A Nebraska youth alcohol-prevention group has been grappling with state lawmakers, regulators and the alcohol industry for years to get alcopops classified as liquor, not beer, and the rollercoaster process will make a key stop on July 31 as the Nebraska Liquor Control Commission holds a hearing on the classification issue.

"The Nebraska Liquor Control Commission will determine whether to continue ignoring state law and classifying the products as beer, or to properly regulate the products as distilled spirits and help reduce availability, reduce advertising and  increase the price of these products -- all factors that impact youth consumption," according to Erin Baum, policy and research specialist for Project Extra Mile, a network of Nebraska community coalitions fighting underage drinking.

Nebraska statute 53-103(2) states that, "Spirits means any beverage which contains alcohol obtained by distillation, mixed with water or other substance in solution, and includes brandy, rum, whiskey, gin or other spirituous liquors and such liquors when rectified, blended, or otherwise mixed with alcohol or other substances," whereas, "Beer means a beverage obtained by alcoholic fermentation of an infusion or concoction of barley or other grain, malt, and hops in water and includes, but is not limited to, beer, ale, stout, lager beer, porter, and near beer."

Alcopops Issue Brewing Since 2003

The issue of whether alcopops should be classified and taxed as liquor or beer has an interesting history in Nebraska. In 2003, the Nebraska Liquor Control Commission notified alcohol wholesalers that it intended to classify alcopops -- known in industry parlance as "flavored malt beverages" and including such popular brands as Mike's Hard Lemonade and Bacardi Breezers -- as liquor products, which in Nebraska are taxed at a rate 12 times that of beer. The notice was based on a U.S. Tax and Trade Bureau (TTB) analysis showing that almost all alcopops derive the majority of their alcohol content from distillation, not fermentation.

However, the alcohol industry, allied with Nebraska state Sen. Ray Janssen, succeeded in delaying implementation of the rule change. "The Commission's notice began a huge push by the alcohol industry to get them to hold off on a decision, and that's where we have been for the last five years," said Diane Riibe, executive director of Project Extra Mile.

After the TTB ruled in 2004 that any alcopop with less than 49 percent of its alcohol derived from distillation should be classified as beer,  a bill was introduced in the state legislature to codify that standard in state law. That legislation failed to advance in the state legislature, but in 2006 the Nebraska Attorney General issued an opinion calling the state statute regarding alcopops ambiguous and stating that the Nebraska Liquor Control Commission had authority to classify the products.

"Flavored malt beverages could be considered beer because under Nebraska's statutory definition, they are 'a beverage obtained by alcoholic fermentation of an infusion or concoction of barley or other grain, malt, and hops in water ...'" wrote assistant attorney general Milissa Johnson-Wiles. "Likewise, flavored malt beverages could be considered distilled spirits because they are 'any beverage which contains alcohol obtained by distillation.'"

Eleven days later, the commission classified alcopops as beer despite objections from Project Extra Mile and other prevention advocates.

Letter-Writing and a Lawsuit

In the aftermath of the commission's decision, Project Extra Mile launched an advocacy campaign to get alcopops reclassified as liquor, gathering more than 900 petitions urging the commission to reverse its ruling and filing a lawsuit to block the new rules from going into effect. Advocates claimed that the commission violated state law in ruling that alcopops were beer, and in December 2007 a state court sent the whole issue back to the commission, saying that the panel failed to comply with its rulemaking procedures.

Despite the Attorney General's opinion, Riibe says there is no ambiguity in Nebraska's law, noting that the statute says that "any" beverage containing distilled spirits is liquor, not beer. "The law in Nebraska is really clear," she said. "The Commission would have to change the law in order to go by the TTB standard."

Riibe said she sees little enthusiasm for changing the law in the legislature or the statehouse. She described Gov. Dave Heineman as generally supportive of youth alcohol-prevention issues and noted that he recently apppointed a new commissioner to the three-member liquor-control panel. "It seems ludicrous for the state to close one eye to the harm being caused to kids and wink with the other at the industry," she said.

Project Extra Mile is urging supporters to attend the hearing and write to Hobart Rupe, executive director of the Nebraska Liquor Control Commission, and the governor to urge them to support classifying alcopops as liquor. Riibe is expecting 75 to 100 people to attend the hearing in support of classifying alcopops as liquor, including local prevention, public health and law-enforcement personnel and Jim Mosher, director of the Center for the Study of Law and Enforcement Policy at the Pacific Insitute for Research and Evaluation (PIRE), a national leader on the alcopops issue.

The fight over alcopops classification has been waged in several states, notably including Maryland, as the alcohol industry seeks to codify their "flavored malt beverages" as beer, largely to avoid the higher taxes attached to liquor products. Last year, California regulators ruled that alcopops are liquor, and this year Utah passed a law banning sales of alcopops from grocery stores. However, Maryland lawmakers approved an industry-backed measure classifying alcopops as beer.

Prevention advocates argue that alcopops are designed to be low-cost "starter drinks" and are aimed primarily at young and inexperienced drinkers who might otherwise be turned off by beer or liquor. The alcohol industry denies that the products are marketed at underage drinkers.