BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        SB 819|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   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  








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            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,  







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          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  







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          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  







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          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







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          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


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