Powdered Alcohol Gets Federal Approval

Despite federal approval, some states have already banned Palcohol due to concerns about abuse of the product.

March 12, 2015

NEW YORK — A powdered alcohol intended to be mixed into drinks has officially gained approval from a federal agency. Dubbed “Palcohol,” the product was approved by the Alcohol and Tobacco Tax and Trade Bureau (ATTTB) last April, but the agency almost immediately backtracked, citing an error.

Yesterday, an ATTTB spokesman confirmed that the outstanding issues had been resolved and that four varieties of Palcohol were now approved by the federal agency. However, since states can also regulate alcohol sales in their borders, it remains to be seen whether the controversial new product will be approved at the state level. Several states have already moved to ban powdered alcohol, citing concerns about abuse by minors and whether Palcohol’s light weight would make it easy to sneak alcohol in venues where it’s otherwise prohibited.

While the decision granting federal approval of Palcohol’s labels is considered the last step in the federal regulatory process, most alcohol regulation is done at the state level and several states have already banned the sale of powdered alcohol. Based on the information currently available, Palcohol is classified as a distilled spirit so it is conceivable that any location currently selling distilled spirits would be permitted to sell the new product. Not all states allow convenience stores to sell distilled spirits (some only allow beer and/or wine), so those states are likely unaffected.  

According to news reports, several states -- including Alaska, Delaware, Louisiana, South Carolina and Vermont -- have already banned powdered alcohol, with more likely to follow. If a state classifies alcohol based on alcohol content or alcohol by volume, then the regulations could vary based on what product/label was approved by ATTTB. In 2014, the Palcohol products ranged from 12-60% alcohol by volume. The low end would put that in the range of most wines. Policies governing sales will largely depend on how each states’ statutes are written.

According to a statement on the Palcohol website, the company hopes to have the product for sale this summer. NACS will continue to track this product and keep members informed about how they may be affected as it comes to market.

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