Senate Bill S2798

                                 BILL NUMBER:  S8506

 TITLE OF BILL :
An act to amend the alcoholic beverage control law, in relation to
including, for the purposes of distribution and retail sale, certain
alcoholic beverages containing a stimulant within the definition of
"liquor"


 PURPOSE :
The purpose of this bill is shift the point of sale place for certain
high caffeinated alcoholic beverages (hereinafter CABs) from grocery
and convenience stores to liquor stores. CABs are defined, under this
bill, as a beverage with a combination of two percent alcohol by
volume and 5 milligrams of caffeine per ounce. These caffeinated
alcoholic beverages (CABs) are now being actively marketed to and
increasingly used by those who are between the ages of 14 to 25.
Shifting the place where CABs are sold from grocery and convenience
stores to liquor stores will effectively limit access to such CABs 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 CABs from such stores, but this
would not be the case if CABs were exclusively sold in liquor stores.

              

 SUMMARY OF PROVISIONS :
Section 1: Amends ABC Law section 3 to revise the definition of the
terms "beer" and "liquor". This bill amends these terms so that the
definition of the term "beer" will exclude CABs and shifts CABs to be
included in the definition of "liquor". The reason for this
definitional change is to shift the sale of CABs 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: 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 CABs and to shift the
sale of such alcoholic beverages in liquor stores.

 JUSTIFICATION :
Energy drinks are designed to make individuals "feel" more aware and
awake. To do this, such drinks contain stimulants such as caffeine,
guarana, or ginseng, and may also contain proteins and vitamins.

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. One of the leading brands in this market,
Red Bull, was created in Austria and introduced into the U.S. market
in 1997. Red Bull and other energy drinks, have become popular mixers
at bars and night clubs, with the Vodka Red Bull being one of the more
popular drinks that mix alcohol and caffeine.

The popularity of mixing energy drinks with alcohol at bars has 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 CABs 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 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 30, 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), consumption 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. The Marion Institute stated that this product
"brilliantly keeps them alert and wanting to keep drinking the
product". Other studies have demonstrated that consumption of such
beverages leads to significantly higher levels of episodic drinking
and episodes of weekly drunkenness. 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 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.  With new brands
of CABs and energy drinks going on the market all of the time, this
lack of clear labeling as to what is alcoholic and not alcoholic can
confuse store personnel and police officers as to which products have
alcohol or not. This can lead to law enforcement problems in
accurately identifying which beverages can be sold to or possessed by
minors and which beverages are subject to open container laws.

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.

The rapid expansion in the market share of CABs has raised questions
about how these drinks are formulated, their caffeine levels, and
alcohol content, and whether they are properly classified as malt
beverages under federal and state law. In 2007, 28 state Attorney
Generals contacted the TTB to inquire about the questions outlined
above.  Further, the FDA is making similar inquiries about the safety
of consuming such beverages.

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.

 LEGISLATIVE HISTORY :
2010:  S.8506 - Referred to Rules

 FISCAL IMPLICATIONS :
None.

 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.