Senate Bill S4221B

                                BILL NUMBER:S4221

TITLE OF BILL:
An act
to amend the alcoholic beverage control law, in relation to including,
for the purposes of distribution, and wholesale and retail sale,
flavored malt beverages within the definition of liquor

PURPOSE:
The purpose of this bill is shift the point of sale for high alcohol
flavored malt beverages (hereinafter FMB's) from grocery and
convenience stores to liquor stores. FMBS are defined, under this
bill, as a beverage with a combination of 6 percent alcohol by
volume and 1 percent sugar that also includes the addition of
flavorings. Such flavorings can he fruit juices or fruit flavor
additives, or herbs, nuts, or spices, such as chocolate,
licorice or vanilla or stimulants such as caffeine, guarana, ginseng,
or taurine. These Flavored Malt Beverages (FMBs) are now being
actively marketed to and increasingly used by those who are between
the ages of 14 to 25.

Shifting the place where FMBs are sold from grocery and convenience
stores to liquor stores will effectively limit access to such FMBs
for underage drinkers. The reason being that persons under the age of
21 can enter into and purchase items in grocery and convenience
stores, but cannot enter into liquor stores to purchase any products
              

sold there. Also, minors tend to hang out around convenience stores
and have a higher ability to shoplift FMBs from such stores, but this
would not be the case if FMBs were exclusively sold in liquor stores.

SUMMARY OF PROVISIONS:
Sections 1: Amends ABC Law section 3 to revise the definition of the
term "beer" and "liquor". This bill amends these terms so that the
definition of the term "beer" will exclude FMBs and shifts FMBS to be
included in the definition of "liquor". The reason for this
definitional change is to shift the sale of FMBS from grocery and
convenience stores (which are allowed to sell beer, but not liquor)
to liquor stores, which are only allowed to sell high alcohol
beverages such as liquor and wine.

Section 2: Amends ABC Law section 3 to add a new definition for the
term "Flavored Malt Beverage" (FMB). Such beverage shall be those
types of beverages that are most attractive to underage drinkers and
for those under the age of 30. FMBs shall be high alcohol beverages
that have over 6 percent alcohol and over 1 percent sugar and have
added flavors or other ingredients that are attractive to children.
The bill includes all flavors and
ingredients, including ones particularly attractive to children such
as fruit flavors; herbs, nuts or spices, such as chocolate, licorice,
or vanilla; or stimulants, such as caffeine. Further, this section
give the Authority to promulgate rules and regulations to provide

further standards as to what should be classified as a FMB or could
be classified as a beer. The purpose of this section is to give the
Authority and beer producers some latitude to continue to manufacture
traditionally brewed beers that do contain honey, fruits, or other
herbs and spices, but which geared to an adult audience and not
children. There are more than several micro-breweries located in New
York and the Northeast that make traditional beers, made for an adult
audience, that contain such additives, but which may fit within the
technical definition of FMBs.

Section 3: Amends ABC Law section 17(15) to authorize the Authority to
promulgate rules and regulations to further define what is
categorized as a FMB that is attractive to children (which would then
be classified as a liquor) and those traditional beers that may fit
within the technical definition of FMBs, but which are geared for an
adult audience. These traditionally brewed beers would continue to
remain classified as a "beer" and sold as a beer. In promulgating
such regulations, beverages that consist of flavors, colors, or
sweetness levels that would be attractive to underage drinkers would
remain to be classified as FMBs.

Section 4: Effective Date: The effective date is 180 days after it
shall have become law so that grocery and convenience stores will
have ample time to sell their existing inventory of newly designated
FMBs and to shift the sale of such alcoholic beverages in liquor
stores.

JUSTIFICATION:
The issue of the sale, marketing and consumption of Flavored Malt
Beverages by underage drinkers and persons under the age of 30 who
continue to abuse these alcoholic beverages continues to evolve
rapidly. About 10 years ago, energy drinks were designed to make
individuals "feel" more aware and awake. To do this, such drinks
contain stimulants such as caffeine, guarana, or ginseng.

Energy drinks are the fastest growing sector in the beverage market.
Energy drinks are primarily marketed to and consumed by persons
between 14 - 35 years old.

The popularity of mixing energy drinks with alcohol at bars led to the
introduction of energy drinks premixed with alcohol. Many of these
beverages are primarily malt based beverages, and therefore, can be
sold in the same places as beer and malt liquor, i.e., supermarkets,
convenience stores, and bodegas, but not liquor stores which can only
sell wine and liquor. High alcohol FMBs such as Joose and Four Loko
are examples of this trend.

Clinical and field studies conducted in the past few years have found
that the over consumption of Caffeinated Alcoholic Beverages (CABs)
that combine high amounts of alcohol and stimulants, such as
caffeine, raises significant public health and safety concerns for
both the consumer and for the public at large. These public health

concerns are particularly acute for persons under the age of 25.
Among the "Top 10" concerns raised by researchers about CABs include:

1) Individuals, particularly those under the age of 3D, who combine
alcohol with stimulants, engage in riskier drinking behaviors and
drink a greater amount in each session. The stimulants used in CABs
make individuals feel more aware, but this "feeling" of awareness
does not actually decrease the levels of impairment or coordination,
reflexes, and judgment that result from excessive alcohol consumption.

2) Individuals are less able to judge their actual levels of
inebriation when consuming CABs. This can lead individuals to consume
more alcohol than they would otherwise consume if just consuming an
alcoholic beverage alone. Normally, with the consumption of alcohol
(a depressant), consolidation goes down as the drinking event
progresses because the subject becomes more tired. Instead, with
CABs, the consumer becomes drunk, but more awake, which can lead to
the further consumption of alcohol. There have been examples in
Westchester County of underage persons getting alcohol poisoning
because they drank CABs to excess and did not have the inhibition
needed to stop consuming these CABs.

3) Consumption of CABs makes such persons think that they can mistakenly
undertake dangerous activities such as driving an automobile.
This is of grave concern with inexperienced drivers who are under the
the age of 21.

4) CABs are commonly consumed by underage drinkers and those who
are under 25 years of age who are generally less sophisticated about
when and how to properly consume alcoholic beverages. This can
lead to higher incidences of physical injury, sexual assault,
becoming the victim of sexual assault, and alcohol poisoning. In
addition, underage consumers tend to already have underdeveloped
decision making skills, which the consumption of alcohol clouds
further.

5) CAB manufacturers have aggressively geared their product packaging,
marketing programs, and the taste of their product to further draw
consumers between the ages of 14 - 25. Currently, the existing CAB
market is male-dominated, however, manufacturers are shifting their
attention to obtain a larger female consumer base, by offering CABs
that are touted as being "light", "sugar-free" or "low carb". In sum,
the trend is for more individuals between the ages of 14 and 35 to
consume such products, not less.

6) The long term health effects of consuming high levels of alcohol (a
depressant) and caffeine (a stimulant) are not known. However, having
two agents in the same beverage that have opposite effects has
generally been considered to be detrimental to long term health. The
Federal Food and Drug Administration (FDA) is now looking into the
safety and legality of these beverages. Those experimental studies
that have been conducted have not established the safety of

co-ingesting caffeine and alcohol, but there are indications that it
may heighten the risk of cardiovascular and neurological damage.

7) Both alcohol and caffeine are diuretics; therefore, the combination
of these two substances in one beverage can leave the consumer
severely dehydrated. Further, the high sugar levels of CABs does
speed up the absorption, of alcohol into the blood stream.

8) The prime market for CABs and for all energy drinks is the same,
persons between 14 and 25 years of age. In general, CABs are sold at
relatively low cost to a demographic group that does not have a lot of
money. Further, these beverages are priced much lower than beer to
retain and expand market share. While many CABs have alcohol content
well above beer and sometimes at the level of wine, its excise tax
rate is assigned at the same level as beer, the lowest level of
excise taxes levied and collected. This low cost of the product makes
them extra attractive to young people, who have been shown to be very
price conscious.

9) The labeling of CABs is very similar to that of non-alcoholic
energy drinks, and meant to be attractive to young people. Energy
drink maker Rockstar, introduced an alcoholic version called Rockstar
21 and the extreme similarity in labeling of the company's alcoholic
and non-alcoholic energy drinks lead to an outcry which forced
Rockstar 21 from the market. Other alcoholic energy drink makers
continue to produce cans that are brightly colored with bold designs
meant to project an image of energy common with regular energy drinks
and inherently more attractive to younger consumers.

10) Easy access to CABs by underage drinkers in convenient stores and
bodegas can encourage youth to start drinking alcohol earlier in life
and can significantly increase alcoholism later in life and the
manifestation of other addictive behaviors, such as gambling and
substance abuse, in the future.

CABs are overwhelmingly consumed by persons under the age of 30, and
many are consumed by underage drinkers. This bill is to limit access
to CABs by underage drinkers by shifting where these beverages can be
sold from convenience stores (which can admit minors to purchase
grocery and snack items) to liquor stores which by law have no items
that can be purchased by minors, hence minors do not patronize such
liquor stores.

The latest development in the Flavored Malt Beverage market, which
overwhelmingly targets underage drinkers, is to manufacture drinks
similar to Caffeinated Alcoholic Beverages (drinks with high levels
of alcohol, sugar and caffeine) only this new generation of beverages
contain alcohol levels up to 12% and sugar. These drinks unlike,
Caffeinated Alcoholic Beverages, have all of the alcohol, bright
colors of the can and beverage, and sugar to continue to attract
underage drinkers, but they have taken the caffeine out. Senate Bill
2798 (Klein) shifted Caffeinated Alcoholic Beverages from grocery

stores to liquor stores. However, with the new shift by manufacturers
to create high sugar and alcohol beverages to continue to attract an
underage consumer, this bill was introduced to prohibit any sale of
all high alcohol malt base beverages that have flavorings, additives,
color composition, and sugar content to make them more attractive to
underage drinkers, whether they have stimulants, such as caffeine or
not.

Under this bill, high alcohol sugary drinks that have kid-friendly
flavors of watermelon, bubblegum, peppermint, vanilla, mango,
raspberry, or strawberry flavors will now need to be sold in liquor
stores if the alcohol content is above 6 percent and it has one
percent sugar.

LEGISLATIVE HISTORY:
New Bill.

FISCAL IMPLICATIONS:
This bill may raise revenue because those
Flavored malt beverages that are now taxed at the very low beer
excise tax rate, will need to set at the much higher liquor excise
tax rate.

LOCAL FISCAL IMPLICATIONS:
None.

EFFECTIVE DATE:
This act shall take effect 180 days after it shall have become law so
that convenience stores (which can currently sell CABs) can liquidate
their inventory of CABs before this law goes into effect, with
provisions.

                                BILL NUMBER:S4221A

TITLE OF BILL:

An act
to amend the alcoholic beverage control law, in relation to including,
for the purposes of distribution, and wholesale and retail sale,
flavored malt beverages within the definition of liquor

PURPOSE:

The purpose of this bill is shift the point of sale for high alcohol
flavored malt beverages (hereinafter FMB's) from grocery and
convenience stores to liquor stores. FMBs are defined, under this
bill, as a beverage with a combination of 6 percent alcohol by volume
and 1 percent sugar that also includes the addition of flavorings.
Such flavorings can be fruit juices or fruit flavor additives, or
herbs, nuts, or spices, such as chocolate, licorice or vanilla or
stimulants such as caffeine, guarana, ginseng, or taurine. These
Flavored Malt Beverages (FMBs) are now being actively marketed to and
increasingly used by those who are between the ages of 14 to 25.

Shifting the place where FMBs are sold from grocery and convenience
stores to liquor stores will effectively limit access to such FMBs
for underage drinkers. The reason being that persons under the age of
21 can enter into and purchase items in grocery and convenience
              

stores, but cannot enter into liquor stores to purchase any products
sold there. Also, minors tend to hang out around convenience stores
and have a higher ability to shoplift FMBs from such stores, but this
would not be the case if FMBs were exclusively sold in liquor stores.

SUMMARY OF PROVISIONS:

Sections 1: Amends ABC Law section 3 to revise the definition of the
term "beer" and "liquor". This bill amends these terms so that the
definition of the term "beer" will exclude FMBs and shifts FMBs to be
included in the definition of "liquor". The reason for this
definitional change is to shift the sale of FMBs from grocery and
convenience stores (which are allowed to sell beer, but not liquor)
to liquor stores, which are only allowed to sell high alcohol
beverages such as liquor and wine.

Section 2: Amends ABC Law section 3 to add a new definition for the
term "Flavored Malt Beverage" (FMB). Such beverage shall be those
types of beverages that are most attractive to underage drinkers and
for those under the age of 30. FMBs shall be high alcohol beverages
that have over 6 percent alcohol and over 1 percent sugar and have
added flavors or other ingredients that are attractive to children.
The bill includes all flavors and
ingredients, including ones particularly attractive to children such
as fruit flavors; herbs, nuts or spices, such as chocolate, licorice,
or vanilla; or stimulants, such as caffeine. Further, this section
give the Authority to promulgate rules and regulations to provide
further standards as to what should be classified as a FMB or could
be classified as a beer. The purpose of this section is to give the
Authority and beer producers some latitude to continue to manufacture


traditionally brewed beers that do contain honey, fruits, or other
herbs and spices, but which geared to an adult audience and not
children. There are more than several micro-breweries located in New
York and the Northeast that make traditional beers, made for an adult
audience, that contain such additives, but which may fit within the
technical definition of FMBs.

Section 3: Amends ABC Law section 17(15) to authorize the Authority to
promulgate rules and regulations to further define what is
categorized as a FMB that is attractive to children (which would then
be classified as a liquor) and those traditional beers that may fit
within the technical definition of FMBs, but which are geared for an
adult audience. These traditionally brewed beers would continue to
remain classified as a "beer" and sold as a beer. In promulgating
such regulations, beverages that consist of flavors, colors, or
sweetness levels that would be attractive to underage drinkers would
remain to be classified as FMBs.

Section 4: Effective Date: The effective date is 180 days after it
shall have become law so that grocery and convenience stores will
have ample time to sell their existing inventory of newly designated
FMBs and to shift the sale of such alcoholic beverages in liquor
stores.

JUSTIFICATION:

The issue of the sale, marketing and consumption of Flavored Malt
Beverages (FMBs) by underage drinkers and persons under the age of 30
who continue to abuse these alcoholic beverages continues to evolve
rapidly.

These issues came to rise initially with the popularity of caffeinated
alcohol beverages (CABs). With reports of students on college
campuses becoming seriously intoxicated due to consumption of energy
drinks that contain alcohol the safety of these beverages came under
close scrutiny. One such beverage, Four Loko, came in a 23.5 ounce
can that contained 12 percent alcohol and 156 milligrams of caffeine.

The rapid expansion in the market share of these CABs raised questions
about how these drinks were formulated, their caffeine levels, and
alcohol content, and whether they are properly classified as malt
beverages under federal and state law.

On November 14, 2010, responding to safety concerns voiced by the
Federal Drug Administration, Governor David Paterson, and the State
Liquor Authority, in conjunction with the Retail Beer Wholesalers
came to a voluntary agreement to stop the distribution of Four LOKO
and similar CAB products in NYS.

On November 17, 2010, the FDA issued Warning Letters to four
manufacturers of CABs (Phusion Projects, LLC, United Brands Co.,
Inc., Charge Beverages Corp., Inc., and New Century Brewing Co.,
LLC). The FDA's letters warned that the addition of caffeine to those
manufacturers' alcoholic beverages had not been approved by FDA and
is an "unsafe food additive." All 4 manufactures decided
to cease the production of their high alcohol drinks with the
inclusion of caffeine.


However, four months after New York State convinced the makers of
these CABs to pull their products off the shelves, a new reformulated
version of the products has been appearing in New York. While
appearing to have conquered the believed deadly combination of
alcohol and caffeine, the new product remains just as dangerous.

These new products, often referred to as alcopops, are still selling
at an average of $2.00 dollars a can and contain the equivalent of
three cans of beer. Reports across the country are citing the high
level of minors still drawn to these products as the alcohol content
remains high and the flavoring and branding maintain its focus on
attracting underage drinkers.

In New York alone in the past few months, 4 teens were rushed to the
Emergency Room in Queens with alcohol poisoning due to Four Loko and
Joose.
Also, the Downstate Poison Control Center has received seven calls to
date reporting seven separate cases of people being sick enough to be
hospitalized after specifically consuming Four Loko. Five of those
seven individuals were under the legal drinking age. Finally, since
January 2011, at Canisus College in Buffalo, New York 10 cases involving
underage consumption of Four Loko, both on and off campus, have been
reported to date.

with its brightly packaged cans, fruity flavors and low price point,
the new version of alcopops without the caffeine are just as
dangerous and deceptive as their predecessor caffeinated alcohol
beverages. For example:

o Inexperienced drinkers can be confused in thinking that one can
contains one serving of alcohol.
o One can may actually contain up to six servings of alcohol, such as
six beers.
o Alcohol content of this degree is more similar to wine than beer, but
unlike wine which is relegated to liquor stores, these high alcohol
malt beverages show up in grocery stores, gas stations, and bodegas.
o Beverages of this type are the most rapid expanding sector of the
market, becoming more and more prevalent and opening new avenues to
become available to youth.
o Youth, particularly girls and young women, are attracted to the sweet
flavor which masks the high alcohol content.
o The flashy packaging is also designed to attract the eye of, and
appeal to, the younger or under aged drinker.

Under this bill, high alcohol sugary drinks as referenced above that
have kid-friendly flavors of watermelon, bubblegum, peppermint,
vanilla, mango, raspberry, or strawberry flavors will now need to be
sold in liquor stores if the alcohol content is above 6 percent and
it has one percent sugar.

LEGISLATIVE HISTORY:

New Bill.

FISCAL IMPLICATIONS:


This bill may raise revenue because those
flavored malt beverages that are now taxed at the very low beer
excise tax rate, will need to set at the much higher liquor excise
tax rate.

LOCAL FISCAL IMPLICATIONS:

None.

EFFECTIVE DATE:

This act shall take effect 180 days after it shall have become law so
that convenience stores (which can currently sell CABs) can liquidate
their inventory of CABs before this law goes into effect, with
provisions.