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Administrative/Regulatory

Jan. 7, 2017

New powdered alcohol ban could prove difficult to enforce

The same properties that lawmakers believe make powdered alcohol a health and safety concern will make AB 1554 difficult to enforce if ever a viable commercial product makes it onto the market. By Molly A. Jones

Molly A. Jones

Counsel, Crowell & Moring LLP

Phone: (415) 986-2800

Email: mojones@crowell.com

UC Hastings COL; San Francisco CA

Molly is counsel in the Intellectual Property and Litigation groups in the firm's San Francisco office.

By Molly A. Jones

"[P]owdered alcohol provides everyone, but especially children, a new way to drink an experiment with alcohol. The odorless, easily concealable white powder can turn any water bottle into vodka, or increase liquor's alcohol content to higher and dangerous levels. With the risks and harms traditional liquid alcohol already present to children, allowing another path to those disturbing outcomes is unacceptable." This was Assemblymember Jacqui Irwin's statement in support of Assembly Bill 1554. As of Jan. 1, AB 1554 prohibits the Department of Alcoholic Beverage Control (ABC) from issuing any licenses to manufacture, distribute or sell powdered alcohol. It also bans the possession, purchase, sale, offer for sale, distribution, manufacture and use of powdered alcohol, and punishes the illegal purchase, possession or use of powdered alcohol as an infraction with a $125 fine. A related law, Senate Bill 819, requires the ABC to revoke any existing licenses for the manufacture, distribution or sale of powdered alcohol and makes the sale, offer for sale, manufacture, or distribution of powdered alcohol a crime, punishable as an infraction by a maximum fine of $500.

But the same properties that lawmakers believe make powdered alcohol a health and safety concern - a concern significant enough to prohibit it outright rather than attempt to regulate it - will make AB 1554 difficult to enforce if ever a viable commercial product makes it onto the market.

What Is Powdered Alcohol?

"Powdered alcohol" is somewhat of a misnomer. The alcohol component is technically still in liquid form but take on a powdered appearance when tiny individual droplets are encapsulated within rings of sugar molecules like dextrin. Many reports about powdered alcohol inaccurately refer to these products as "freeze-dried." The recent controversy and legislative fervor sparked by a new company attempting to bring powdered alcohol to the market seems to result from other misunderstandings of the product, its history, and the potentially useful applications of powdered alcohol.

Forms of powdered alcohol have been in existence since at least the 1960s. In 1964, Harold Bode filed a patent application for "Preparation of an alcoholic dry beverage powder," which the inventor described as having applications in "novel food products." A Japanese company, Sato Foods, has been marketing powdered alcohol since the 1970s as a food processing additive to improve flavor, mask the strong odor of fish, and tenderize meat and preserve juiciness in cooked meat. American food chemist William A. Mitchell invented a method of preparing powdered alcohol for which his employer, General Foods Corp., filed a patent application in 1972. This patent for "Alcohol-containing powder" as well as patents for "Alcohol-containing dextrin powder" were granted in 1976. (Mitchell is better known for his other inventions: Tang, Pop Rocks, Jell-O, Cool Whip, and powdered egg whites.) Despite these patents, General Foods did not bring any products containing powdered alcohol to market. Nonetheless, California adopted Alcoholic Beverage Tax Regulation 2557 in 1978, which provided rules on trade practices and a conversion for powdered alcohol weight to volume in wine gallons.

Since the 1970s, several international products have come and gone without much commercial success, and no U.S. company has seriously attempted to bring powdered alcohol to market until very recently. In March 2015, the U.S. Alcohol and Tobacco Tax and Trade Bureau (TTB) granted label approvals to an Arizona-based company called Palcohol, which sought to market four varieties of powdered alcohol products to be sold in one-ounce, single-serving packets. At the time, the Federal Drug Administration stated it did not have legal authority to weigh in on the introduction of powdered alcohol into the market, since "review of formulation and labeling of distilled spirits products" is within the province of the TTB, but it nonetheless provided nominal review of the non-alcoholic ingredients in the Palcohol products.

Despite the long history of powdered alcohol, federal approval for these products, and the existence of some state regulations regarding powdered alcohol, lawmakers across the country have been whipped up into a legislating frenzy to completely ban powdered alcohol. To date, more than 30 states have banned powdered alcohol, and only Colorado, Delaware, New Hampshire and New Mexico have expanded the statutory definition of alcohol to allow the regulation of powdered alcohol under those states' existing alcohol statutes. (A similar bill to ban powdered alcohol was vetoed by Arizona Gov. Doug Ducey in April 2015.) U.S. Sen. Charles Schumer, D-N.Y., has twice introduced legislation to ban the sale of powdered alcohol on a federal level, but neither attempt was considered by the Senate.

Why All the Legislative Buzz?

Assemblymember Irwin's concerns over powdered alcohol echo the legislative fervor of lawmakers across the U.S. who have glommed onto sensationalist media commentary to decry the dangers of powdered alcohol for our youth. Lawmakers point to statements made by Palochol's immature founder on the company's website that, for example, powdered alcohol could (but shouldn't) be snorted. It is somewhat unsurprising that these ill-advised and unfortunate statements caused Sen. Schumer to conclude that powdered alcohol is the "Kool-Aid for underage drinking."

But despite the overwhelming disapproval of powdered alcohol by state and federal legislators, health experts remain divided as to whether powdered alcohol is any more or less of a hazard than liquid forms of alcohol, and the primary concerns seem at least superficially unrelated to the realities of the proposed product. For example, basic math dictates that turning alcohol into powdered alcohol actually more than doubles the volume of the same quantity of alcohol, which makes it bulkier and even more difficult to conceal than liquid alcohol. This doesn't even take into account the relatively diluted alcohol content of powdered alcohol. That is, the highest alcohol content available under the law in California is 75.5 percent alcohol by volume (151 proof), but by contrast, the TTB-approved label registrations for Palcohol state that the products are only 10 percent alcohol by volume (20 proof). Similarly, basic science dictates the minimum amount of time required to break down the sugar rings to release the alcohol in liquid, which when combined with the bulk-factor of powdered alcohol makes it exceedingly unlikely that powdered alcohol would be the preferred method of spiking someone's drink. Widely reported fear mongering over snorting powdered alcohol also suffer from a lack of basic understanding of the properties of the sugar compounds encapsulating the liquid alcohol. Even a small amount of liquid in the sinuses would turn the powder into glue and thus deprive the experimenter of any real opportunity to absorb what is already a diluted concentration of alcohol in the powdered alcohol product.

All of these realities beg the question why a complete prohibition of powdered alcohol is warranted in lieu of regulations along the lines of Regulation 2557 or enforcement of other existing laws (e.g., minor-in-possession laws). Notwithstanding Palcohol's poor marketing, the long history of powdered alcohol and even Palcohol's own statements indicate some legitimate market and useful application of powdered alcohol products as a beverage for responsible consumers, in food processing, and even for industrial applications. Ultimately, it is unclear from the lack of empirical evidence that the abuse of powdered alcohol by underage or of-age drinkers justifies the outright prohibition of this form of alcohol.

Enforcement Challenges

Assuming for the sake of argument that the threats posed by powdered alcohol entering the market are as the State Legislature says, the perceived qualities of powdered alcohol that purportedly make it dangerous to minors are the very same qualities that will make enforcement of AB 1554 difficult. Lawmakers point to the four-inch by six-inch Palcohol packets as being difficult to detect when in a minor's possession, which presumably also means that imposing fines on anyone traveling to California with powdered alcohol in his or her possession would also be difficult. It is also unclear that the relatively nominal $125 fine for violations of AB 1554, absent legitimate enforcement efforts, would be sufficient to deter the purchase, possession, and use of powdered alcohol in California. If, for example, the penalty for a minor-in-possession violation (a misdemeanor), which carries a penalty of a $250 fine and community service, cannot be expected to deter a minor from consuming powdered alcohol, then presumably, too, the $125 fine under AB 1554 will likewise fail to deter a minor from experimenting with powdered alcohol as opposed to the much more ubiquitous liquid version.

Nevertheless, it seems that these enforcement concerns are not likely to be realized, since the current prohibition in more than half of U.S. states, including now California, makes it nearly impossible that any business will successfully launch a powdered alcohol product onto the U.S. market.

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