Home – States Rush To Regulate Powdered Alcohol

States Rush To Regulate Powdered Alcohol

 Sometime this summer consumers in a handful of states will be able to buy a favorite alcoholic beverage or cocktail in a most unusual form: powder. The product, dubbed Palcohol, received federal approval earlier this year, but if lawmakers in many more states get their way it will never see the inside of a liquor store or supermarket. 

 

The brainchild of creator Mark Phillips and his Arizona-based company, Lipsmark LLC, the Palcohol product line currently consists of two primary alcohols – vodka and rum – and a trio of pre-made cocktail mixes: a Cosmopolitan, a Lemon Drop and a Margarita-like drink dubbed a Powderita. All require only that someone add the right amount of water, close the re-sealable packet and give it a good shake.

 

That ease of use is exactly what has lawmakers and regulators in more than three dozen states concerned enough to want to strictly regulate — or ban - the product before it ever hits store shelves. According to the National Conference of State Legislatures, at least seven states - Alaska, Louisiana, North Dakota, South Carolina, Utah, Vermont and Virginia – have already barred the sale or production of Palcohol, while four more – Colorado, Michigan, New Mexico and Delaware – have decided to regulate it as they would traditional liquid alcohol. State liquor licensing boards in Pennsylvania and Massachusetts have also blocked its sale, and Maryland Comptroller Peter Franchot convinced Old Line State liquor wholesalers and retailers to go along with a voluntary ban while lawmakers worked on legislation (SB 937) to formally bar its sale. That bill is now with Gov. Larry Hogan (R).  Bills have also been sent to governors in Washington, Oklahoma, Georgia, Indiana and Tennessee, and remain pending in many more statehouses as well: NCSL notes that 77 bills were introduced in at least 39 states, D.C. and Puerto Rico this session.

 

Federal lawmakers have also taken note of Palcohol’s impending arrival. U.S. Senator Chuck Schumer (D-New York) expressed dismay in March when the U.S. Alcohol and Tobacco Tax and Trade Bureau gave Palcohol its endorsement. He quickly introduced US SB 728, dubbed the Sober Truth on Preventing Underage Drinking Reauthorization (STOP) Act, legislation intended to bar the production, sale, distribution or possession of Palcohol. 

 

“I am in total disbelief that our federal government has approved such an obviously dangerous product, and so, Congress must take matters into its own hands and make powdered alcohol illegal,” he said in a statement. “Underage alcohol abuse is a growing epidemic with tragic consequences and powdered alcohol could exacerbate this.”

 

Critics are also concerned that some users would snort the powder rather than mix it into a drink. Alcohol Justice, a California non-profit that acts as a liquor industry watchdog, sent a letter last month to all Golden State lawmakers urging them to join other states seeking to ban Palcohol before it gets to market. In addition to concerns over its ease of use, the group said the size and shape of Palcohol’s packaging is too similar to that of nonalcoholic children’s drink packets and cited the potential for users to mix the powdered alcohol with beer, other liquors, energy drinks, alcopops or other products aimed at a younger demographic. It also warned that Palcohol packets could be more easily concealed by underage drinkers attending concerts or other events where alcohol is barred, with Alcohol Justice Executive Director Bruce Lee Livingston saying: “the sense of urgency is real. We need our elected state leaders to take action this year to keep this public health and safety threat out of California.”

 

The overwhelmingly negative reaction to his product has put Phillips on the defensive. He has posted an almost 17 minute video on the Palcohol website to attempt to explain what the product is, how it should be used and why consumers should be allowed to have it. He’s also attempted to refute many of the claims critics have made against it, particularly the idea that someone would snort it. Doing that, he says, would be painful, time consuming and wouldn’t give the user the desired effect.

 

But Phillips himself was first to suggest that Palcohol might be used unwisely. While his current website lauds the product’s potential benefits, the previous version openly talked about Palcohol’s less savory potential uses. Those included suggesting consumers could get around high drink prices at concerts and other events by illegally smuggling it into the venue to “enjoy a mixed drink for a fraction of the cost.” The site also suggested adding Palcohol to food to “give it an extra kick.” Phillips even made a direct reference to snorting the alcohol powder, saying “Yes, you can snort it. And you'll get drunk almost instantly because the alcohol will be absorbed so quickly in your nose,” though he also added a warning: “Good idea? No. It will mess you up. Use Palcohol responsibly.”

 

On the new site Phillips admits to using “edgy” wording in describing Palcohol, but denies ever advocating any illegal use of the product.

 

While losing the California liquor market – the largest in the country - would be a severe blow to Palcohol’s chances of long-term success, Michael Scippa, Alcohol Justice’s Director of Public Affairs, says the reaction from lawmakers to their request to ban the product has so far been lukewarm. A bill could potentially still come up, he says, but time is running out to get something done this session without it being a “gut and amend.”

 

But the perspective of at least one powerful California lawmaker shows the problem may not be as simple as a lack of political will. California Assembly Minority Leader Kristin Olsen (R) says she hasn’t actually seen the Alcohol Justice letter, but believes Golden State lawmakers could be prompted to action if they become convinced Palcohol presents a danger to kids.

 

“I’m definitely in favor of innovation wherever possible,” she says. “But with something like this I would want to be very sure we have proper policies in place to prevent children from accessing these products. I would have to take a close look at the specific language of and kind of bill that comes up, but I think it’s entirely appropriate for the Legislature to conduct a close review of a product like this as it is coming to the market.”

 

While it appears Palcohol will continue to face a steep challenge in many states, Phillips has so far managed to fend off having his product banned in at least three states: Kentucky, Mississippi and Wyoming. Bills in all three passed at least one chamber, but each measure ultimately died in the next house. Arizona Gov. Doug Ducey (R) also vetoed another prohibition bill, HB 2178 saying in in his veto message “there does not appear to be evidence that this bill is necessary.” He instead ordered the state Department of Liquor Licenses and Control to review its rules to ensure Palcohol was regulated in the same way as liquid alcohol.

 

It doesn’t get any easier from here, however. As of last Monday, still-pending anti-Palcohol bills had cleared at least one chamber in nine states. Expect more such legislation in the future.

 

 

-- By RICH EHISEN

Follow Rich on Twitter @WordsmithRich