How to Open a Dispensary in New Mexico

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How to Open a Dispensary in New Mexico in 2024

To open a dispensary in New Mexico, you must first obtain a dispensary license from the Cannabis Control Division (CCD) of the state’s Regulation and Licensing Department. Dispensaries operating in the state must conform to both state and municipal regulations. It takes about 90 days to get a response from the CCD regarding a New Mexico dispensary license application. Dispensary licensees are required to comply with state and municipal regulations.

Why Open a Dispensary in New Mexico?

A rising demand for cannabis in New Mexico is demonstrated by the growing cannabis sales reported every month in the state. The New Mexico Cannabis Demand Modelling Report revealed that the state had a total demand for 161 million grams of cannabis in the year 2022. Also, in September 2023, data from the Cannabis Reporting Online Portal (CROP) showed that the New Mexico cannabis market generated over $47 million in cannabis sales.

The state also enjoys a thriving medical cannabis industry with the number of registered medical marijuana patients in the New Mexico Medical Cannabis Program standing at 102,000 in March 2023. New Mexico also has a big recreational cannabis market. With only 1,013 licensed cannabis retailers for a population of over 2 million, experts have suggested the need for more marijuana dispensaries to cater for the needs of medical marijuana patients and recreational cannabis consumers.

Types of Dispensary Licenses in New Mexico

New Mexico issues cannabis retailer licenses to dispensaries within its jurisdiction. The license permits a person to sell cannabis products to qualified medical marijuana patients, primary caregivers, and recreational cannabis users.

How to Get a New Mexico Dispensary License

To obtain a dispensary license in New Mexico, follow the steps below:

The CCD will review the application and issue a dispensary license if approved.

Information and Documents Required for a Dispensary License in New Mexico

To apply for a dispensary license in New Mexico, the following documents are required:

  • A social and economic equity plan: This document must detail the applicant’s plan to encourage economic and social diversity in employment
  • Proof of age for every controlling person: Identification cards issued by a federal or state government that include the name, date of birth, and picture of the applicant or controlling person
  • Authorization For Release of Information Form
  • Program diagram attestation
  • Applicant attestation

What Plans Do You Need to Open a Dispensary in New Mexico?

  • A business plan details business goals and objectives and outlines the strategy for reaching them. While not required as part of the dispensary license application process in New Mexico, a business plan is important as it helps a prospective dispensary owner understand their target customers and the financial requirements of opening a dispensary.

When preparing a business plan for a New Mexico dispensary, the following key points should be included:

  • Executive summary: This is a one or two-page document containing the most important information about the dispensary. It is the first thing investors and local regulators will read
  • Market overview: This section describes the demand for cannabis in the local market and how the dispensary intends to meet this demand
  • Strategy and implementation: This should include a marketing and sales plan tailored toward realizing the target market’s patronage
  • Operational plan
  • Organizational structure: This should include details of investors, management team, employees, and other stakeholders in the dispensary business, as well as their backgrounds and responsibilities
  • Financial projections

The following should be included in the site plan for a proposed dispensary in New Mexico:

  • Location of the proposed dispensary
  • Description of proposed activities in each area of the dispensary
  • Details of the property boundaries
  • Documentation certifying that the proposed dispensary has met the state requirements

A security plan for a cannabis dispensary must show the measures to protect the dispensary’s customers and inventory. This plan should include the following:

  • Alarm systems covering the interior and the perimeter of the dispensary
  • Silent duress alarms
  • Continuously recording surveillance cameras
  • Exterior fencing
  • Reinforced glass and windows

Are There Municipal Requirements for Opening a Cannabis Dispensary in New Mexico?

Yes. There are municipal requirements for opening a cannabis dispensary in New Mexico. Municipalities in the state need to approve dispensaries looking to operate within their borders. However, pursuant to Section 26-2C-12 of the Cannabis Regulation Act, municipalities cannot completely prohibit the operation of marijuana businesses, including licensed dispensaries, within their jurisdictions.

How Long Does It Take to Get a New Mexico Dispensary License?

There is no specific time frame for processing dispensary license applications in New Mexico, and applications are treated on a case-by-case basis. However, given the large pool of applications the CCD receives, it may take about three months to get the Division’s response regarding a dispensary license application.

Where Can You Locate a Cannabis Dispensary in New Mexico?

State laws permit municipalities to set their own location and zoning requirements. Generally, in New Mexico, a cannabis dispensary may not be located within:

  • 300 feet of a school or child daycare facility
  • 600 feet from another cannabis retail establishment

Can Licensees Have More Than One Dispensary Location in New Mexico?

Yes. Pursuant to section 26-2C-6 (I) of the Cannabis Regulation Act, dispensary license holders in New Mexico are allowed to have more than one dispensary location.

How Much Does It Cost to Open a Marijuana Dispensary in New Mexico?

Depending on the size and scale of the business, the cost of opening a dispensary in New Mexico ranges from $450,000 to $1,500,000. The following are average costs a prospective dispensary owner may expect to bear as start-up costs in New Mexico:

  • Retail space lease - Around $5,000 and $10,000 per month, depending on the size and location of the proposed dispensary
  • License application fee - $2,500 annually plus $1,000 for each additional licensed premises
  • Cost of renovating the facility (to ensure compliance with regulatory standards) - Around $300,000 to $800,000, depending on the size of the property
  • Operational costs - An average of $110,000 to $120,000 per year
  • Product costs - An average pound of marijuana product costs $1,600. The total cost of products to open a dispensary will ultimately depend on stock and size of the inventory
  • Employee salary - An average of $22/hour for each employee. Paying an average of five employees $22/hour may bring the total cost of employee salary to around $350,000 annually
  • Taxes - Depends on sale

Do You Need an Insurance Policy for a Cannabis Dispensary in New Mexico?

New Mexico does not mandate cannabis dispensaries to have insurance coverage. However, getting a dispensary insured is recommended as it saves the business from taking the financial hit that comes with unforeseen circumstances like fire, theft, mechanical failure, and so on.

The following types of insurance policies are recommended for cannabis dispensaries:

  • General liability insurance: This protects the business against basic third-party risks. It also covers risks such as damaged customer properties as well as libel and other advertising injuries
  • Product liability insurance: This provides protection against lawsuits related to products sold by the dispensary
  • Commercial property insurance: This helps pay for property damage and loss in the event of covered risks
  • Workers’ compensation insurance: Dispensary employees are at risk of physical harm or may experience lost wages when they sustain work-related injuries. Workers’ compensation insurance can cover such employees’ medical bills and lost wages during this period
  • Cyber liability insurance: Cyber liability insurance protects a dispensary from liabilities relating to data breaches resulting from the release of customers’ personal (sensitive)information

The following factors will determine a dispensary’s insurance cost:

  • The scope and size of the dispensary
  • The types of insurance policies needed
  • The coverage limit of the insurance plan
  • Any past insurance claims made

How to Get a Grant to Open a Dispensary in New Mexico

Although traditional banks, which are subject to federal laws, are usually weary of providing loans to cannabis entrepreneurs, other loan options are becoming increasingly diverse as cannabis becomes mainstream. The following are other ways through which entrepreneurs can get a grant to open a dispensary in New Mexico:

  • Self-funding: Personal funds are a great source of financing for cannabis businesses, given the difficulty in accessing loans from traditional banking systems
  • Family and friends: Family and friends are an easy option for cannabis entrepreneurs looking for loans. They often provide low-interest loans and are usually ready to agree to the most convenient method of repayment
  • Equity funding: This source of loan typically involves a group of high-net-worth individuals pulling funds together to invest in emerging companies. Investors often provide capital in exchange for considerable equity stakes in the business
  • Crowdfunding: Crowdfunding platforms are another viable option for cannabis entrepreneurs. With this option, entrepreneurs need to present captivating business plans on any crowdfunding platform and pitch their business to potential investors
  • Cannabis-specific brokers and lenders: There are several lenders that are familiar with the cannabis industry and are focused on investing in it. While their rates can be higher than obtainable in other industries, they serve as a viable alternative to other sources of funding that require giving up equity in exchange for capital
  • Social Equity Investments: New Mexico has a social equity program that is targeted towards helping a category of cannabis entrepreneurs get established in the industry. Qualified entrepreneurs in the state can benefit from this program

Does New Mexico Have a Social Equity Program for Cannabis Dispensaries?

Yes, New Mexico has a social equity program for cannabis dispensaries. New Mexico also offers micro-business licenses at a discounted rate, allowing more entrepreneurs, including prospective dispensary owners, to participate in the state’s cannabis industry.

To qualify as a social and economic equity applicant for a dispensary license in New Mexico, an individual must represent at least two of the following:

  • An enrolled member of an Indian nation, Tribe, or Pueblo, Acequia Parciante in good standing, or qualified Land Grant-Mercedes
  • Have a household income at or below the average median income (AMI) in New Mexico
  • Have been cited for, arrested for, or convicted of a felony as defined in NM Stat 29-3A-5(G) (including as a juvenile) or was subject to civil asset forfeiture related to a marijuana investigation
  • Persons belonging to any of the racial groups covered in the Social Equity Program
  • Distressed farmer
  • Transgender or non-conforming gender identity

To determine whether an entity can be classified as having social equity status, the business must be controlled by and with majority ownership of people who qualify as social equity applicants.

Does New Mexico Tax Marijuana Dispensaries?

Yes, New Mexico dispensaries collect taxes on marijuana purchases and remit them to the New Mexico Tax and Revenue Department. Cannabis retailers are required to pay Cannabis Excise Taxes and Gross Receipt Taxes (GRT) in the state. While adult-use dispensaries have to pay both Cannabis Excise Taxes and GRT, medical marijuana dispensaries only have to pay GRT. The excise tax in New Mexico is 12% of sales price until July 1, 2025, and will gradually rise to 18% beginning July 1, 2030. New Mexico cannabis consumers are required to pay an additional 5.13% sales tax on every purchase of marijuana for personal use.

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