Q&A: State regulators poised to make rules for powdered alcohol

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Photo: Palcohol
Palcohol creator Mark Phillips defends his product in a screenshot from a company video.

Powdered alcohol has been approved for sale in the United States, but its future in Colorado is unclear. A company called Palcohol got federal approval last week to sell its packets of powder that come in five flavors. They can be stirred into soda, water, juice or other liquids, and Palcohol's founder says one packet contains about as much alcohol as a shot of liquor.

Before it’s even on sale, though, several states, including Colorado, have taken steps to regulate it.

Other states have pursued bans on powdered alcohol. Colorado's Liquor Enforcement Division is prepared to set rules for its sale before the product becomes available in the state.

CPR's Rachel Estabrook joined Colorado Matters host Ryan Warner to talk about the latest developments.

Ryan Warner: This company Palcohol, based in Arizona, plans to start selling its products nationally later in the spring. If that happens, will it be sold in Colorado?

Rachel Estabrook: It could be. A company would have to apply to the state to distribute it here and retailers would have to stock it. And this is a state issue. While the federal government approved Palcohol’s labeling, which was the last federal regulatory hurdle, states still get to decide whether and under what rules it can be sold. Think about how Colorado grocery stores can’t sell full-strength beer. Same sort of thing. So in Colorado this is the responsibility of the Department of Revenue. I talked with spokeswoman Daria Serna about powdered alcohol.

"It is considered an alcohol that the Department of Revenue’s Liquor Enforcement Division CAN create rules around and make sure that they regulate in an appropriate manner," Serna says.

And she says the division will have rules in place by the time the product goes to market… if it does.

I understand there’s been some confusion about this. Why?

In January, lawmakers in Colorado took up the issue of powdered alcohol, debating a bill that would ban it in here. And at that time, the director of this liquor enforcement division testified that his office did not have the authority to make rules for the sale of powdered alcohol. Since then, he’s determined that he was wrong -- his office does have the authority… and the spokeswoman says regulators will act quickly if they get an application to distribute and sell powdered alcohol in the state.

What would those rules look like?

It’s impossible to say until they’re written, of course, but the division would most likely treat powdered alcohol like it does other spirits… meaning it could only be sold by licensed retailers -- bars, liquor stores, venues that are allowed to sell liquor -- and only to people 21 and over. Even the founder of Palcohol says he hopes that’s how his product is sold.

The state Legislature considered banning powdered alcohol… could that still happen?

Theoretically yes, but it doesn’t look like they’ll pursue a ban at this point. According to the sponsor of the original bill, the intent was always to ban powdered alcohol until the federal government approved it. The feds have done that now… and the bill has been changed: instead of banning sales, the bill would order the Liquor Enforcement Division, which we talked about earlier, to regulate sales more immediately than the Division might do on its own. But that bill as it stands seems to be dead anyway.


I talked with Representative Jonathan Singer, a Democrat from Longmont. He’s working on this issue in the House, where his party is in control. And he says it’s really a language issue.

"The current bill that was introduced will likely not make it through, just because of the constitutional issues with running a bill that tries to ban something and then changing the intent of the bill to do something that actually regulates it. That’s just not constitutional, to do something in a bill other than what the bill title says it does," Singer says.

It sounds like a paperwork issue.

It seems that way to me. The bill title is, “Concerning a ban on powdered alcohol.” Singer says there will be a new bill, ordering rules around powdered alcohol. He thinks it'll be introduced in the next few weeks, with enough time to act on it before the legislative session ends in May. There’s reason to believe it would pass; lawmakers on both sides voted for different versions of the original bill, and in fact, it was introduced in the House by a Republican, Rep. JoAnn Windholz of Commerce City.

Singer is a Democrat, and worked on some rules for recreational marijuana here, and he told me, "If we can legalize and regulate marijuana safely here in Colorado, there’s no reason we can’t regulate something that’s allowed by the federal government."

Not everyone thinks Colorado’s safely regulating marijuana, but you get the idea. He thinks the state should be able to figure out powdered alcohol.

Let’s explain what Palcohol is.

It’s alcohol in a powdered form. The owner of Palcohol, Mark Phillips, won’t say how he makes it, but it’s powder that will come in a packet, with the intention of adding a mixer to the packet to make a drink. Phillips released a video on YouTube last year, because he said he wanted to get out the truth about his product, following some negative press coverage.

"This is the bag that Palcohol will come in," he said, demonstrating the product. "This happens to be powdered vodka. And this is a shot of vodka. These are equal amounts of alcohol. Palcohol is not some super-concentrated version of alcohol. It’s simply one shot of alcohol in powdered form."

He says it’s designed to mix with liquids, but it can also be sprinkled on food. For example, let’s say you mix it into barbecue sauce for your pork sandwich, or mix it into guacamole. The Wall Street Journal -- and several other publications -- reported that an earlier version of Palcohol's website actually recommended mixing with food. According to the Wall Street Journal's report, the company advised putting the product on food after cooking, since it would burn off during cooking. Those references have been removed from the site.

What are lawmakers most concerned about?

As I mentioned some lawmakers are under the impression that if they don't pass a bill to regulate powdered alcohol, it could be sold to 12-year-olds at 7/11. The state’s liquor regulators say that’s not the case. Still, lawmakers worry that it’ll be easier for teens to get access to powdered alcohol, that it’ll appeal to teens because it’s made in fruity flavors, and it would be easier to sneak powered alcohol into public venues than it is to sneak in a can of beer, for example. Some are concerned that, as with marijuana edibles, people won’t necessarily know how much they’re consuming if it's not in the original packaging.

How are other states dealing with this product?

A handful have already banned it. Other states are considering how to deal with it. And one U.S. senator says he’ll proposed a federal ban.

So powdered alcohol isn’t commercially available in the U.S. as of right now. Is it in other countries?

A little bit. It’s been in Japan since the 70s from a company called Sato Food Industries, which says it should be used mostly for enhancing flavor and appearance of food. Over the last two decades entrepreneurs in Germany and the Netherlands created powdered alcohols. In Germany it was available for sale for a time. And in the Netherlands it never made it to market.