Designates as liquor, for purposes of sale and distribution, certain alcoholic beverages containing caffeine or other stimulants

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.