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 effec-
tively 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, conven-
ience stores, and bodegas, but not liquor stores which can only sell
wine and liquor. High alcohol CABs such as Joose and Four Loko are exam-
ples 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 indi-
viduals feel more aware, but this "feeling" of awareness does not actu-
ally 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 bever-
age 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 legali-
ty 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-alco-
holic 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 offi-
cers 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 manifes-

tation 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 alco-
hol 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 consum-
ing 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:
New Bill.

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.