Gansler targets alcohol bill

Proposal would allow `alcopop' to be taxed as beer

April 02, 2008|By Bradley Olson | Bradley Olson,Sun reporter

Attorney General Douglas F. Gansler and public health advocates launched a campaign yesterday to make sure drinks like Mike's Hard Lemonade and Jack Daniel's Black Jack Cola are considered legally the same as liquor, not beer.

The legislature is considering a bill backed by alcohol manufacturers and distributors that would classify the beverages as beer, overruling an opinion that Gansler issued this month declaring such beverages - loosely termed "alcopops" - to be spirits under the law because of how they are made and because of evidence that they are popular among teenagers. The opinion effectively changes the way the drinks have been regulated in the state for decades.

Lobbyists for the liquor industry, who deny the drinks are marketed to teens and argue they should be classified like beer because of their alcohol content, have been pushing hard for the bill, which passed in the Senate with little fanfare.

A Sun analysis found that alcohol interests gave about $2.8 million since 1998 to hundreds of local and state politicians and committees and spent about $2 million on lobbyists since 2002. Manufacturers of the drinks, which include some of the nation's biggest brewers, contributed $33,700 to Maryland political candidates over the past decade. The Maryland Beer Wholesalers Association contributed an additional $53,000.

If the legislation makes it through the House, the drinks would continue to be taxed at lower rates than alcoholic beverages such as rum and whiskey and would enjoy wider distribution than spirits.

"Beer is yellow with foam," Gansler told reporters at a news conference, holding up a bottle of Smirnoff Source, which is described this way on its label: "contains pure spring water + alcohol."

"This is not beer," he added.

He had on display a number of drinks manufactured by all the major brewing companies, including one that resembled a hotel shampoo bottle that Gansler said high school girls often buy at convenience stores on the way to prom. Another, named Sparks, which looks similar to an energy drink and has high amounts of caffeine, he termed as "very dangerous."

But alcohol industry executives and lobbyists decry the attempts to paint the bill as a vote for teenage drinking, noting that most studies that have found the drinks to be popular among teenage girls also found generic beer to be equally popular among kids in the same age groups.

They characterized opposition to the bill as an attempt to raise taxes on the beverages and mentioned studies that found that 65 percent of teenage drinkers get their alcohol from someone above the legal drinking age. They also note that in a 2003 investigation, the Federal Trade Commission found "no evidence of intent to target minors" with the drinks.

"This is going to be a tax on adult consumers that would do nothing to quell underage drinking or abuse," said Gary Galanis, a spokesman for Diageo North America, the U.S. subsidiary of the company that makes Smirnoff and other drinks. "We're focused on real solutions to underage drinking, and we don't see this as anything that would do any good. There's no scheme to market to underage kids."

Diageo contributed more than $14,000 to Maryland politicians over the past several years.

While industry sources said they expect the alcopops bill to pass in the Economic Matters Committee, it could become the subject of a major fight on the House floor.

"These drinks get dressed up in a six-pack, but if we had truth in advertising, they would come with a shot glass," said Del. Heather R. Mizeur, a Montgomery County Democrat who opposes the legislation.

Dr. Peter L. Beilenson, the Howard County health officer, assembled numerous high school students, lobbyists for churches, public health officials and lawmakers who spoke against the bill, including an Owings Mills man whose 18-year-old son was killed in 2006 by a drunken driver.

Neil Goldberg, the youth's father, said that anyone who believes the alcohol industry is concerned with teen drinking "is either naive or foolish."

"They are greedy," he said. "Be there no doubt. These products are marketed to our children. ... They taste like soda pop."

Still, alcohol lobbyists said, if the bill fails, there could be a severe market disruption, because the drinks would be taxed at a higher rate, and the whole distribution system set up for them would have to change.

They pointed out that Gansler, both in testimony opposing the bill and in statements to reporters, has said he favors creating a new category in the alcohol regulatory system for the drinks, taxing them slightly higher than beer and regulating their distribution accordingly.

"This would impact thousands of businesses," said W. Minor Carter, a lobbyist for the Beer Wholesalers' Council of Maryland. "One of the challenges is that the attorney general himself opines that [classifying the drinks as spirits] is not the best solution."

Carter and others said manufacturers or retailers of the beverages might sue to nullify Gansler's opinion.

Gansler said yesterday that he would welcome such a lawsuit. He said the matter could be resolved in the next legislative session if the General Assembly opts to reclassify the drinks into a new category.

"They would have no chance of winning" a lawsuit, he said, holding up one of the beverages. "If you walk in and tell a jury this is beer, they'll laugh at you."

bradley.olson@baltsun.com

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.