BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 819


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          SENATE THIRD READING


          SB  
          819 (Huff)


          As Amended  June 28, 2016


          Majority vote


          SENATE VOTE:  39-0


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Governmental    |15-0 |Gray, Bigelow, Bonta, |                    |
          |Organization    |     |Cooley, Cooper, Daly, |                    |
          |                |     |Cristina Garcia,      |                    |
          |                |     |Eduardo Garcia,       |                    |
          |                |     |Gipson,               |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |Jones-Sawyer, Levine, |                    |
          |                |     |Linder, Salas,        |                    |
          |                |     |Steinorth, Waldron    |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |20-0 |Gonzalez, Bigelow,    |                    |
          |                |     |Bloom, Bonilla,       |                    |
          |                |     |Bonta, Calderon,      |                    |
          |                |     |Chang, Daly, Eggman,  |                    |
          |                |     |Gallagher, Eduardo    |                    |








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          |                |     |Garcia, Holden,       |                    |
          |                |     |Jones, Obernolte,     |                    |
          |                |     |Quirk, Santiago,      |                    |
          |                |     |Wagner, Weber, Wood,  |                    |
          |                |     |Chau                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 


          SUMMARY:  Prohibits the purchase, sale, offer for sale,  
          distribution, manufacture, possession, or use of powdered  
          alcohol. It requires the Department of Alcoholic Beverage  
          Control (ABC) to revoke the license of any licensee who  
          manufactures, distributes, or sells powdered alcohol.   
          Specifically, 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)Prohibits the possession, purchase, sell, offer for sale,  
            distribution, manufacture, or use of powdered alcohol. 


          4)Provides 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.


          5)Contains co-authors.









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          EXISTING LAW:   


          1)Federal Law grants states the authority to establish alcoholic  
            beverage laws and administrative structures to regulate the  
            sale and distribution of alcoholic beverages. 


          2)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.


          3)Imposes regulations on the sale of alcoholic beverages and  
            creates penalties for violations of those regulations.


          4)Grants ABC exclusive authority to administer the provisions of  
            the Act. 


          5)Establishes three types of alcoholic beverages for tax  
            purposes, namely, distilled spirits, beer and wine. 


          6)Stipulates that any person who sells or offers for sale any  
            vaporized form of alcohol produced by an alcohol vaporizing  
            device shall be guilty of a misdemeanor punishable by a $1,000  
            fine or imprisonment in a county jail for up to six months.   
            Provides that any person who purchases or uses any vaporized  
            form of alcohol produced by an alcohol vaporizing device is  
            subject to a fine of $250.


          7)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.








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          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, minor absorbable workload to ABC to monitor and  
          enforce the provisions of this bill.


          COMMENTS:  


          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 (U.S.) when  
          in April 2014 the U.S. Alcohol and Tobacco Tax and Trade Bureau  
          (TBB) approved labels for a product called Palcohol.  


          Proponents of powdered alcohol have touted its lightweight and  
          its ease to transport as some of the benefits of powdered  
          alcohol compared to liquid alcohol.  The creator of Palcohol,  
          has stated that powdered alcohol is ideal for such outdoor  
          activities as hiking.  The Palcohol website had previously  
          touted additional benefits including that it would be easier to  
          sneak powdered alcohol into sporting events and concerts and the  
          ability to sprinkle powdered alcohol on food for "an extra  
          kick."


          Critics of powdered alcohol argue that this type of product 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  








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          schools. 


          Powdered Alcohol Authorization:  Though the TBB approved the  
          Palcohol labels in April of 2014, within two weeks the TBB  
          issued a statement stating that the approval had been issued in  
          error.  However, in March 2015, the TBB again approved four  
          powdered alcohol products with the brand name "Palcohol" for  
          sale in the U.S.  


          Shortly after TBB approval, the U. S. Food and Drug  
          Administration (FDA) responded to inaccurate reports that  
          implied that the FDA had approved powdered alcohol as being  
          safe.  Rather, the FDA clarified that its role was to evaluate  
          the nonalcoholic ingredients.  Based on that evaluation, the FDA  
          stated, "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 TBB, are responsible for  
          regulating the sale of alcohol and tobacco products at the  
          retail level, including sales to minors.  As of January 2016,  
          twenty-seven 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 website 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."








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          Powdered distilled spirits are already taxed in California in  
          the same manner and to the same extent as other distilled  
          spirits in Title 18 of the California Code of Regulations,  
          Article 6, Classification of Particular Beverages, Regulation  
          2557.


          Vaporized alcohol:  Existing state law bans the sale or use of  
          any vaporized form of alcohol produced by an alcohol vaporizing  
          device.  Vaporized alcohol is alcohol mixed with pure oxygen or  
          another gas to produce a vaporized product that can be inhaled.   
          To date, no notable enforcement cost can be attributed to the  
          ban of this type of alcohol.


          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,  
          slipped to unknowing recipients, or even added to beverages  
          already containing alcohol in an attempt to create a dangerously  
          potent concoction."


          A 2013 study from the U.S. Centers for Disease Control and  
          Prevention (CDC) found that the societal costs for binge  
          drinking are higher in California than in any other state: $32  
          billion for one year of excessive alcoholic festivities.   
          Problems caused by binge drinking include lost work  
          productivity, poor health, crime, automobile accidents and  
          property damage.  The same study concluded that underage binge  
          drinking cost California an additional $3.5 billion.  It is  
          incumbent on each state to decide if this product should be sold  
          in their borders.


          The author further argues that, "because this new product can be  
          easily sold and transferred, this is a prime product for abuse  








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          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."


          Related legislation:  AB 1554 (Irwin) of the current legislative  
          session.  Prohibits ABC from issuing a license to manufacture,  
          distribute, or sell powdered alcohol, as defined.  (Pending on  
          Senate Floor)


          Prior legislation:  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) of 2010.  Would have prohibited the sale,  
          production, importation, manufacture or distribution of a  
          caffeinated malted beverage, as defined.  (Failed passage in  
          Assembly Governmental Organization Committee)


          AB 346 (Beall), Chapter 624, Statutes of 2008).  Required that  
          any container of beer or alcoholic beverage that derives 0.5% 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 273 (Baca), Chapter 29, Statutes of 2006.  Prohibits the  
          sale, purchase, and use of any vaporized form of alcohol  








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          produced by an alcohol vaporizing device, as defined.


          AB 1657 (Chan) of 2004.  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.  (Failed passage in Senate Governmental  
          Organization Committee)




          Analysis Prepared by:                                             
                          Eric Johnson / G.O. / (916) 319-2531  FN:  
          0004863