hour ago, Classick said:

Im not sure PET makes a difference between HDPE, but we're using the latter currently in 8oz capacity and with 24-210 neck/fine most sprayer cap

Thanks much for checking

correct, PET just tends to be clearer 

[Thatch]

Anyone got a line on in-stock 2 to 4 ounce spray bottles for a reasonable price?  We had delivery promised for Monday and now it's next month.

[John Bassett]

On 4/5/2020 at 8:33 AM, Thatch said:

Anyone got a line on in-stock 2 to 4 ounce spray bottles for a reasonable price?  We had delivery promised for Monday and now it's next month.

We are in the same boat.  I cannot get 2 or 4 oz bottles of any kind.   My usual supplier dried up.

[SCLabGuy]

On 4/3/2020 at 10:49 AM, DrDistillation said:

I'd personally have no issue using H2O2 regardless of supplier if I could get it.  It should be cheaper to transport as well.  I see it available still from many suppliers.

It would be almost impossible for H2O2 not to fall into footnote 7 on the FDA document. https://www.fda.gov/media/136118/download

"Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP. Technical grade hydrogen peroxide falls within this policy if the concentration is within that of Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP."

This is confusing but I think we (DSPs) actually have to use USP. 

The "Technical grade" footnote you mentioned appears in an FDA document titled: "Policy for Temporary Compounding of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency Immediately in Effect Guidance for Industry" @ https://www.fda.gov/media/136118/download

I believe that guidance is for compounders (i.e. pharmacist-controlled) production facilities that do not normally make sanitizer, allowing them to make it with technical grade peroxide:

Quote

The Agency is issuing this guidance to communicate its policy for the temporary compounding of certain alcohol-based hand sanitizer products

by pharmacists in State-licensed pharmacies or Federal facilities and registered outsourcing facilities (referred to collectively in this guidance as compounders)

 

 

There is a similar but separate FDA guidance doc titled: "Temporary Policy for Preparation of Certain Alcohol-Based Hand Sanitizer Products During the Public Health Emergency (COVID-191 ) Guidance for Industry " @ https://www.fda.gov/media/136289/download

This one says: 

Quote

The Agency is issuing this guidance to communicate its policy for the temporary preparation of certain alcohol-based hand sanitizer products

by firms that register as over-the-counter (OTC) drug manufacturers to prepare alcohol-based hand sanitizers under the circumstances described in this guidance (“firms”) for the duration of the public health emergency declared by the Secretary of Health and Human Services (HHS) on January 31, 2020.

I don't think DSPs are Federal compounding facilities - I think they fall under the 2nd doc's umbrella of "firms" that register as OTC manufacturers.

Hence, we can only use USP, because the footnote in that doc is missing the technical grade exception.

Anyone else got another reading?

[DrDistillation]

SCLabGuy, that footnote for technical grade is in the FDA document being provided to DSPs and forwarded by the TTB who you are licensed with.  That is their way of granting you this lead way in these emergency times. If you are a DSP making sanitizer YOU ARE essentially a local "compounder" under the waiver.  You still have to register with the FDA but get immediate approval if following their recipe.

These are the same documents I've quoted many times here on this forum.  If in doubt, do not take anyone's advice including mine, but make the proper phone calls for guidance.  I've done this myself more than a half a dozen times but would suggest you do the same as well.

I'll use my words and not quote anyone, but I've been as much as told (multiple times by different people) during the crisis that if you follow the simple steps as laid out, are NOT selling the product and are denaturing properly that minor issues will be ignored as good faith.

So if the MSDS shows it as or matching a technical grade product (if that's what's called for) I'd personally be OK with that in these times under these "bulletins".

My take is that you are NOT an OTC as you CAN'T sell the product OTC. You are a DSP acting under a temporary waiver to make a specific product a specific way using what's available that matches what they've given us as a recipe (including allowed footnote deviations).

Again, if in doubt, make proper phone calls, then let us know what you find out!  No one should believe anything anyone says, but believe their own eyes reading the few pages we've been given.  Sure others may help with guidance but trust yourself, your own instincts and VERIFY what you think might be wrong.  I myself have gotten conflicting info from TTB & FDA which doesn't help.  That to me adds to the fact that neither will be going after DSP who make a good effort to follow the steps as laid out.

We're living in strange times for sure in DSP land!

[DrDistillation]

To add to the above.  If you call the TTB or FDA about a question on ingredients, don't sugar coat your question.  Be forth coming and tell them exactly what you are seeking clarification on.  IE I can't find 3% or 12% HP but can get 34% H2O2 that appears to meet your technical grade requirements.  Can I use this or what do I need to verify first before use.  Be specific in your questions.  Ask for a resolution in writing but they will probably decline and refer you to the current waiver docs.

If you can record the call for your own protection and start the call of with, this is John Doe form XYZ distillery in ZZ state, DSP-xxxx.  I''m recording this call and looking for clarification on....

Then get their name and department and log it in your notes as well as the recorded phone call.  You will generally not get bogus or info they guess at but will get a straight answer or get transferred to a different person who can answer knowing you are recording the call!  If transferred, let them know who you are, where you're located, your DSP # and that they are being recorded.

If you get someone who is reading against a checklist or seems clueless ask for a supervisor or hangup and try again.  I literally talked to one person who had to check the difference between iso and ethyl. Supervisor not available,  click, redial.

If you get an answer the ingredients don't match what they require go back to the drawing board and look some more or just produce spirits for sale.  Many DSP have switched over production to Sanitizer which WILL affect availability of some spirits in 2 to 4 years.  That may sound calluse but if you can't make a sanitizer product today you might as well be in business 5 to 10 years from now when the next crisis appears that you can help with.  Very few businesses are jumping in to help with the crisis in the way DSP have (at a loss) and if you've tried but failed, get past it, survive and come back to fight another day!

Not to get  political, but the country/world is likely going to go through a major recession due to Covad-19.  If you keep your DSP operational and keep people employed then hang your head high long term as that is x amount of people you kept off unemployment and contributing via all the taxes involved.  DSPs contribute a substantially higher amount via taxes to the IRS (if in USA) then 99.9+% of other businesses so keep that in mind. Even if you can't produce sanitizier you are helping the economy by staying alive and keeping people employed and paying all our taxes we pay that others benefit from!

[SCLabGuy]

1 hour ago, DrDistillation said:

the FDA document being provided to DSPs and forwarded by the TTB who you are licensed with

TTB guidance: https://www.ttb.gov/public-guidance/ttb-pg-2020-1a
Refers specifically to FDA doc 136289 ("firms" and not "compounders") and does so three times.
It does not refer to the "compounder" doc (136118) at all.
Do you have a source for this claim - that TTB is referring to the "compounding" doc (136118)?

 

Quote

if you are NOT selling the product

I agree that relatively small things would be overlooked in this case.  But some DSPs are trying to sell sanitizer in order to stay afloat... and those DSPs would, in my opinion, be wise to toe the line.

[DrDistillation]

Just follow the TTB directive and the linked FDA document for how to make hand sanitizer under the waiver and call it a day. Do each and every step.

Don't go looking for other documents to try and find "loop holes".  Just follow the directions as given or make phone calls for guidance.

[SCLabGuy]

1 hour ago, DrDistillation said:

Just follow the TTB directive and the linked FDA document for how to make hand sanitizer under the waiver and call it a day. Do each and every step.

Don't go looking for other documents to try and find "loop holes".  Just follow the directions as given or make phone calls for guidance.

Neither of the docs that you mention allow Technical Grade Hydrogen Peroxide.  My point is that I think YOU are the one that's looking for a loop hole in an "other" document.  Specifically the "Compounders" document, which nobody (i.e. TTB or FDA) has said applies to you.  

We have, of course, been making calls to FDA but they are skittish about going on the record.

I maintain that the distinction only matters (technical grade vs. USP h2o2) if you are selling the product, in which case I feel (morally and legally) you have a higher standard of accountability.  If you are donating it, I think we all know that the two are functionally equivalent in this particular use case.

[DrDistillation]

TTB doc https://www.ttb.gov/public-guidance/ttb-pg-2020-1a

has a link to FDA document https://www.fda.gov/media/136289/download

Step 1 c. Hydrogen peroxide footnote 10

10 Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP. Technical grade hydrogen peroxide falls within this policy if the concentration is within that of Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP

-------

So not a loophole but specifically spelled out.  The loophole I was referring to was about selling the product as that is not mentioned in the docs.  Only NOT FOR SALE sanitizer.  Maybe the TTB/FDA don't care but the bulletins say otherwise. That DOES need clarification if you are thinking of trying to sell.

[SCLabGuy]

6 hours ago, DrDistillation said:

TTB doc https://www.ttb.gov/public-guidance/ttb-pg-2020-1a

has a link to FDA document https://www.fda.gov/media/136289/download

Step 1 c. Hydrogen peroxide footnote 10

10 Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP. Technical grade hydrogen peroxide falls within this policy if the concentration is within that of Hydrogen Peroxide Concentrate USP or Hydrogen Peroxide Topical Solution USP

-------

So not a loophole but specifically spelled out.  The loophole I was referring to was about selling the product as that is not mentioned in the docs.  Only NOT FOR SALE sanitizer.  Maybe the TTB/FDA don't care but the bulletins say otherwise. That DOES need clarification if you are thinking of trying to sell.

You're right. It was me that had the two guidance docs backwards.

[adamOVD]

On 3/30/2020 at 4:44 PM, DrDistillation said:

Maybe another tip for anyone going this route.  If you aren't doing large batches like 100 gallons at a time it's going to be harder to measure 1/16 of an ounce (weight, not volume).

You could use a gram scale but that's only marginally better since there is 28.3495 grams per ounce.

Get a grain scale (like what's used for hand loading bullets and measuring gun powder). There are  437.5 grains per ounce so 27.34 grains per 100 gallons.

If mixing up 20 gallons batches of Ethanol to denature you would use 5.47 grains for example.

This goes a way back in the thread, but for making small batches I was thinking of dissolving the Bitrex in 10x its weight in water to make the batch measurement easier.

[dhdunbar]

I have avoided getting further involved in this because it is a rats nest.  The FDA guidance documents say that it contains nonbinding recommendations.  WTF does that mean?   The whole thing centers on FDA's concern about it GRAS ruies.

Whai Would call the FD's overly  cautious approach to covid 19 testing poked a stick into the spokes of an essential program.  It put us way behind the wave.  It's caution on hand sanitzers is having the same effect.   In 1996 and 2009 and nine the FDA was prepared to recognize undenatured alcohol as GRAS in hand sanitizers, but in 2016 it reversed that, calling for further testing.  Why?  Out of a concern that kids might drink it and poison themselves.  Let';s put those two concerns on the scales by which we measure this emergency.  To me, the FDA's position is indefensible.  The are running much too scared.  And as a lot of you know, the result has been a "wild west" scene around the country.  What has the FDA's conservatism accomplished? So I stay out of it.  Once burned.   

But I will insert a bit more here.

TTB's guidance document addresses TWO different matters.  One is the production of an article, in the parlance of part 20 of its regulatons.  The article is the hand sanitizer.  TTB says that you can forget the rules in part 20 for the production of articles if you make the hand sanitizer according to the guidance document.   I'll leave that there.

The second matter is the sale of undenatured alcohol, plain alcohol, not containing any other substance other than water, to persons who are eligible to receive it under the provisions of the Internal Revenue Code.  Normally, you would need to be an industrial alcohol plant to do that.  Normally you would need a bond.  TTB's guidance document waives those two requirements.  It does not waive the other requirements that part 20 p[laces on such sales. If you look at the TTB  guidance document carefully, you will see that every reference to "not for sale" applies to the removal of the undenatured alcohol, not hand sanitizer.  Here is every reference to "not for sale" that you will find in TTB's guidance document:

• Alcohol, whether or not denatured, may be delivered tax-free to state and local governments for non-beverage purposes. The same is true for hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions, if not for resale or use in the manufacture of any product for sale.
• Any existing DSP also may remove undenatured or denatured ethanol from bonded premises free of tax for use by any state or local government to produce hand sanitizer. In addition, any existing DSP may remove undenatured or denatured ethanol from bonded premises free of tax for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer, and not for resale or use in the manufacture of any product for sale.  See 26 U.S.C. 5214(a)(3). These measures are generally authorized under authorities that apply in disaster situations, and as a result, are initially approved through June 30, 2020, with the possibility for extension as necessary.
• Guidance for hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions. Hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions may obtain alcohol free of tax for their own nonbeverage purpose use and not for resale or use in the manufacture of any product for sale, as described in 26 U.S.C. 5214(a)(3). Manufacturing hand sanitizer is one such nonbeverage use. As with state and local governments, such alcohol must be obtained from a distilled spirits plant and may only be obtained by those holding an alcohol user permit from TTB. See 26 U.S.C. 5271(a); 27 CFR part 22. TTB will offer these organizations the same streamlined application, as authorized under 27 CFR 22.42 and 22.43(a)(2). Again, please note that recent FDA guidance specifies using denaturants when making hand sanitizer.

The requirement that the person obtaining the alcohol have a permit cannot be waived because it would waive a tax provision.  Only congress can do that.  The rules are different for the removal. for industrial purposes, of tax determined bulk alcohol   The TTB guidance document does not waive those rules.  

But there is no issue that I can find with selling hand sanitizer made in accordance with the provisions of the guidance document.

[DrDistillation]

44 minutes ago, dhdunbar said:

• Alcohol, whether or not denatured, may be delivered tax-free to state and local governments for non-beverage purposes. The same is true for hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions, if not for resale or use in the manufacture of any product for sale.

So how can you remove alcohol from bonded storage to make a product and sell it when it says right there the alcohol can't be used to manufacture ANY product for sale?

https://www.ttb.gov/public-guidance/ttb-pg-2020-1a

Any existing DSP therefore can immediately commence production of hand sanitizer or distilled spirits (ethanol) for use in hand sanitizer, as described below, without having to first obtain authorization.  Any existing DSP also may remove undenatured or denatured ethanol from bonded premises free of tax for use by any state or local government to produce hand sanitizer. In addition, any existing DSP may remove undenatured or denatured ethanol from bonded premises free of tax for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer, and not for resale or use in the manufacture of any product for sale.

Does that give the DSP the SOLE ability to manufacture a product for sale but not the others mentioned?  Doubtful.  Why would the TTB give a DSP tax free access to alcohol they can profit on (spirit or sanitizer)?

Does it even give the DSP the ability to distribute other than to governments, hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics or qualifying education institutions?  Unclear from what is written but in government speak, no it doesn't.

The TTB guidance documents leave a lot unclear in their poorly worded guidance documents!

[daveflintstone]

4 hours ago, adamOVD said:

This goes a way back in the thread, but for making small batches I was thinking of dissolving the Bitrex in 10x its weight in water to make the batch measurement easier.

That's exactly what the distributor recommends, but not water, ethanol. Directly from the distributor:

 

Using Bitrex-USP/NF In Crystal Form	Treat Rate
	Pure Bitrex
Add to each:	grams
54 gallon drum	1.0
100 gallon = 1/16 avd. Oz.	1.8
270 gallon tote	4.9

 

If you want to make a Stock Solution to make it easier to handle Bitrex is readily soluble in Ethanol, but NOT WATER.

 

I'd suggest a 10% weight/weight solution in ethanol, then math on treat rate would be 10x above chart. 

[DrDistillation]

You have to understand what you're doing of course and understand that instead of measuring dry weight you'll now be using X volume instead.  That may be more confusing for some than worth it.  It does work great however for those who can substitute volume vs weight understanding the dilution factor.

What might be easier for people doing batches less than a barrel would be switching to using a grain scale (cheap).  These are scales used by jewelers and those who load bullets/shotgun shells, etc (ie 9 grain bullet).

There are 437.5 grain per ounce (by weight).  So instead of measuring 1/16 ounce per 100 gallons Ethanol you can measure 27.34 grains per hundred gallons.

If doing 25 gallon batches of denaturing then 5.47 grains.

If doing 10 gallon batches of denaturing then 2.73 grains.

Either way works fine, just use what's convenient that you fully understand the weight or volume required.

 

[daveflintstone]

You do not need to substitute volume for weight when using ethanol diluted bitrex.  Just use 10x the required crystalline weight because the dilution is 10x by weight.  Because the amount is so tiny compared to the volume of the batch, the additional ethanol can be ignored.

[DrDistillation]

For these small amounts used, yea only weight not volume.  I'd not use 10x ethanol, 10:1 but instead use 9x ethanol 9:1 so you have a 1/10th solution by weight.

[daveflintstone]

Uh yeah that's what a 10% weight/weight solution is, 1 part bitrex and 9 parts 190.  So as I said, you would then use 10x the crystalline treatment weight: 1.8 grams / 100 gallons becomes 18 grams / 100 gallons.

It doesn't matter the size of your batch, you'd always use a weight measurement not volume.  And you can always ignore the additional volume because the treatment amount is so tiny compared to any size batch, it won't register.

[DrDistillation]

Yea, that's a solid strategy to make measurements much easier.

Great Tip!

[Southernhighlander]

On 4/7/2020 at 1:58 PM, DrDistillation said:

So how can you remove alcohol from bonded storage to make a product and sell it when it says right there the alcohol can't be used to manufacture ANY product for sale?

https://www.ttb.gov/public-guidance/ttb-pg-2020-1a

Any existing DSP therefore can immediately commence production of hand sanitizer or distilled spirits (ethanol) for use in hand sanitizer, as described below, without having to first obtain authorization.  Any existing DSP also may remove undenatured or denatured ethanol from bonded premises free of tax for use by any state or local government to produce hand sanitizer. In addition, any existing DSP may remove undenatured or denatured ethanol from bonded premises free of tax for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer, and not for resale or use in the manufacture of any product for sale.

Does that give the DSP the SOLE ability to manufacture a product for sale but not the others mentioned?  Doubtful.  Why would the TTB give a DSP tax free access to alcohol they can profit on (spirit or sanitizer)?

Does it even give the DSP the ability to distribute other than to governments, hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics or qualifying education institutions?  Unclear from what is written but in government speak, no it doesn't.

The TTB guidance documents leave a lot unclear in their poorly worded guidance documents!

  I had trouble following this myself at first and I have a pretty good understanding of legalese. If you read everything that they reference, basically the translation is that the rules are being waved for the time being so that you can remove ethanol from bond for producing hand sanitizer and there will be no tax, if the hand sanitizer is used for that industrial purposes.  It  gives you the right to give it away or sell it to the government, hospitals, blood banks, sanitariums, certain pathological laboratories not profit clinics and qualifying education institutions.   This does not allow you to sell it or even give it to the public or any other entities, except for those explicitly listed.  I can deal with that but they are making our process for producing the hand sanitizer a lot harder by forcing us to denature our ethanol.  If they would change that it would make things a lot simpler for all of us. 

[dhdunbar]

20 hours ago, DrDistillation said:

So how can you remove alcohol from bonded storage to make a product and sell it when it says right there the alcohol can't be used to manufacture ANY product for sale?

The guidance in the document is precisely worded.  The excerpt you quote has three separate sentences, each describing a different set of circumstances.  The three sentences are clear, but you have to carefully parse them.   

First Sentence -  Part 19, 20, and 223 requirements

• Any existing DSP 
• Can immediately commence production of;
•      Hand sanitizer or
•      Distilled spirits (ethanol) for use in hand sanitizer,
• As described below, 
• Without having to first obtain authorization.

What does that allow and prohibit? 

• The sentence is relatively free of embedded clauses. 
• Nothing in that provision prohibits manufacturing , for sale,  hand sanitizer or distilled spirits  for use in hand sanitizer.  This is a blanket authorization. 
•  Nothing in that sentence addresses whether you must pay taxes on the distilled spirits that are in the hand sanitize that you produce or on the distilled spirits that you produce for use in hand sanitizer. 
• This sentence waives the requirements of part 19 that a DSP be qualified as an industrial plant and have a bond to engage in such transactions.  Part 19 allows you to make "articles," a class of products to which hand sanitizers belong, on DSP premises, without an additional SDA users permit, as long as you make the articles in conformity with the requirements of part 20.
• Part 20 requires formulas for articles produced.  If the formula is not a general use formula, then you must file a formula and obtain TTB's approval of it before making it.  However, the "as described below" provision of the first sentence has the effect of making the formula in the guidance a general use formula for the duration of the emergency.  Thus, you do not have to have additional authorization, i.e. the formula, to make a hand santizer if you do so in accordance with the formula in the guidance.
• You will not need to pay taxes if you produce the sanitizer according to the current TTB guidance, since the current guidance requires that you produce hand sanitizer with specially denature alcohol (SDA).  You make SDA according to a formula ion part 21.  If you follow the formula, , tax is no longer attached to alcohol used to make the SDA.  Therefore, the hand sanitizer made with SDA is not subject to excise tax.  You remove it without paying tax.  
• Second Sentence - Part 19 and 22 requirements re: governments

The second sentence describes a different set of circumstances.  It is independent of the first sentance.  It addresses the removal, from a DSP,  of alcohol. for use by a restricted class of persons, only a state or local government, for use by such persons, to make hand sanitizer.

•  Any existing DSP
• Also may remove
• Undenatured or denatured ethanol
• From bonded premises free of tax
• For use by any state or local government to produce hand sanitizer.

What does that allow and prohibit? 

• The provisions of this sentence apply only to removals made to state or local governments. 
• The government would be the person using the product.
• In this case, the removal is free of tax, but only if they have an industrial use permit issued under part 22. 
• Again, the guidance waives the requirement that the DSP be qualified as an industrial alcohol plant and the requirement for a bond.  It does not waive the requirement that the government have a permit under part 22.  

Third  Sentence - Part 19 and 22 requirements re: hospitals, pharmacies, etc.

The third sentence describes a third set of circumstances. It is independent of either of the two preceding sentences.   It addresses the removal, without payment of tax,  of undenatured or denatured alcohol, to specific types of entities.  

• Any existing DSP
• may remove undenatured or denatured ethanol
• from bonded premises free of tax
• for use by hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions seeking to use it to manufacture hand sanitizer,
• and not for resale or use in the manufacture of any product for sale.

What does it prohibit and allow:

 

• The provisions of this sentence apply only to removals made to the enumerated parties, hospitals, blood banks, sanitariums, certain pathological laboratories, non-profit clinics, and qualifying educational institutions 
• The enumerated parties will be the persons using the product (they do so under the second set of FDA guidelines, which differ from the set that applies to DSPs that are manufacturing hand sanitizers, which has been a cause of some confusion here).
• In this case, the removal is free of tax, but only if they have an industrial use permit issued under part 22. 
• Again, the guidance waives the requirement that the DSP be qualified as an industrial alcohol plant and the requirement for a bond.  It does not waive the requirement that the government have a permit under part 22.  

Resale Provisions

• Importantly, the phrase "not for resale" does not apply to sales of sanitizer made with denatured alcohol under the provisions of the first sentence. 
• The not for resale provision apply  only in the circumstances described by the third sentence, i.e., where a DSP sells spirits "free of tax" to one of the enumerated entities. 
• The liability for the tax passes from you to the entity upon removal of the spirits from your DSP. 
• That is why the entity must have an industrial use permit and why you must verify that it has such a permit prior to selling the alcohol free of tax  to the entity. 
• If the entity then produces a hand sanitizer for which it makes a charge, the entity owes the excise tax.    
• The regulations assume that the government entities to whom you may remove spirits free of tax for their use will not manufacture articles for sale.. 

This is my reading of the requirements.  I am not an attorney and this should not be construed as legal advice.  I offer it for general guidance as a result of my experinece with these matters,  If you think that I am wrong, or may be wrong, contact TTB to determine if what I am saying comports to the intent of the regulations in question.