OMAHA, Neb. (Legal Newsline) - An alcohol industry watchdog is unhappy that Nebraska's legislature is attempting to overturn a state Supreme Court decision that increased the tax on flavored malt beverages like Mike's Hard Lemonade.

Last week, the unicameral Legislature voted 27-7 to advance a bill that would define so-called "alcopops" as beer. Earlier this month, the state Supreme Court wrote that they should be classified as liquor because up to 49 percent of the alcohol in them is distilled.

Alcohol Justice says it is surprised Attorney General Jon Bruning led a lawsuit seeking to have alcopops classified as beer, which would have reduced the tax paid per gallon on them from $3.75 to 31 cents.

"Research has documented that increasing the price of alcohol reduces the amount of access young people have to these products, and is the most effective policy to reduce alcohol consumption and related harm," the organization said in a statement Thursday.

Three nonprofits hoping to prevent underage drinking and a Nebraska woman had challenged the state Liquor Control Commission's finding that malt beverages were beer.

Justice William said the commission's regulations exceeded its authority.

"(W)e reject the Commission's argument that these beverages can be classified as beer because they also contain fermented alcohol," Connolly wrote.

"Even if distilled spirits are only indirectly added to the beverages through 'flavorings' during production, the act does not define beer to include beverages that contain distilled alcohol."

Connolly wrote that the Nebraska Liquor Control Act defines spirits as beverages that contain alcohol obtained by distillation, and that the commission's argument that it should be allowed to interpret the statute was incorrect.

He also wrote that the act defines beer as "a beverage obtained by alcoholic fermentation of an infusion or concoction of barley or other grain, malt and hopes in water and includes, but is not limited to, beer, ale, stout, lager beer, porter and near beer."

Connolly concluded, "Even though this list of beer products is not exclusive, a beverage containing alcohol obtained through fermentation - not distillation - is obviously the definitive criteria for beer under the act."

Federal regulations allow products that contain both fermented alcohol and distilled alcohol to be classified as malt beverages. A trial court rejected the commission's argument that the state law's definition of beer could include the federal regulatory definition of flavored malt beverages.

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