On the Money

Palcohol is 'innovative,' maker says, as parents beg to differ

Palcohol: Shaken & stirred
Palcohol: Shaken & stirred

It's a new take on the old-fashioned cocktail. It's called Palcohol, and it's got lawmakers and parents alike up in arms.

Palcohol is simply alcohol in powdered form that needs 6 ounces of water, juice or soda to create a spiked drink. The product's recent clearance for sale by the Alcohol and Tobacco Tax and Trade Bureau (TTB) has many in the public worried that misuse and abuse is bound to happen. A frequently cited worry is that some people could easily sneaking it into venues where alcohol isn't permitted, use it to spike drinks at public venues, and the potential that minors can gain access to it.

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Creator Mark Phillips, however, disagrees.

"It has so many innovative uses across so many different industries like in medicine, in the military, in aviation, in manufacturing, and commercial uses," Phillips told CNBC's "On the Money" in an interview. "It's a revolutionary product that can solve a lot of problems, save a lot of weight in shipping, and thus reduce the carbon footprint."

As an active sportsman, Phillips says he thought of powdered alcohol as a way to have a drink after hiking without the weight of liquor bottles. He believes the criticisms about the product are overblown, and that critics may be missing both Palcohol's objective and potential.

United in outrage

JOH_9344 | Flickr

Naturally, some states see it differently. South Carolina and Louisiana, for example, have already taken the step of banning it.

In addition, politicians have jumped into the fray. U.S. Senator Charles Schumer (D-N.Y.) introduced legislation last week to make Palcohol illegal. These are tactics that Phillips says will backfire.

"One thing we don't do we don't ban it because we learned that prohibition doesn't work. When you ban something, you lose all control over distribution," Phillips said.

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He argues that banning Palcohol will actually make it easier for teenagers to get, because the lack of regulation will make it easily accessible in a potential black market.

In response to the rising controversy, the Food and Drug Administration (FDA) released a statement to clarify that it had not approved Palcohol, despite what was being reported in the media. It had concluded that the uses of ingredients in the product were in compliance with FDA regulations, and therefore it had no legal reason to prohibit its sale.

As of now, the agency will watch Palcohol as it "may take further actions under its statutory authority if warranted."

Currently, Palcohol is not available for purchase. However, Phillips says he's still devising his distribution and pricing strategy but plans to sell Palcohol everywhere liquor is sold by the end of the summer.

The flavors available include vodka, rum, Cosmopolitan, and Powderita.