Tax Board Supports New ‘Alcopop’ Rate: State Regulators Back Reclassifying Sweet Malt Beverages As Hard Liquor.

By Jim Sanders, The Sacramento Bee, Calif.

Nov. 16–They taste like fruit drinks, they’re packaged like beer, they’re attractive to many teenagers — and state tax regulators took a final vote Thursday to tax them as hard liquor.

The Board of Equalization voted 3-2 to classify flavored malt beverages, such as Mike’s Hard Lemonade and Smirnoff Ice, as distilled spirits instead of beers.

The change, if accepted by the state Office of Administrative Law, will send taxes soaring for the drinks, known as “alcopops,” from 20 cents per gallon, the beer rate, to $3.30 per gallon, the liquor rate.

Buyers could find themselves paying an extra $2 per six-pack for the sweet alcoholic drinks.

Board members Betty Yee, Judy Chu and a representative of state Controller John Chiang supported the higher tax rate Thursday, while members Bill Leonard and Michelle Steel voted no.

For years, opponents have argued that alcopops are designed and marketed to be “gateway” drinks that attract young Californians who otherwise might not consume alcohol.

Chu said sweet flavors, bright packaging and innocuous names — such as Mike’s Hard Lemonade — target a specific segment of the population.

“They’re meant to entice young people into drinking,” she said.

Substantially higher taxes could discourage underage drinking, according to supporters of the Board of Equalization’s action Thursday.

Industry officials say flavored malt beverages contain roughly the same alcohol content as beer — 4 percent to 6 percent — and that reclassifying them as hard liquor is unwarranted, will do nothing to cut teenage drinking, and will burden small retailers and restaurants by requiring them to have expensive liquor licenses.

The board approved the regulations Thursday to impose the higher taxes despite an opinion from Legislative Counsel Diane Boyer-Vine that questioned its authority to do so, and a separate letter from the state Department of Alcoholic Beverage Control that urged the tax board to leave such decisions to legislators.

Leonard said he would not be surprised if the action is overturned. “I think we’re exceeding our authority,” he said.

Higher taxes for flavored malt beverages are not scheduled to take effect until July.

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