Federal agency reverses approval of powdered alcohol

Earlier this month, the government approved a new product called Palcohol - just add water for an instant cocktail, or you can supposedly sprinkle it on your food.

"Nothing even close to this has been on the market in the recent past in the U.S., or ever," said attorney Robert Lehrman.

Lehrman deals with the regulation of alcoholic beverages. His blog post about Palcohol created a major internet buzz.

The products include powdered vodka and rum, as well as cosmo and lemon drop cocktails.

"I'm quite astonished that this got approved. In the past, and really to this day, the agency that regulates this tends to be quite careful and rather traditional," said Lehrman.

That agency is the U.S. Alcohol and Tobacco Tax and Trade Bureau. It's gotten a lot of attention since approving Palcohol's product labels -- the last step after it okayed both the distillery and formula.

But late yesterday, a spokesman told CBS News' Jan Crawford that those approvals were "issued in error," and refused to give further explanation.

Palcohol creator Mark Phillips says he just needs to resubmit the labels and his products remain on track to hit stores this fall, but that raises questions about how Palcohol might be used or abused.

For instance, the company's website warns against the dangers of snorting the powder. Yet, young people may be willing to experiment.

"Underage drinking is a big concern when it comes to powderized alcohol," said Lehrman. "I do think parents and teachers - this probably will get their attention in a big way."

Like with instant coffee, people are saying the powder just isn't the same as the real thing, which is why critics say Palcohol's biggest market is those underage drinkers who don't seem to care that much about taste.