Skip to main content

December 2006

News & Media

California Moves to Raise Taxes on FMBs 
December 18, 2006 

SACRAMENTO -- On December 13, California authorities moved to curb the sale of flavored malt beverages (FMB) by changing its classification from beer to distilled spirits, which would make California the second state to treat FMBs as hard liquor, the Los Angeles Times reports.

The reclassification would add as much as $2 to the taxes per six-pack of FMBs and go so far as to remove the legal beverages from convenience store shelves.

Outgoing state Controller Steve Westly told the newspaper he is confident that reclassifying FMBs and removing them from store shelves will take place in 2007. “When you're selling a product that is flavored with distilled spirits, that you're marketing as distilled spirits, I think common sense dictates that it should be taxed as distilled spirits," he said. “I see no public policy rationale why we should provide a lower tax rate to companies that are promoting distilled spirits to young people in California.”

Should the reclassification become reality, an estimated 24,000 California retailers with licenses to sell only wine and beer would not be able to stock FMBs.

Only Maine taxes FMBs as distilled spirits, but across the country, attorneys general are paying more attention to the issue, notes the newspaper. "If California reclassifies, a number of states will take a careful look at this," James F. Mosher, a lawyer with the Center for the Study of Law and Enforcement Policy, told the newspaper.

The public hearing process will last at least nine months before recommendations by the tax board staff are brought before the board for a final vote.