BILL ANALYSIS
Date of Hearing: April 12, 2010
ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION
Joe Coto, Chair
AB 1598 (Beall) - As Amended: March 2, 2010
SUBJECT : Alcoholic beverages: caffeinated malt beverages.
SUMMARY : Beginning on and after six months from the
effective date of this bill, prohibit the sale, production,
importation, manufacture or distribution of caffeinated
malt beverages in California. Specifically, this bill :
1)Prohibits the import, production, manufacture,
distribution, or sale of caffeinated malt beverages, as
defined, at retail locations within the state.
2)Defines caffeinated malt beverage as "a beverage for
which the producer is required to file a formula for
approval with the United States Alcohol and Tobacco Trade
and Tax Bureau (TTB), as specified, and is either of the
following:
a) A beverage containing at least 0.5 percent alcohol
by volume that is produced by a brewer, as defined, to
which is added or infused caffeine or other
stimulants, alone or in combination, including, but
not limited to, guarana, ginseng, and taurine.
b) A beverage containing at least 0.5 percent alcohol
by volume that is treated by processing, filtration,
or another method of manufacture that is not generally
recognized as a traditional process in the production
of beer, as described, to which is added a flavor or
other ingredient containing alcohol, except for a hop
extract, and caffeine or other stimulants, alone or in
combination, including, but not limited to, guarana,
ginseng, and taurine.
1)Provides for either the imposition of a monetary fine or
suspension of the licensee's license for first and 2nd
violations of this prohibition and for revocation of the
licensee' s license for a 3rd violation, as defined.
2)Delays the operative date of this prohibition until 6
months from the bill's effective date.
3)Provides ABC may promulgate rules and regulations to
effectuate the purposes of this law.
4)Makes various legislative findings and declarations
EXISTING LAW :
1)The 21st Amendment to the United States Constitution
grants states the authority to regulate the sale and
distribution of alcoholic beverages.
2)Establishes ABC and grants it the exclusive authority to
administer the provisions of the Alcoholic Beverage
Control Act (Act) in accordance with laws enacted by the
Legislature.
3)Provides that ABC shall be responsible for the licensing
of individuals and businesses associated with the
manufacture, importation and sale of alcoholic beverages
in this state and the collection of license fees or
occupation taxes for this purpose.
4)Provides that any container of beer or alcoholic
beverage, other than sake, that is approved for labeling
as a malt beverage under the Federal Alcohol
Administration Act (FAAA), that derives 0.5% or more of
its alcoholic content by volume from flavors or other
ingredients containing distilled alcohol and that is sold
within this state on or after July 1, 2009, shall bear a
distinctive, conspicuous, and prominently displayed
label, or firmly affixed sticker, as defined.
5)Prohibits the use in any advertisement of alcoholic
beverages, of any subject matter, language or slogans
addressed to and intended to encourage minors to drink
alcoholic beverages.
6)Specifies that consumer advertising specialties furnished
by a beer manufacturer are intended only for adults of
legal drinking age and prohibits the use of coin banks,
toys, balloons, magic tricks, miniature bottles or cans,
confections, dolls or other items that appeal to minors
or underage drinkers in connection with the merchandising
of beer.
7)The federal agency with primary responsibility for
regulating alcoholic beverages, the Treasury Department's
Alcohol and Tobacco Tax and Trade Bureau, requires that
alcoholic beverages contain only ingredients that satisfy
the Food and Drug Administration's (FDA) requirements for
use.
FISCAL EFFECT : Unknown.
COMMENTS :
Background :
Who regulates alcohol at the federal level ? The Alcohol
and Tobacco Tax and Trade Bureau (TTB) is a part of the
United States federal government. TTB oversees the selling
of alcohol and tobacco products. TTB was established in
January 2003. TTB is a bureau of the United States
Department of the Treasury. TTB collects taxes owed, and
ensures that alcohol beverages are produced, labeled,
advertised and marketed in accordance with Federal law.
Its objectives are to protect the revenue, protect the
public and promote voluntary compliance.
The Advertising, Labeling, and Formulation Division (ALFD)
within TTB implements and enforces a broad range of
statutory and compliance provisions of the Internal Revenue
Code (IRC) and the Federal Alcohol Administration Act (the
Act). The Act requires importers and bottlers of beverage
alcohol to obtain certificates of label approval or
certificates of exemption from label approval (COLAs) for
most alcohol beverages prior to their introduction into
interstate commerce. ALFD acts on these COLAs to ensure
that products are labeled in accordance with Federal laws
and regulations. ALFD also examines formulas for wine and
distilled spirits, statements of process, and pre-import
applications filed by importers and proprietors of domestic
distilled spirits plants, wineries, and breweries for
proper tax classification and to ensure that the products
are manufactured in accordance with Federal laws and
regulations.
FDA reviewing caffeinated alcoholic beverages : On November
12, 2009, the Food and Drug Administration (FDA) notified
nearly 30 manufacturers of certain alcoholic beverages
containing added caffeine that it intends to look into the
safety and legality of their products. The list of
manufacturers was provided to FDA in a letter from the
co-chairs of the National Association of Attorneys General
Youth Access to Alcohol Committee. According to the
agency, "at this point, FDA has no information regarding
any additional products, other than the original list."
The FDA requested that, within 30 days, the companies
produce evidence of their rationale, with supporting data
and information, for concluding that the use of caffeine in
their product is Generally Recognized As Safe (GRAS) or
prior sanctioned. For a substance to be GRAS, there must
be evidence of its safety at the levels used and a basis to
conclude that this evidence is generally known and accepted
by qualified experts. FDA's letter informed each company
"that if FDA determines that the use of caffeine in the
firm's alcoholic beverages is not GRAS or prior sanctioned,
FDA will take appropriate action to ensure that the
products are removed from the marketplace."
In a press release, the FDA cited the Federal Food, Drug
and Cosmetic Act which specifies that any ingredient added
to food (including alcoholic beverages) as unsafe unless
"its particular use has been approved by FDA regulation,
the substance is subject to a prior sanction, or the
substance is GRAS. In addition, the increasing popularity
of consumption of caffeinated alcoholic beverages by
college students and reports of potential health and safety
issues necessitates that we look seriously at the
scientific evidence as soon as possible," said Dr. Joshua
Sharfstein, principal deputy commissioner of food and
drugs."
The press release further stated," to date, the FDA has
only approved caffeine as an additive for use in soft
drinks in concentrations of no greater than 200 parts per
million. It has not approved caffeine for use at any level
in alcoholic beverages." This FDA action is not directed
at products that are flavored with coffee. The beverages
that are the subject of FDA's request for information are
characterized by the intentional addition of caffeine to
alcoholic beverages by the manufacturer.
The FDA intends to evaluate the information submitted by
the manufacturers and other available scientific evidence
as soon as possible. The FDA states that the "timeframe is
difficult to predict and it will depend on the amount and
quality of data and information that the FDA receives from
manufacturers and that are otherwise available to the
agency and upon the complexity of scientific issues that
may be encountered in the course of its review. The FDA's
decision regarding the regulatory status of caffeine added
to various alcoholic beverages will be a high priority for
the agency; however, a decision regarding the use of
caffeine in alcoholic beverages could take some time."
The FDA further states that the final outcome "will depend
on agencies review of the available data and information
pertinent to this use of caffeine. For example, if the FDA
determines that such use of caffeine is unsafe based on the
totality of the evidence, it could move swiftly to remove
these products from the market as has been suggested by the
Attorneys General. Alternatively, the agency might conclude
that such use meets the GRAS standard and take no further
action."
According to Beer Marketer's Insights, "the market for
caffeinated alcoholic drinks is about 1 percent of the
total beer industry, making its annual sales about $1
billion."
Related actions : In 2008, several attorneys general and
the San Francisco City Attorney initiated investigations of
MillerCoors Brewing and Anheuser-Busch, Inc. for alcoholic
energy drinks (AED) production and marketing. As a result
the companies agreed to stop manufacturing and distributing
caffeinated alcoholic beverages such as Sparks, Tilt and
Bud Extra.
In September 2009, the FDA received a letter from 18
attorneys general, along with one city attorney, voicing
concerns about caffeinated alcohol drinks. The letter
asked for the FDA to take stronger action to ensure that
caffeinated alcoholic drinks are safe for consumption under
FDA regulations. The letter stated "that there is no
consensus of opinion that the use of caffeine in alcoholic
beverages is safe. In addition to published scientific
studies, the GRAS standard requires there be a consensus
about safety of the substance for its intended use among
qualified experts based on generally available scientific
data. In the case of AEDs, there is no consensus that the
use of caffeine in alcohol is safe."
Flavored Malt Beverages : Flavored Malt Beverages (FMBs)
are considered to be malt-based beverages, similar to beer,
and for the most part are regulated and marketed like beer
products. Because they are deemed to be malt-based
beverages they are taxed by most states, including
California, and the federal government as beer. The
current tax rate on beer is $0.20 per gallon, while the
current tax rate on distilled spirits under 100 proof is
$3.30 per gallon. A TTB regulation permits the addition of
flavors and other nonbeverage materials containing alcohol
to beers and malt beverages. Malt beverages that contain
not more than 6% alcohol by volume may derive no more than
49% of their alcohol content from flavors and other
nonbeverage materials. If a malt beverage contains more
than 6% alcohol by volume, not more than 1.5% of the volume
of the finished product may consist of alcohol derived from
flavors and other nonbeverage ingredients containing
alcohol.
Purpose of the bill : According to the author, combining
alcohol with caffeine and other stimulants does not
ameliorate alcohol's negative effects on one's motor
coordination and visual reaction times. Recent science has
revealed that adding caffeine and other stimulants to
alcohol is harmful because these additives impair one's
ability to judge his or her own level of intoxication as
well as the ability to judge the level of intoxication in
someone else. This results in increased alcohol
consumption and can lead drinkers to wrongly conclude that
they are capable of engaging in risky and potentially
dangerous activities, like operating a motor vehicle or
engaging in risky sexual behavior.
The author points out that young people are particularly
vulnerable to increased problems associated with the use of
these products as they are more likely to misjudge their
own intoxication level, more likely to take risks than
adults, and more likely to suffer from high rates of
alcohol problems, including alcohol-related traffic
accidents, violence, sexual assault, and suicide.
The author points out that there is no general consensus
among health professionals and the scientific research
community that the use of caffeine in alcoholic beverages
has been demonstrated to be safe. On the contrary, these
alcoholic beverages have been associated with dangerous
behaviors towards oneself and others.
The author states, that "these beverages are so dangerous
that the attorneys generals in 13 states, including
California's, want them removed from the market place.
This legislation will complete the work they have started."
In support : Proponents point out that underage drinking
continues to be a significant problem in our society and
national studies show the number of adolescents with
substance abuse problems is steadily increasing.
Proponents state that research has consistently
demonstrated the strong relationship between substance
abuse among youth and many emotional and behavioral
problems, including fighting, taking or being taken
advantage of sexually, stealing, driving under the
influence, school truancies, depression and suicide
attempts.
Alcoholic energy drinks are known for hiding true
impairment. Alcohol is a depressant, and the high amounts
of caffeine in these drinks counteract the exhaustion of
the alcohol but they do not counteract the impairment.
This can lead to a person not feeling they are impaired as
they truly are, and tragedy can result.
Proponents contend that experts in the field agree that the
use of caffeine added to alcohol poses a significant public
health threat and that it has never been shown or
demonstrated that any quantity or level of caffeine is safe
for use in alcohol. This view is shared by law
enforcement, regulators, and public health groups.
Proponents contend that "manufacturers of these products
appear to be targeting underage people through
youth-orientated media marketing. Further stating that
studies indicate caffeine appears to mask the feeling of
alcohol intoxication, which can lead to risky behavior,
such as driving while intoxicated.
Supporters note that under the federal Food, Drug and
Cosmetic Act, purposely adding a substance to food - for
example, caffeine in alcoholic beverages - is unlawful
unless it has been federally approved or is generally
recognized as safe. Caffeine in alcoholic beverages has not
received FDA approval. The FDA has only approved adding
caffeine to soft drinks.
In opposition : In opposition of this bill, United Brands
Company states, this bill would be unprecedented because
California would be the only state in the nation to ban
these products outright. Their products comply with all
applicable federal and state laws, including California's.
All alcohol products need to be approved by state agencies
and the TTB before they are approved for distribution. All
of the ingredients in these products have been approved by
TTB. In addition, a manufacturer has to be licensed by the
state in which they do business.
Phusion Products states that they are opposed to this
measure for the following reasons: 1) the bill is untimely
and unnecessary because the FDA is presently considering
whether combining caffeine with alcohol presents safety
concerns; 2) Phusion's products are produced and marketed
responsibility, and are not marketed deceptively or to
minors; and 3) this bill arbitrarily and unfairly singles
out specific products for prohibition, while excluding
literally hundreds of other caffeinated alcoholic products,
such as distilled sprits with caffeine or mixed drinks that
contain caffeine and alcohol.
Phusion Projects further states that their products "are
very likely to contain less alcohol and less caffeine than
drinks made of distilled sprits mixed with caffeinated
beverages such as liqueur or whiskey and coffee, rum and
cola, or energy drinks and vodka. Unlike drinks mixed by
individuals and bartenders, our products offer measured and
known amounts of caffeine and alcohol. As noted in studies
cited by proponents of this bill, most consumers of
caffeinated alcoholic beverages mix their own drinks.
Therefore, it is highly likely this number will increase if
caffeinated malt beverages are banned."
Opponents further contend, that alcohol and caffeine have
safely been consumed together for centuries, the questions
of whether combining these products presents unique health
or safety concerns is, at best, an open question.
Likewise, assuming that the concerns associated with
combining alcohol and caffeine are sufficiently important
that they warrant special regulatory or legislative
attention, it is far from clear that the extreme measure of
prohibition is necessary to address the concerns
effectively. Thus, the opponents state that scientific
evidence is insufficient to support the ban proposed by AB
1598. However, to the extent there may be questions
regarding the effects of consuming their products,
comprehensive scientific studies are currently underway
that should answer those questions.
Previous legislation : AB 346 (Beall), Chapter 624,
Statutes of 2008. Provides that any container of beer or
alcoholic beverage, other than sake, that is approved for
labeling as a malt beverage under the Federal Alcohol
Administration Act (FAAA), that derives 0.5% or more of its
alcoholic content by volume from flavors or other
ingredients containing distilled alcohol and that is sold
within this state on or after July 1, 2009, shall bear a
distinctive, conspicuous, and prominently displayed label,
or firmly affixed sticker, as defined.
AB 273 (Baca), Chapter 29, Statutes of 2006. Prohibits the
sale, purchase, and use of any vaporized form of alcohol
produced by an alcohol vaporizing device, as defined.
SB 1180 (Migden) of the 2005-06 Session. Required the
Department of Alcohol and Drug Programs to issue a report
to the Legislature concerning the use of alcohol by
underage youth. Held by Assembly Appropriation Committee.
AB 2013 (Saldana) of the 2005-06 Session. Required all
surtaxes, penalties, and interest, resulting from the
reclassification of an alcoholic beverage from a beer to a
distilled spirit, be transferred to the Youth Alcohol
Problem Prevention Fund. Held in Assembly Governmental
Organization Committee at the request of the author.
AB 417 (Aghazarian) of the 2005-06 Session. Would have
modified the definition of beer to include any alcoholic
beverage that qualifies as a malt beverage under federal
law. In the veto message, the Governor encouraged "All
interested parties, particularly health professionals, law
enforcement and the producers of flavored malt beverages,
to use this opportunity for public debate and serious
consideration of the policy issues surrounding this
beverage."
AB 1657 (Chan) 2003-04 Session. Would have limited the
sale of any prepackaged alcoholic beverage product made
with a gelatin base to businesses that prohibit the
presence of persons under the age of 21 on the premises.
(Failed passage in Senate G.O. Committee)
REGISTERED SUPPORT / OPPOSITION :
Support
California Council on Alcohol Problems
California Rural Indian Health Board Inc
County Alcohol and Drug Program Administrators Association
of California
David l. Ortiz, Principal, La Colina Junior High School
Dennis J. Herrera, San Francisco City Attorney
Marin Institute
Mothers Against Drunk Driving
San Francisco Unified School District
Student Support Services (SFUSD)
The San Diego Youth Council
Youth ALIVE!
Youth Leadership Institute
Opposition
Phusion Projects, LLC
United Brands Company
Analysis Prepared by : Eric Johnson / G. O. / (916)
319-2531