Realignment at the Iowa Alcoholic Beverages Division

Iowa Alcoholic Beverages Division

As an agency that has been around since the repeal of Prohibition, the Iowa Alcoholic Beverages Division (ABD) has undergone many changes throughout the years — and 2023 was no exception.

Until recently, the agency was part of the state’s Department of Commerce. Effective July 1, 2023, it was moved under Iowa’s Department of Revenue, as the result of an assessment of the state’s government structure led by Governor Kim Reynolds.

“It had been nearly 40 years since Iowa stepped back and conducted a comprehensive assessment of its structure,” says Mary Mosiman, Director of the Department of Revenue. “We were all tasked with identifying ways in which we could enhance operations and how we could do better. And we did.”

The ABD oversees the licensing, regulation, warehousing and distribution of alcohol. Its recent restructuring follows a state government alignment bill that was passed by the Iowa Legislature during its session in the first quarter of 2023, with a public announcement made in July 2023. The change largely focused on tax modernization efforts to make it easier for people to do business in Iowa, allowing them to complete all their tax and licensing processes using the same system.

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As both the ABD and the Department of Revenue have licensing and compliance functions, the alignment also allowed for the streamlining of several administrative operations. Specifically, the Department of Revenue is in the midst of a multiyear process to create and provide an integrated, user-friendly tax and licensing system that will impact many operational areas and extend to modernizing the ABD. (Additionally, the Iowa Lottery also became part of the Department of Revenue on July 1, allowing for additional streamlining opportunities.)

None of the ABD’s 55 employees were physically relocated from the division’s headquarters in Ankeny, IA. Most people’s job responsibilities did not change, although some reporting lines in the compliance, legal services, human resources and accounting units were affected.

In preparation for the restructuring, the ABD invested a great deal of time in getting employees excited about organizational change management. Internal team members were also guided by a change management team, with a strong emphasis placed on communications and trainings, largely centered around technology.

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The ABD is now in what it has dubbed an “integration phase,” which will continue through December 2024 as the division works toward fully merging its strategic planning, operations, systems, processes and staff with that of the Department of Revenue.

Technology And Educational Outreach

A top priority of the department is to enhance current technology by bringing all hared administrative actions, including tax filing and payments along with obtaining licenses, into one system — GovConnectIowa. This is a free and secure portal operated by the Department of Revenue to manage transactions across multiple state agencies.

Another goal is to build an expanded portal that allows all constituents to more easily manage all transactions related to alcohol, licensing, payments and lottery all in one place. GovConnectIowa also allows people to communicate more efficiently with the Department of Revenue and view records of previous correspondence within the portal. Mosiman, who helped lead the department’s multiyear tax moderniza tion effort, also plans to bring all the ABD’s legacy systems on board and integrated into a more user-friendly format by the end of 2025.

“Whenever you try to elevate the customer experience, there is rarely a downside, but still, change is change,” Mosiman says. “We made every effort to ensure that people understood why this was happening and to ensure that any questions they have are addressed in a timely matter.”

As for the results of these efforts, it is too early for the ABD to have new financial records to share, although the state is capturing data to monitor the results.

Another focus area of the ABD is to expand current outreach and education efforts by adding additional resources related to licensing and trade practicing. Planning is currently in development.

Forecasting Warehousing Needs

A big priority of the ABD is to analyze the results of a warehouse capacity study, which was recently completed. The agency’s current warehouse has been in use since 1986. Four years ago, an expansion added additional capacity for a total of 220,000 square feet — and yet, the facility is already completely full.

“In the last 10 to 12 years, we’ve seen an increase in demand for different brands,” says Steve Larson, Administrator of the ABD. “As our distribution grows, our capacity lessens. We need to look at different pathways and make sure we aren’t limited by capacity in the future. We also need to consider the impact our warehouse capacity will have on customers and retailers over time.”

One way the ABD has addressed warehouse capacity limitations is by outsourcing the warehousing and distribution of spirits, a change that began in 2019. This process now includes 1,700 distribution points across the state and resulted in significant service improvements.

Along with warehouse capacity, the agency is also looking at future needs related to safety, risk management and the environment. In addition to the results of the study, any decisions the ABD makes will also be informed by the additional data the agency can collect due to the ongoing systems integration process.

Looking to the Future

Ultimately, the ABD is in the middle of a period of significant transformation and opportunity. As the division continues to integrate more strongly with the Department of Revenue, additional opportunities for streamlining and improvements are expected to come to light.

“As a result of this alignment, we now have access to more resources to help improve how we govern state alcohol laws,” Larson says. “We have made a number of significant advances in recent years that we will continue building upon, and in the future, we are well-positioned to have an even stronger footprint as it relates to compliance, tax validation, trade practices and enforcement. Our alignment with the Department of Revenue will give us access to additional resources and expertise, allowing us to be bigger and better than we ever were before.”

In the coming months, the ABD plans to focus on compliance-related improvements, and develop a comprehensive educational outreach plan for brokers and suppliers. The division will also begin creating a new strategic plan that will identify additional ways of being more proactive in the future, rather than primarily reactive. The new strategic plan is expected to be finalized in spring of 2024.

Additionally, the department’s legal team will conduct a comprehensive review of the state’s current alcohol laws, beginning next year, which will likely result in additional opportunities for enhancement. This multiyear process will include the assessment of current laws, identifying opportunities to refresh and modernize rules and regulations, and make some statutory changes. It is estimated that this process will take between three to five years, and will require statutory approval to finalize any recommendations.

Despite so much recent change, it has all been for the better, and the ABD is well positioned to make strong advances in the months and years ahead.

Melissa Sherwin is a freelance writer and marketing communications strategist from Chicago, IL. Her work has appeared in Chicago’s Daily Herald newspaper, Time Out Chicago, Suburban Life newspapers, and various magazines. She is also the author of several children’s books. Follow her @MelissaNSherwin. Read her recent piece: Virginia ABC Named StateWays 2023 Overall Best Practices Winner.

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