FILE - alcohol

Iowa Gov. Kim Reynolds signed Senate File 2374 into law.

(The Center Square) – A bill signed Tuesday by Iowa Gov. Kim Reynolds establishes new retail alcohol licenses and fee structures come January.

The state’s Legislative Services Agency anticipates that the changes will decrease general fund revenue by $2.9 million in fiscal year 2023 and $3.7 million in future fiscal years. The Iowa Department of Commerce’s Alcoholic Beverages Division transfers part of revenue from license fees, liquor sales and other sources from the Liquor Control Trust Fund to the Iowa general fund.

Iowa will have eight retail alcohol licenses instead of the current 14. For example, Iowa is repealing class “C” beer permits and class “B” wine permits for grocery and convenience stores, replacing those permits with a new class “B” retail alcohol license that allows the licensee to sell wine and beer for consumption off premises. Grocery and convenience stores with class “B” retail alcohol licenses can sell up to (not including) a case of wine and up to five (inclusive) cases of beer, high alcoholic content beer and canned cocktails per day to class “C,” “D,” “F,” and special class “C” retail alcohol licensees for resale for on-premises consumption.

Class “B” retail alcohol licenses’ costs will be based square footage of the grocery or convenience store and population of the city in which the store is located. For example, a store smaller than 1,500 square feet in a city of no more than 2,500 residents would be able to buy its license for $75. A store of more than 5,000 square feet in a city of more than 15,000 people would pay $750 for its license. Currently, a class “B” wine permit costs $500 while a class “B” beer permit varies by city population.

The bill also changed annual license fees in several instances. The largest change of fee is the reduction of class “A” beer (native) and special class “A” beer” fees from $750 to $300 apiece.

The ABD will spend between $50,000 and $250,000 to update its Salesforce system and Iowa Department of Revenue’s GovConnectIowa system to process the changes. ABD said in a statement that it has begun to modify systems and prepare materials to guide licensees through the transition.

The state estimates that in fiscal year 2023, retail license fee changes will result in an estimated loss of $141,000 for local authorities and about $2.75 million for the Liquor Control Trust Fund. In future years, the anticipated revenue impact on the Liquor Control Trust Fund is roughly $3.67 million. Local authorities may lose about $188,000. Changes in manufacturing and wholesale fees are estimated to decrease Liquor Control Trust Fund revenue by $16,894 in fiscal year 2023 and $22,525 in fiscal years 2024 and beyond.

Retailers also no longer need a special privilege to sell alcoholic beverages on Sunday. Currently, some licenses must pay a 20.0% higher fee to sell on Sundays. That funding was transferred to the Iowa Department of Public Health.

Sunday sales license fees in fiscal year 2021 were about $945,000, which is $20,000 more than the average Sunday sale license fees sales’ average over the past five years. Eliminating the extra cost for Sunday sales privileges is expected to decrease fiscal year 2023 Sunday sales fee revenue by about $700,000. In future years, the annual decrease is projected to be about $925,000.

Native distilleries can sell up to nine liters of spirits per person, per day on their premises, instead of 1.5. The bill also increases the amount of alcohol that can be in “high alcohol content beer” to be 19.0% instead of 15.0%.

Sen. Claire Celsi, D-West Des Moines, was the sole legislator to vote against the bill.