Principal Glenn France said the decision to withdraw its application to Napier City Council
was made on Friday, after being sent about 700 pages of correspondence opposing the bid, as well as being threatened with legal action.
"The board and the school community are very disappointed in having to make this action after 12 years of obtaining special licence for their Food and Music Festival," France said.
"There is a general consensus that the school has been the recipient of institutional bullying by the Hawke's Bay District Health Board based on a singular moral stance.
"The volume of the brief of evidence from the HBDHB is excessive and overwhelming for an individual and small community."
In the past, the event has provided funding for sports equipment and other financial outgoings.
The health board said it was "pleased" with the school's decision.
Hawke's Bay paediatrician and former Children's Commissioner Dr Russell Wills said the issue was the wider health concerns of alcohol-related harm and the messages of drinking on school grounds and around young children.
"Hawke's Bay is in the top three of district health boards with the highest proportion of hazardous drinkers per capita.
"The number of people needing hospital care in Hawke's Bay as a direct result of alcohol has risen by nearly 100 per cent from 2009 to 2016. This comes with a cost of $3 million in hospital stays."
He said schools could fundraise in other ways.
While he didn't directly address the school's claims of "institutional bullying", Wills said: "Port [Ahuriri] school is a good school with a good principal and a good board and we would like to support them, but they made a mistake with this issue".
"We consulted extensively when we wrote our alcohol and schools don't mix policy and it is very widely supported in schools.
"Most schools that have events during the day at school make children the centre of the event, they have fun and make money without the use if alcohol.
"We are required by the 2012 act to minimise harm from alcohol and that's what we've done."
Current Children's Commissioner, Judge Andrew Becroft agreed, saying "alcohol and children don't mix" and it would have been a different story had it been an adult-only event.
"They [schools] should lead from the front and in putting children first, they shouldn't make school fundraising events a situation where alcohol consumption is normalised and particularly where children are available and witness it."
Becroft said all evidence showed exposure to alcohol "either through seeing adults drinking, or alcohol advertising increases the likelihood of when those children are adults of drinking and drinking hazardously".
Hawke's Bay Primary Principals' Association president Maurice Rehu also supported the district health board's position.
"I believe that alcohol and children don't mix and it is not a fundraiser that I would endorse in my school community."
