BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 39
Author: Padilla (D), et al.
Amended: 6/7/11
Vote: 21
SENATE GOVERNMENTAL ORGANIZATION COMM : 8-3, 03/22/11
AYES: Wright, Calderon, Corbett, De León, Evans, Padilla,
Wyland, Yee
NOES: Anderson, Cannella, Strickland
NO VOTE RECORDED: Berryhill, Hernandez
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 24-14, 04/25/11
AYES: Alquist, Calderon, Corbett, Correa, De León,
DeSaulnier, Evans, Hancock, Hernandez, Kehoe, Leno, Lieu,
Liu, Lowenthal, Negrete McLeod, Padilla, Pavley, Price,
Rubio, Simitian, Steinberg, Vargas, Wright, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Dutton,
Fuller, Gaines, Harman, Huff, La Malfa, Runner,
Strickland, Walters, Wyland
NO VOTE RECORDED: Emmerson, Wolk
ASSEMBLY FLOOR : 49-26, 07/11/11 - See last page for vote
SUBJECT : Alcoholic beverages: caffeinated beer
beverages
SOURCE : Author
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DIGEST : This bill prohibits the importation, production,
manufacture, distribution, or sale of beer to which
caffeine has been directly added as a separate ingredient
at retail locations in California, as defined.
Assembly Amendments were technical and clarifying in
nature.
ANALYSIS : The Alcoholic Beverage Control Act contains
various provisions regulating the application for, the
issuance of, the suspension of, and the conditions imposed
upon, alcoholic beverage licenses by the Department of
Alcoholic Beverage Control (ABC). A violation of the act
is a misdemeanor, except as otherwise specified.
This bill:
1.Provides that beer to which caffeine has been directly
added as a separate ingredient shall not be imported into
this state, produced, manufactured, or distributed within
this state, or sold by a licensed retailer within this
state.
2.Provides that ABC may require licensees to submit product
formulas as it determines to be necessary to implement
and enforce this law, as specified.
Comments
Federal response to caffeinated alcoholic beverages: On
November 12, 2009, the Food and Drug Administration (FDA)
notified nearly 30 manufacturers of certain alcoholic
beverages containing added caffeine of its intent 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.
The FDA requested that 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
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evidence is generally known and accepted by qualified
experts. FDA informed each company that if it determined
that the use of caffeine in each alcoholic beverage is not
GRAS or prior sanctioned, FDA would take appropriate action
to ensure that the products are removed from the
marketplace. FDA's action was not directed at products
that are flavored with coffee. The beverages that were the
subject of FDA's request for information are characterized
by the intentional addition of caffeine to alcoholic
beverages by the manufacturer. FDA stated that "a decision
regarding the use of caffeine in alcoholic beverages could
take some time."
More recently, in a letter dated November 17, 2010, the FDA
advised four companies (New Century Brewing Company,
Boston, MA - product known as "Moonshot;" Phusion Projects,
LLC., Chicago, IL - product known as "Four Loko;" Charge
Beverage Corporation, Lake Oswego, OR - product known as
"Core High Gravity HG Green," "Core High Gravity HG
Orange," "Lemon Lime Core Spiked;" and, United Brands
Company, La Mesa, CA - product known as "Joose" and "Max")
that it had reviewed the regulatory status of their
products, each of which contained caffeine that had been
directly added to an alcoholic beverage and packaged in
combined caffeine and alcohol form. The FDA letter warned
the companies that as it was used in their products,
caffeine is an unsafe food additive, and therefore the
products are adulterated, unsafe, and illegal under the
Federal Food, Drug, and Cosmetic (FFDC) Act and mislabeled
under the Federal Alcohol Administration (FAA) Act. The
companies were given a specific time-frame to submit
detailed steps that would be taken to correct the situation
and assure that similar violations would not occur.
The Tobacco Trade and Tax Bureau (TTB) also issued letters
to the same four companies and asked them to submit
detailed steps that would be taken to correct any
violations of the FAA Act. In November 2010, Phusion
Projects, the creators of Four Loko, announced before
receiving the warning letter from the FDA that they would
be reformulating their malt beverage and would remove
caffeine from the product. Two manufacturers are still
awaiting approval or have not applied for permits to sell
their reformulated drinks. In addition, two companies have
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decided to stop making their malt beverages altogether.
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 non-beverage
materials containing alcohol to beers and malt beverages.
Malt beverages that contain no more than six percent
alcohol by volume may derive no more than 49 percent of
their alcohol content from flavors and other non-beverage
materials. If a malt beverage contains more than six
percent alcohol by volume, not more than 1.5 percent of the
volume of the finished product may consist of alcohol
derived from flavors and other non-beverage ingredients
containing alcohol.
According to the author's office, caffeinated alcoholic
drinks have certainly made headlines over the past year
including a highly publicized incident at Central
Washington University involving approximately 10 students
who were hospitalized after drinking a product called "Four
Loko" at a party. Some states (e.g., New York,
Massachusetts, Michigan, Kansas, Utah, Oklahoma, and
Washington) have even taken steps to ban the products.
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 their 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.
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The author emphasizes 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. 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 also contend that "manufacturers of these
products appear to be targeting underage people through
youth-orientated media marketing.
Prior/Related Legislation
AB 1598 (Beall), 2009-10 Session, prohibited the sale,
production, importation, manufacture or distribution of a
caffeinated malted beverage, as defined. (Failed passage
in Assembly G.O. Committee)
AB 346 (Beall), Chapter 624, Statutes of 2008, requires
that any container of beer or alcoholic beverage that
derives 0.5 percent or more of its alcoholic content by
volume from flavors or other ingredients containing
distilled alcohol and that is sold by a manufacturer or
importer to a wholesaler or retailer within this state to
bear a label or a firmly affixed sticker that includes
specified information regarding its alcohol content and its
status as an alcoholic beverage.
AB 345 (Saldana), 2007-08 Session, required the State Board
of Equalization (BOE), for calendar years beginning on or
after January 1, 2008, to calculate the total amount of all
surtaxes, interest, and penalties that would be collected
as a result of a reclassification of any alcoholic beverage
from beer to a distilled spirit, as specified. (Died in
Assembly G.O. Committee)
AB 417 (Aghazarian), of the 2005-06 Session, modified the
definition of beer to include any alcoholic beverage that
qualifies as a malt beverage under federal law. (Vetoed,
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in his 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, 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)
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Assembly Appropriations Committee, ABC
investigations are primarily complaint driven. Therefore
any enforcement of this legislation would be through
complaints. ABC does not anticipate a high volume of
complaints about caffeinated beer. Therefore, the costs
associated with ABC investigating complaints, reviewing
product formulas, and possibly having products tested,
would be minor and absorbable within existing resources.
SUPPORT : (Verified 7/12/11)
Alameda County Board of Supervisors
California Association of Alcoholism and Drug Abuse
Counselors
California Medical Association
California Narcotic Officers Association
California Police Chiefs Association
California Society of Addiction Medicine
City of Fresno Police Chief Jerry Dyer
Consumer Federation of California
County Alcohol and Drug Program Administrators Association
of California
Health Officers Association of California
Mothers Against Drunk Driving
Ventura County Board of Supervisors
Village Nation
ARGUMENTS IN SUPPORT : The Alameda County Board of
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Supervisors states, "There are currently a number of
caffeinated malt beverage products on the market that are
targeted in packaging and advertising to young people and
these products impair the ability of a person to judge
their own level of intoxication or to judge the
intoxication of someone else. SB 39 will help reduce the
rates of alcohol-related traffic accidents, violence,
sexual assaults, and suicides, particularly among young
people."
Also writing in support, the County Alcohol and Drug
Program Administrators Association of California
(Association) states, "The beverages are often flavored
with fruit, and typically come in large, flashy cans that
use graphic images to promote partying and heavy drinking."
The Association also writes, "Underage drinking remains one
of the most pressing public health concerns for the State -
it costs the citizens of California an estimated $7.3
billion each year in medical care, work loss, and pain and
suffering stemming from alcohol related youth violence,
traffic accidents, property crime and other injuries."
The California Police Chiefs Association and the California
Narcotic Officers Association note that, "These products
typically come in large, flashy 24 oz. cans with graphic
images and consuming one can has beompared to drinking 5
cans of beer and one cup of coffee."
Note: The California Council on Alcohol Problems (CCAP)
submitted a letter supporting the overall concept of
banning such products; however, they believe that this
bill does not go far enough to protect California
youth. CCAP would like to see the bill amended to
include other stimulants (e.g., guarana, ginseng and
taurine).
ASSEMBLY FLOOR : 49-26, 07/11/11
AYES: Alejo, Allen, Ammiano, Atkins, Block, Blumenfield,
Bradford, Brownley, Buchanan, Butler, Charles Calderon,
Campos, Carter, Cedillo, Chesbro, Cook, Davis, Dickinson,
Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gatto,
Gordon, Hall, Hayashi, Roger Hernández, Hill, Hueso,
Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza, Nestande,
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Pan, Perea, V. Manuel Pérez, Portantino, Skinner,
Solorio, Swanson, Torres, Wieckowski, Williams, Yamada,
John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Donnelly,
Fletcher, Beth Gaines, Garrick, Grove, Hagman, Halderman,
Harkey, Huber, Jeffries, Jones, Knight, Logue, Mansoor,
Miller, Morrell, Nielsen, Norby, Olsen, Silva, Smyth,
Valadao, Wagner
NO VOTE RECORDED: Beall, Bonilla, Gorell, Mitchell,
Monning
PQ:nl 7/12/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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