June 2021 marked one of the most monumental moments in New Mexico cannabis laws: The state legalized recreational cannabis. Now, the local market is opening its doors to a thriving cannabis market. And investors are flocking in to cash in on the opportunity.
If you are looking into cashing in on the New Mexico “green rush,” you need a license from the Cannabis Control Division and the Regulatory Advisement Committee. You can always apply for a license online via the CCD website. But you'll need a bit of preparation to bolster your chances of getting a license.
Thousands of applications have already been submitted, so competition is fierce. But don't fret just yet. With the right knowledge and preparation, you can be well on your way to opening your cannabis dispensary in New Mexico.
In this guide, we will explore all aspects pertaining to opening a cannabis dispensary in New Mexico. We'll also give you a few pointers on how to run it once you've got your license. Without further ado, let's get right to it.
Process of Opening a Dispensary in New Mexico
Application
There is no set timeline for dispensary applications in New Mexico. Unlike most states, New Mexico hasn't put state-wide restrictions on marijuana businesses. Although this might sound like good news, municipalities within the state can still enforce zoning laws to limit the number of dispensaries near certain establishments such as schools and daycares.
On the bright side, unlike other states that put a cap on the number of cannabis businesses allowed to operate in the state, New Mexico has no cap, which is great for aspiring dispensary owners. That being said, there's still a chance that regulators could stop issuing licenses if the regulatory committee deems it necessary to maintain market equilibrium. So, if you're thinking of opening a dispensary in New Mexico, you'd better do it before it's too late.
Like with most legal states, the launch of a new cannabis industry often ushers in the chance for the state to make up for its shortcomings in areas that were hardest hit by the war on drugs. And luckily, New Mexico isn't any different. This means that citizens who were previously penalized or incarcerated will get a form of reprieve.
The application process for dispensary licenses in New Mexico is tedious at best. We recommend hiring a consulting group if you want a more streamlined process. But if you prefer doing things yourself, here's what to expect. There are a few types of cannabis business licenses available in New Mexico. The type of license you choose to go for all comes down to the type of cannabis business you want to open. The licenses include:
- Cannabis Producer License: This license allows you to cultivate cannabis plants. All unprocessed products must be tested in a cannabis testing facility and can only be transported to other cannabis establishments or to where they’ll be sold.
- Cannabis Manufacturer License: This license allows you to turn unprocessed cannabis into edibles, oils, and other cannabis products. You can also package and test cannabis products with this license.
- Cannabis Retailer License: This license allows you to sell cannabis and cannabis products to qualified medical marijuana patients and adult recreational users. And since we're talking about opening a dispensary, this is the kind of license you'll need.
Securing Capital
Cannabis remains illegal at the federal level. It is still considered a controlled substance by the federal government. This means that regular banks and other traditional lenders can't give you capital, thus making private investors the most likely option when securing capital.
Luckily, New Mexico's legislation allows for something called microbusiness. In this model, entrepreneurs who can't raise the necessary capital can plant up to 200 plants. This gives them a shot at the cannabis industry. Microbusinesses will also be allowed to cultivate, process, and sell cannabis under a single license. This will eliminate most of the fees and costs that come with operating a cannabis business.
When you're securing capital, you also have to consider taxes. Since cannabis is still considered a controlled substance at the federal level, cannabis businesses cannot claim any business expenses when filing their taxes. Well, you could still claim the cost of goods sold. But compared to other businesses, the tax imposed on cannabis businesses is significant.
Outline a Business Plan With a Focus on Compliance
Like with any other business, you must start your cannabis dispensary with a well-formulated business plan. However, when planning for a cannabis dispensary, you also have to account for compliance in both your short-term and long-term business strategies.
Both recreational and medical marijuana dispensaries in New Mexico must comply with all regulations in their day-to-day operations. As a dispensary owner, you must keep up with any regulatory changes. You should also implement additional requirements as necessary.
Here is a brief summary of key recreational cannabis laws in New Mexico:
- Dispensaries can only sell cannabis to individuals over 21, and proper identification must be provided for age verification.
- Medical marijuana establishments can acquire a recreational cannabis license and operate both entities in the same establishment.
- A customer can only purchase two pounds of cannabis flower, 800 milligrams of edibles, or 16 grams of cannabis concentrate.
- Each purchase is privy to a 12% excise tax until 2025, after which it will be increased. Medical marijuana patients and caregivers don't have to pay this tax.
- All products' packaging must include the New Mexico poison control hotline information. It should also have warnings for any potential adverse effects and be child-resistant.
- All dispensaries must utilize a compliant cannabis inventory management and POS system that integrates seamlessly with BioTrack. This is the state's official seed-to-sale tracking system.
Staffing Your Dispensary
Advertise a budtending job at your dispensary, and you're bound to get tons of applications. However, many of these applicants won’t be the right fit. When staffing your cannabis dispensary, you need hard-working cannabis enthusiasts. Don't put too much emphasis on finding experienced people. Because let's face it, the industry is still quite young, and cannabis has just been legalized in the state.
Instead, look for passionate people who know about cannabis products and are not afraid to sample the products themselves. You should also look for staff with a good demeanor. After all, a dispensary is much like any other retail business out there. And if one thing's for sure about retail businesses, good customer service is the key to a successful business.
While you're at it, you should also train the people you select. Here are a few areas you should focus on when training your dispensary staff:
- How different strains, cannabinoids, and terpenes affect someone
- Which cannabis products are best for different ailments like pain, difficulty sleeping, stress, and more
- That taking THC in moderation can cause anxiety (They should advise customers who are just starting out to start on low doses, then work their way up)
- Hemp-derived CBD products can't make you high (So, when a customer says they get anxiety from weed, your staff should recommend they try CBD)
Typically, cannabis jobs pay between $12 and $15 an hour, which is a significant step up from the $9 minimum wage in New Mexico. That being said, you should pay your staff well to improve your staff retention rate. This way, you won't have to retrain new staff as frequently.
Sourcing Your Product
This is probably the most important aspect of running your cannabis business. Sure, great customer service is vital. But if you can't get high-quality products, you'll lose a lot of business to your competitors.
If you are a retail-only location without a manufacturing or cultivating license, you need to partner with other cannabis businesses to receive your product. When sourcing for a partner, you need to find someone who is reliable and consistent and can supply you with high-quality cannabis products.
Once you have your licenses and store location all set up, you need to reach out to your contacts. If you don't have any contacts who can supply you, you can try networking with other players in the cannabis industry through various social platforms like LeafWire and LinkedIn.
How to Manage Your Cannabis Dispensary
Prioritize Inventory Management
When it comes to running a cannabis dispensary, an efficient inventory management system is more than a smart business practice; it is a legal obligation. The most convenient and efficient solution here is finding a robust cannabis POS system that can efficiently handle inventory management.
To stay on top of New Mexico's cannabis regulatory requirements, you need a cannabis POS system that aligns with CCD regulations. And if your dispensary deals in both medical and recreational marijuana, you'll need to set aside a minimum of 10% of your inventory for medical marijuana patients.
Your cannabis POS system should also offer seamless integration with BioTrack and include automated reporting to make your day-to-day operations as seamless as possible.
Choose the Right Dispensary Hardware
Having reliable software in your cannabis dispensary is great, but if your hardware can't keep up with the software's requirements, it won't do you much good. Therefore, you should make sure that the computers at your point of sale are powerful enough to run multiple pieces of dispensary software without any downtime.
In addition to computers, you'll also need hardware staples such as displays, scales, scanners, drawers, and tablets. Also, before purchasing any hardware, make sure that it is compatible with your preferred POS and inventory management systems.
Delivery and E-commerce Services
Covid-19 revolutionized how consumers buy their weed. Cannabis dispensaries across the country no longer rely solely on foot traffic to make sales. Now, almost 70% of all cannabis products are sold online. So, you're losing a lot of business if you don't have an e-commerce website and a reliable delivery service.
Online ordering and delivery services are currently available for New Mexico medical marijuana dispensaries. Later this year, this privilege is expected to be available to recreational marijuana dispensaries.
Regardless of whether you plan on starting a medical or recreational cannabis dispensary, having an e-commerce strategy is vital to the success of your business. That being said, online cannabis sales are tightly regulated. So, you'll need a POS system with native e-commerce tools to make the process more manageable.
Your e-commerce strategy should account for data collection, reporting, documentation, and seamless integration. This way, your online business becomes a true reflection of your overall marijuana retail plan.
Stand Out From Your Competitors
The recreational cannabis market in New Mexico is still young. But with time, as more dispensaries continue to pop up, competition will intensify. Therefore, while planning to open your dispensary, it is vital that you determine how you will set your business apart from your competitors.
What will your dispensary offer that your competitors cannot? Is it a bespoke strain, a unique shopping experience, or crazy discounts? Whatever your choice is, make sure that you set yourself apart as a leader in high-quality products and customer service. You should also make it a top priority to build a brand that encompasses your dispensary's key principles, mission, etc.
Market Your Cannabis Dispensary
Marketing your dispensary is vital to your business's success. After all, how else will people know what you sell? How will they even know that your business exists? An effective marketing strategy will make your brand stand apart from your competitors and attract more customers.
While you're at it, consider increasing your online presence across social media by practicing a little social media marketing. You can also contract the services of influencers and other online marketers. Getting a Google My Business listing can also go a long way in making your dispensary more visible to prospective customers online.
The Bottom Line
New Mexico has just opened its doors to recreational cannabis investors. This is the perfect time to plant your roots before competition intensifies. And unlike most legal states, the regulatory requirements in New Mexico are easy to navigate, even for small investors with limited capital.
We hope the information in this guide has set you on the right path to opening your first dispensary in the state. Good luck!