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Powdered Alcohol Products New Challenge in an Era of Needed Regulation

Powdered Alcohol Products New Challenge in an Era of Needed Regulation


The Journal of American Medical Association

Authors: Timothy S. Naimi, MD, MPH1; James F. Mosher, JD2

June 15, 2015


In March 2015, the Alcohol and Tobacco Tax and Trade Bureau (TTB) approved several powdered alcohol products, sold under the brand name Palcohol, for sale in the United States. Powdered or crystalline alcohol is alcohol that has been absorbed into a carbohydrate (eg, dextrin), resulting in a dry state rather than its usual liquid form. Although alcohol has been converted into crystalline form for more than 200 years,1Palcohol constitutes the first entry into a new US alcohol market. These powdered alcohol products are 50% alcohol by weight and, if mixed according to package instructions, would yield a liquid that is 10% alcohol by volume.


Public health concerns about powdered alcohol focus primarily on its use in binge drinking (ie, drinking to the point of intoxication) or youth drinking and its potential for undermining retail businesses and alcohol regulations. In terms of binge drinking and alcohol poisoning, the use of powdered alcohol introduces the potential for overdose on the basis of the amount of powder used or the amount of liquid or food into which it is diluted or mixed. This is different from most wine and beer products, which are consumed at the alcohol concentration at which they are packaged. Initially at least, consumers will not be familiar with typical serving sizes for powdered alcohol, and adding powder to other beverages would not affect the apparent volume of the drink. Powdered alcohol could readily be used to “spike” nonalcoholic beverages, to increase the alcohol concentration of alcoholic beverages consumed on dates or at social gatherings, or, as initially acknowledged on Palcohol’s website though later retracted following negative publicity, could be snorted to induce rapid intoxication.


Because powdered alcohol is compact and easy to conceal, these products can easily be brought into locations where alcohol is otherwise restricted or prohibited, including parks, schools, movie theaters, and alcohol-free community and cultural events. This could create challenges for school officials and also state and local law enforcement agencies responsible for enforcing underage drinking laws and alcohol-free location restrictions. In addition, powdered alcohol would be relatively efficient to transport over long distances and therefore may promote smuggling to overcome state bans or exploit differential tax rates to illegally avoid paying taxes in states where these products are ultimately sold (as in the case of cigarette smuggling).


Powdered alcohol could also undermine retailers’ economic interests and their ability to comply with laws designed to protect public health and safety. Alcohol sold by licensees at “on-premises” locations (eg, bars, restaurants, airplanes, sports stadiums, concerts) is relatively expensive, and customers, particularly those who intend to drink heavily, may bring powdered alcohol to these venues as a means to increase the alcohol content of their beverage and decrease their costs. Retailers are legally required to monitor their customers’ consumption and ensure that underage and obviously intoxicated persons are not served. Were powdered alcohol surreptitiously introduced by customers, these tasks would be made more difficult, and failure to comply can lead to fines and suspended or revoked licenses. Retailers would also face heightened exposure to civil liability (“dram shop”) lawsuits. Dram shop liability laws hold alcohol retailers liable for alcohol-attributable harms (eg, injuries or deaths resulting from alcohol-related motor vehicle crashes) caused by patrons who were illegally sold or served alcohol because they were either intoxicated or underage. Retailers would also lose money from reduced on-premises sales.


The degree to which these concerns might be realized is unclear. However, in the absence of data proving that a product is safe or manageable, the precautionary principle as applied to public health requires that reasonable safety be established prior to the introduction of potentially dangerous products. Once a product is sanctioned, in wide use by the public, economically viable, and generating revenues that get funneled back into political efforts to preserve or augment those revenues, it becomes difficult to reverse course, regardless of subsequent scientific evidence about resulting harms.


The precautionary principle is routinely followed at the federal level for most new food products, nonalcoholic beverages, and prescription drugs, which makes the federal government’s failure to regulate alcohol product innovations particularly concerning. The TTB, the federal agency primarily responsible for regulating the alcohol market, is housed in the Treasury Department. Its statutory authority to address public health and safety issues is limited, and it has little expertise in these areas. As a result, as part of its review process, the TTB does not typically focus on these issues associated with the new product. The US Food and Drug Administration (FDA) typically defers to the TTB, as was the case with powdered alcohol products. The FDA review of Palcohol focused on the nonalcohol ingredients, which were in compliance with FDA regulations, and the FDA claimed it had no legal basis to restrict the sale of powdered alcohol.2


Alcoholic jello shots, flavored alcoholic beverages, and other youth-oriented alcohol products provide important cautionary case studies—products that entered the market with little or no federal and state oversight. In the case of flavored alcoholic beverages, many states failed to enforce their own laws and have regulated these products as beer instead of distilled spirits (resulting in lower taxes and more widespread distribution) following the TTB’s own questionable determination of the nature of the product. Alcoholic energy drinks, which premix alcohol and caffeine, also entered the market without adequate review. These beverages rapidly gained popularity with youth and young adults as an inexpensive way to binge drink while decreasing the feeling of intoxication.3 State attorneys general among others petitioned the FDA to investigate the legality of mixing caffeine and alcohol in these products under FDA regulations several years after the products’ introduction. After more than a year of review, the FDA banned the products because manufacturers had failed to establish that mixing alcohol and caffeine met GRAS (Generally Recognized as Safe) standards.


Failure of federal and state governments to regulate the alcohol market effectively has been the rule rather than the exception. Numerous federal reports and academic reviews have issued reports about alcohol policy. The science and resulting recommendations are remarkably consistent: increase taxes, reduce availability, and reduce marketing, particularly to youth.


Currently, alcohol is increasingly affordable, and the federal excise taxes per US standard drink ($0.05 for beer, $0.04 for wine, $0.13 for distilled spirits) represent only a small percentage of current prices.4 During the past 25 years, excise taxes, which are based on a fixed amount per unit volume, have eroded with inflation. For example, the federal tax on beer, which accounts for more than half of all alcohol and two-thirds of binge drinks consumed in the United States, has declined by more than 40% in real terms since it was last adjusted in 1991. The external or “second-hand” economic costs of alcohol exceed current federal and state tax revenues by approximately $1 per drink5; therefore, current tax policy amounts to a public subsidy of alcohol consumption.6 To prevent sales to intoxicated persons and to support age 21 minimum legal drinking age laws, state alcohol beverage control agencies are supposed to conduct enforcement activities. However, many states have less than 1 enforcement agent per 1000 licensed outlets, and some have none at all. Moreover, alcohol marketing activities are governed primarily by industry self-regulation.7These guidelines are legally nonenforceable, and monitoring compliance with them is beyond the resources available to the Federal Trade Commission, which is the federal agency that has historically overseen this area. During the past decade, alcohol companies have ended their voluntary ban on liquor advertising on network television, greatly increased alcohol marketing on cable television, and begun aggressive marketing campaigns through social media that are virtually impossible to monitor based on current voluntary reporting practices.


Against this discouraging backdrop, state responses to the federal approval of powdered alcohol may signal a new era for state-level alcohol policy action. As of June 2015, 12 states (Alaska, Georgia, Indiana, Louisiana, Nebraska, Nevada, North Dakota, Tennessee, Utah, Vermont, Virginia, and Washington) prohibit the sale of powdered alcohol; Maryland, Minnesota, and South Carolina have enacted temporary bans; and more states are considering bans or restrictions or have entered into voluntary agreements with relevant industry groups.8 Control states (states that directly operate wholesale businesses, retail businesses, or both) have the authority to ban powdered alcohol without legislative action, and several have announced their intention to do so. Public health and law enforcement officials and several industry groups have publicly supported these state efforts.


Alcohol consumption causes more than 100 000 deaths annually in the United States, with approximately 30 years of life lost per death.9 Proponents of marijuana legalization have called for states to “regulate marijuana like alcohol” and point to the fact that alcohol causes many more deaths and social problems than marijuana. Beyond the laudable efforts of states to restrict or ban the sale of powdered alcohol, from a broader perspective it is time for federal and state governments to start adequately regulating the sale, distribution, and marketing of all alcohol products.