Department of Liquor and Lottery asks Appropriations for D365 upgrade, B2B rollout as sales flatten

Wendy Knight, commissioner of the Vermont Department of Liquor and Lottery, told the state Appropriations Committee on Feb. 20 that the department is proposing no new initiatives for fiscal 2026 but is asking for funding to upgrade its D365 inventory system and to launch a business‑to‑business (B2B) ordering website for bars, restaurants and hotels.

“We have a dual mission at the department,” Knight said. “We obviously sell products that generate revenue for the state. … The other, important component, probably more important component of our mission is the responsibility aspect of it in the public safety.”

Knight said distilled‑spirit sales nationally and in Vermont are declining and that the department has been preparing for lower liquor revenue. She warned lottery revenue is “jackpot driven” and therefore difficult to predict. Knight said the department sold about $168,000,000 in lottery tickets in fiscal 2024 and that profits sent to the Education Fund were $35,000,000; she described that contribution as “literally a drop in the bucket,” saying it represented about 1.8 percent of the Education Fund.

Why it matters: the D365 upgrade and the B2B site are intended both to improve service for on‑premise licensees — who must buy spirits from 802 spirit stores — and to make the department’s operations more efficient as sales remain flat. Committee members pressed staff for details on costs, contract structure and operational impacts during a question‑and‑answer session.

What the department is asking for: Knight said discovery work with ADS, the state IT contract manager, showed the existing D365 platform had not been upgraded in seven years and would not interface with the planned B2B website. The request includes a roughly $1.8 million increase tied to upgrading D365 so it can support the B2B project, and a separate hardware/support line of about $699,000 tied to point‑of‑sale hardware. Knight also described a $440,000 increase in the ADS support contract and a $167,000 increase in Salesforce licensing fees as more departments left the shared Salesforce environment.

Knight described the planned B2B site as an ordering portal for on‑premise licensees that will display inventory, suggest alternatives when items are out of stock, and let licensees place orders for pick‑up at spirit stores; she said the department plans to launch the ordering site this spring and later add payment and consumer‑facing search functionality.

Other budget and operational notes: the department is emphasizing cost containment and IT modernization rather than program expansion. Knight said the department is using enterprise funds that include liquor control, the Vermont Lottery and sports wagering, and that the tobacco settlement fund was added to the enterprise funds at Finance and Management’s request. She reported workforce shortages at bars, restaurants and retail outlets that are shortening hours and affecting sales, and said retail theft of cash, tickets and alcohol has occurred across the state; the department’s law enforcement investigators follow up on reported incidents.

Knight also noted an operational constraint: the state warehouse capacity limits the department’s ability to buy in bulk and capture discounts. She said an annex suffered flood damage and that acquisition or construction options are complicated by higher current construction costs.

Personnel and administrative changes: Knight said Finance Director Lisa Allard will retire in March and that Tracy Badu has been hired to replace her and has been working alongside Allard. Knight said the department submitted a single pay‑act language change to rename a reference from ‘‘liquor control board’’ to ‘‘liquor control fund’’ so the appropriation references the correct fund.

Next steps and transparency: Knight told committee members she would share the department’s legislative packet and detailed line‑item information; she framed the near‑term focus as completing the D365 upgrade and launching the B2B ordering site, then evolving the platform to add payment and consumer search features.

No formal committee votes or motions were recorded in the transcript excerpt.