BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 819| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: SB 819 Author: Huff (R), et al. Amended: 3/15/16 Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE: 12-0, 3/8/16 AYES: Hall, Berryhill, Block, Gaines, Glazer, Hernandez, Hill, Hueso, Lara, McGuire, Runner, Vidak NO VOTE RECORDED: Galgiani SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8 SUBJECT: Powdered alcohol SOURCE: Author DIGEST: This bill prohibits the Department of Alcoholic Beverage Control (ABC) from issuing a license to manufacture, distribute, or sell powdered alcohol, as defined. ANALYSIS: Existing federal law grants states the authority to establish alcoholic beverage laws and administrative structures to regulate the sale and distribution of alcoholic beverages. Existing state law: 1)Establishes the Alcoholic Beverage Control Act (Act) which contains various provisions regulating the application for, the issuance of, the suspension of, and the conditions imposed upon, alcoholic beverage licenses by ABC. 2)Imposes regulations on the sale of alcoholic beverages and SB 819 Page 2 creates penalties for violations of those regulations. 3)Grants ABC exclusive authority to administer the provisions of the Act. 4)Establishes three types of alcoholic beverages for tax purposes, namely, distilled spirits, beer and wine. 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. This bill: 1)Prohibits ABC from issuing a license to manufacture, distribute, or sell powdered alcohol. 2)Defines "powdered alcohol" to mean an alcohol prepared or sold in a powder or crystalline form that is used for human consumption in that form or reconstituted as an alcoholic beverage when mixed with water or any other liquid. 3)Requires that ABC revoke or suspend any license if the licensee or the agent or employee of the licensee manufactures, distributes, or offers for retail sale powdered alcohol. 4)Prohibits the possession, purchase, sale, offer for sale, distribution, manufacture, or use of powdered alcohol. 5)Specifies that any person who sells, offers for sale, manufactures, or distributes powdered alcohol is guilty of an infraction that shall be punishable by a fine of not more than $500. 6)Specifies that any person who possesses, purchases, or uses powdered alcohol is guilty of an infraction and subject to a fine of $125. Background Purpose of the bill. According to the author, "the ease of this substance presents an array of potential health problems in California as it can be snorted, added to an energy drink, SB 819 Page 3 slipped to unknowing recipients, or even added to beverages already containing alcohol in an attempt to create a dangerously potent concoction." The author further argues that, "because this new drug can be easily sold and transferred, this is a prime product for abuse by children and teenagers. Alcohol-related harm to California youth can present itself in several ways including death, injuries, assaults, sexual violence, unsafe sex, suicide attempts, and academic problems. Permitting the sale of powdered alcohol in California sends the wrong message to youth and young adults about responsible drinking." Powdered alcohol. As the name suggests, powdered alcohol is powder that when mixed with water or any other liquid becomes an alcoholic beverage. Small amounts of liquid alcohol are enclosed in cyclodextrins, which are literally small rings of sugar. Once water or any other liquid is added the sugar dissolves and the alcohol is freed into the drink. Powdered alcohol gained media attention in the United States when in April 2014 the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) approved labels for a product called Palcohol. Proponents of powdered alcohol have touted its light weight and its ease to transport as some of the benefits of powdered alcohol compared to liquid alcohol. Critics of powdered alcohol argue that powdered alcohol will be much easier to over consume, conceal and be acquired by minors. Critics point to the ability to add powdered alcohol to liquid alcohol to produce a greater concentration than intended. In addition, critics point to the ease in which people, including youths, could bring alcohol to places where it is banned; such as sporting events, movie theaters, parks, and schools. Powdered alcohol authorization. Though the TTB approved the Palcohol labels in April of 2014, within two weeks the TTB issued a statement stating that the approval had been issued in error. However in March 2015, the TTB again approved four powdered alcohol products with the brand name "Palcohol" for sale in the U.S. Shortly after TTB approval, the U. S. Food and Drug Administration (FDA) responded to inaccurate reports that implied that the FDA had approved powdered alcohol as being SB 819 Page 4 safe. Rather, the FDA clarified that its role was to evaluate the nonalcoholic ingredients. Based on that evaluation, the FDA stated that "the use of ingredients in the proposed products was in compliance with FDA's regulations. The agency notes that the ingredients used in the products are typical of ingredients found in many processed foods." The FDA concluded that they had no legal basis to block their entry into the U.S. market. However, individual states, not the TTB, are responsible for regulating the sale of alcohol and tobacco products at the retail level, including sales to minors. As of November 2015, 27 states have banned powdered alcohol outright. Two states, Maryland and Minnesota have a one year temporary statutory ban. Three states, Colorado, Delaware, and New Mexico have added powdered alcohol in their statutory definitions of alcohol so that the product can be regulated under existing alcohol regulations. As of today, powdered alcohol is not being sold anywhere in the United States, though the Palcohol web site does state that, "we will be working on getting the production facility up and running. It will take a while but hopefully it will be available soon." Prior/Related Legislation AB 1554 (Irwin, 2016) prohibits ABC from issuing a license to manufacture, distribute, or sell powdered alcohol, as defined, and requires ABC to revoke the license of any licensee who manufactures, distributes, or sells powdered alcohol, as provided. (Pending in the Assembly Appropriations Committee) SB 39 (Padilla, Chapter 140, Statutes of 2011) prohibited 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. AB 1598 (Beall, 2010) would have prohibited the sale, production, importation, manufacture or distribution of a caffeinated malted beverage, as defined. (Failed passage in the Assembly Governmental Organization Committee) FISCAL EFFECT: Appropriation: No Fiscal SB 819 Page 5 Com.:YesLocal: Yes SUPPORT: (Verified4/13/16) Alcohol Justice Association of California Healthcare Districts California Academy of Family Physicians California Alcohol Policy Alliance California Association of Driving Under the Influence Treatment Programs California Beer and Beverage Distributors California College and University Police Chiefs Association California Council on Alcohol Problems California District Attorneys Association California Friday Night Live Partnership California State Sheriffs' Association Children's Hospital Los Angeles City and County of San Francisco Board of Supervisors City of El Cajon City of Hayward Consumer Federation of California Contra Costa County Board of Supervisors County Behavioral Health Directors Association County Health Executives Association of California County of El Dorado Board of Supervisors Eden Youth and Family Center Health Officers Association of California Institute of Public Strategies Janus of Santa Cruz Los Angeles County Sheriffs Department Los Angeles Drug and Alcohol Policy Alliance Lutheran Office of Public Policy California Marin County Board of Supervisors National Council on Alcoholism and Drug Dependence - San Fernando Valley Partnership for a Positive Pomona Placer County Board of Supervisors Pueblo y Salud, Inc Saving Lives Coalition SHIELDS for Families Social Model Recovery Systems, Inc. Sonoma County Board of Supervisors SB 819 Page 6 The Wall Las Memorias Project Ventura County Board of Supervisors Youth Leadership Institute 3 Individuals OPPOSITION: (Verified4/13/16) Palcohol ARGUMENTS IN SUPPORT: According to the California Alcohol Policy Alliance, "powdered alcohol is perhaps the most dangerous, youth attractive alcohol product allowed in the market. We cannot ignore the dangers the product poses to underage drinkers. If this product hits the California market, serious injuries, alcohol poisonings, and even deaths will result." The Health Officer's Association of California states that, "mixing powdered alcohol with smaller amounts of water than directed will result in extremely potent beverages. In its powdered and compact form, this product will be easy to conceal and bring to areas where alcohol is prohibited, such as schools; or where alcohol is sold and regulated, such as cultural events. When alcohol is for sale at an event or location, retailers are required to monitor customers' intake to prevent over intoxication. This becomes much more difficult when customers can bring their own alcohol in powdered form." ARGUMENTS IN OPPOSITION: According to Palcohol, "a study shows that 80% of Californians that drink want to use powdered alcohol for travel and outdoor recreation. In addition, because Palcohol is so much lighter to ship than liquid alcohol, it will reduce the carbon footprint." Prepared by:Felipe Lopez / G.O. / (916) 651-1530 4/13/16 15:53:38 **** END **** SB 819 Page 7