Appeal set in 'alcopops' ruling

The Nebraska Supreme Court will hear arguments Thursday about whether sweetened malt beverages that critics have dubbed "alcopops" should be taxed as hard liquor rather than beer.

The Nebraska Attorney General's Office is appealing a ruling by Lancaster County District Judge John Colborn, who earlier this year found that state law dictates that drinks containing any distilled alcohol should be taxed as hard liquor.

The beverages, which critics call "alcopops" because they believe the sweet taste and packaging are aimed at young consumers, start out as brewed malt beverages but are flavored with distilled spirits.

The Nebraska Liquor Control Commission classified brewed malt beverages as beer in 2006. The commission said the state's alcoholic beverages rule should be the same as that of the federal government, which classifies the beverages as beer.

But a mother and three Nebraska groups that fight underage drinking filed a lawsuit in 2009, arguing the state commission's rule conflicts with Nebraska law — enacted right after Prohibition — that bans the mixing of hard liquor and beer. Nebraska is the only state with such a ban. The lawsuit led to Colborn's ruling this year.

One of the groups, Project Extra Mile, contends the beer classification helped make the drinks popular with underage drinkers by keeping them on more store shelves and at lower prices. Assuming the higher taxes are passed along to consumers, the hard-liquor classification would raise shelf prices considerably.

Classifying the beverages as hard liquor would raise the state tax on flavored malt beverages — such as Mike's Hard Lemonade and Smirnoff Ice — from 31 cents per gallon to $3.75 per gallon. Sales of the drinks also could be banned at beer-only stores, as some mini-markets and other outlets are designated.

In a brief with the State Supreme Court, the Nebraska Attorney General's Office argues the flavored malt beverages — referenced in the brief as FMB — meet the definition of beer under the state law.

"FMB products were not anticipated when current Nebraska statutes were enacted, and the appropriate classification of FMB products under current Nebraska statutes is ambiguous," wrote Assistant Attorney General Milissa Johnson-Wiles.

The Attorney General's Office also questioned whether the mother and three groups had standing to bring the lawsuit.

Vince Powers, a Lincoln attorney representing the parties that filed the lawsuit, argues state liquor laws clearly separate beer from "spirits," which are defined as "any beverage which contains alcohol obtained by distillation, mixed with water or other substance in solution, and includes brandy, rum, whiskey, gin and other spirituous liquors and such liquors when rectified, blended or otherwise mixed with alcohol or other substances."

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