In a groundbreaking ruling, the California State Board of Equalization (BOE) has ruled that so-called "alcopop" drinks should be taxed as distilled spirits, rather than continuing to be subject to lower beer taxes.

The decision is expected to increase California state taxes on products like Mike's Hard Lemonade and Smirnoff Ice by about 25 percent; currently, California taxes beer at 20 cents per gallon, while distilled spirits are taxed at $3.30 per gallon.

"Flavored malt beverages should be taxed as distilled spirits because they fall under the category of distilled spirits, as written in California law," said California state Controller John Chiang. "While today's vote is about fair taxation, taxing flavored malt beverages as liquor will also help reduce their popularity with young people by simply pricing the product out of their reach."

The decision was applauded by the California Youth and Alcopops Coalition, which includes groups like the Marin Institute. The coalition has waged a long campaign to change how alcopops -- largely branded and marketed by the distilled-spirits industry -- are taxed and regulated.

Michael Scippa, advocacy director for the Marin Institute, told Join Together that up to 90 percent of the alcohol contained in alcopops is derived from distilled spirits, and that California law states that a beverage with any amount of detectable alcohol from such sources is considered a distilled product, not a beer product.

"Up until now, alcopop manufacturers have gotten away with a cynical manipulation of California's alcoholic beverage laws, mischaracterizing their products - which derive most of their alcoholic content from distilled spirits - as though they were beer to permit them to be sold cheaply and broadly throughout the state," said Scott Dickey, an attorney with the San Francisco-based Public Law Group, which provided free legal services to the campaign to change the alcopops classification. "The BOE's decision is a big step forward in holding alcopop manufacturers accountable for this deception."

Calls to Diageo, a distilled-spirits firm that makes alcopops like Smirnoff Ice, were not returned by Join Together's deadline. Diageo officials testified against the reclassification, however, arguing that it would do nothing to curb underage drinking.

Industry critics charge that the sweet and fruity alcoholic drinks are designed to appeal to young drinkers, especially females, who are turned off by the flavor of beer or hard liquor. "This is an enlightened step forward in controlling underage consumption of alcohol," said Marin Institute executive director Bruce Lee Livingston. "For generations, Big Alcohol has evaded proper taxation on these products. Now, the state will benefit and the health and well-being of our youth will be improved."

Michele Simon, director of research and policy at Marin, called the BOE decision "a great victory not just for the people and state of California but for other states that are taking a keen interest in our process because they desire similar outcomes.  If we can do it, so can they."

Scippa told Join Together that Rhode Island, Nebraska, Vermont and Oregon are among the states that have been tracking the California case, although each has different regulatory systems regarding alcohol taxation. The state of Maine began taxing alcopops as liquor products several years ago, and Scippa argued that it is a matter of simple fiscal responsibility for lawmakers in other states to look at whether alcopops are being properly regulated. "We do anticipate other states to follow," Scippa said.

Of course, industry critics who see alcopops as aimed primarily at young drinkers "would be happy to see them go away completely," says Scippa, which is actually what happened this week in Germany. The German government imposed a special alcopop tax in 2004, and Bacardi just announced that it was pulling its Breezer and Rigo alcopop brands from the market, citing declining sales.