New Mexico is the latest state to legalize cannabis for adult consumption, hoping to begin sales by April 2022. The Cannabis Regulation Act (CRA) will become effective on June 29, 2021.
The law allows consumers to possess two ounces of cannabis flower, 16 grams of cannabis extract, and 800 milligrams of edibles. New Mexico currently has a medical marijuana program, but the adult-use bill requires the newly implemented Cannabis Regulatory Advisement Committee to come into effect no later than September 1, 2021. This committee will advise the already-existing Cannabis Control Division (CCD).
This effort has Gov. Michelle Lujan Grisham’s whole-hearted support, who feels it will bolster New Mexico’s economy and rebuild the damage caused by the War on Drugs. “The legalization of adult-use cannabis paves the way for the creation of a new economic driver in our state with the promise of creating thousands of good paying jobs for years to come. We are going to increase consumer safety by creating a bona fide industry. We’re going to start righting past wrongs of this country’s failed war on drugs. And we’re going to break new ground in an industry that may well transform New Mexico’s economic future for the better,” said Gov. Grisham.
With the passing of this exciting legislation comes plenty of questions, but the big one is, “When can people begin to apply for cannabis business licenses?” The short answer is: we don’t know. However, according to the timeline on the CCD’s website, the state has until April 1, 2022, to award licenses. This means you’ll need to spend this year preparing to apply for a dispensary license in New Mexico, so read on to learn how!
Like we mentioned above, we don’t know the exact timeline for dispensary applications.
However, we do know that unlike other states, local New Mexican governments cannot ban cannabis businesses entirely. This is great news for consumers and the various local economies in the state of New Mexico. Municipalities, however, can use their authority through local zoning laws to limit the number of cannabis businesses near schools and daycares, as well as other cannabis businesses.
The law doesn’t set a limit for the number of businesses allowed to operate in the state, unlike other states that put a cap on cannabis businesses. Both markets have their pros and cons, but a more open market like New Mexico’s is great for the consumer. However, regulators could stop issuing new licenses if an advisory committee confirms that the “market equilibrium is deficient,” so if you’re thinking about opening a dispensary in New Mexico, it’s recommended that you get in with the first round of applications.
With the launch of a new cannabis industry often comes an effort to support underserved communities that were hit the hardest by the War on Drugs, and New Mexico is no different. Social justice language is expected to be repackaged in another bill, with support from the New Mexican government and citizens. “By ensuring equity and social justice in our cannabis legalization, we are saying ‘enough’ to the devastating ‘War on Drugs’ that over-incarcerated and over-penalized thousands of New Mexicans,” said Democratic Rep. Andrea Romero.
Because the legislation is brand new, the fees associated with applying for cannabis licensure have not been specified. However, it costs between $30,000 and $100,000 to open a medical cannabis dispensary in New Mexico, so it would be smart to plan for at least that much, but even more if you’re playing it safe. Many of the associated costs and fees are non-refundable, even if you don’t secure a license.
The application process for a dispensary is tedious, that’s one thing we know for sure! We highly recommend finding a consulting group to help you through the licensing process. There will be questions involving specific laws and other details you may not know the answers to, so hiring someone who does can help you focus on the questions you need to answer. For example, you’ll likely have to provide details about how you’re planning to operate your business, where you’re planning to be located, what kind of capital you have lined up, and more. Application writing support can be invaluable when you’re filling out the required sections.
Securing capital is hard in the cannabis business, thanks to clashing federal and state laws. Cannabis is considered an illegal controlled substance in the eyes of the American federal government. This means traditional banks and other traditional leaders aren’t an option for cannabis businesses, making private investors the most likely option for securing capital.
If capital is a concern, New Mexico’s legislation allows for something called microbusinesses, where you can grow up to 200 plants. The backers of this bill emphasize the importance of this license type so entrepreneurs who don’t have the necessary capital can still enter the market. Those microbusinesses will be able to cultivate, process, and sell cannabis all under one single license, eliminating many of the costs and fees associated with operating a cannabis business.
Taxes are another thing to keep in mind. Because cannabis is still considered a controlled substance, Tax Code 280e forbids cannabis businesses from claiming most business expenses on their taxes. Even though it’s a state-legal business, the IRS doesn’t recognize it as such. You’re still able to claim the cost of goods sold, which translates to a few different areas, but the tax break difference for cannabis businesses versus other industries is astronomical.
Staffing for Cannabis
Staffing cannabis dispensaries can be a challenge. How do you find the right fit? The most important part is finding hard-working individuals who are passionate about cannabis. Don’t put too much emphasis on finding employees with prior cannabis experience, because at the end of the day, a budtender’s job is first and foremost about people — not cannabis. Look for applicants with consistent work history in retail and other consumer-facing jobs that tell you they can work comfortably with the general public.
As far as cannabis goes, employees should know about it and be willing to try products, but it’s on you to supply them with the proper education. Here are some things to include in their training:
- Which products are best for different ailments like sleep, stress, pain, and more
- That too much THC can cause anxiety, and they should always emphasize starting low and going slow until the consumer is comfortable
- How different strains, terpenes, and cannabinoids can affect someone
- That cannabis can cause interactions with certain medications and that they encourage consumers to talk with a cannabis-educated physician if they are currently on prescription medication.
- Hemp-derived CBD doesn’t cause a high, so if being high makes a consumer nervous, recommend they try CBD
Cannabis jobs pay between $12 and $15 an hour, a pretty significant step up from New Mexico’s $9 minimum wage. The better you pay your staff, the better of a team you’ll retain.
Retail-only locations without a cultivation or manufacturing license will need to partner with other businesses in order to receive cannabis products. This is one of, if not the most, important parts of operating a cannabis business. Of course, customer service is crucial to your success as a dispensary owner. But if you’re not in control of your product like vertically integrated companies are, it becomes an especially important part of your operations to ensure the best quality and safety for your consumers.
You want to find a partner you trust and someone who can supply you with consistent, high-quality products that meet regulatory guidelines. The best thing to do is reach out to your existing cannabis network, in New Mexico or not, and get the conversation started. If you don’t have an existing cannabis network, build one! LinkedIn and LeafWire are both great online platforms for the cannabis community to connect.
Compliance is critical in the cannabis industry. Because you’re technically handling a controlled substance, it becomes crucial to maintain compliance and follow the state’s regulations.
You as an individual will need to maintain compliance by passing the appropriate background checks and following any zoning ordinances, age requirements, and other items set forth by New Mexico’s government. Dispensaries also need to have the appropriate security, like guards and cameras, if the legislation demands it.
Marketing Your Cannabis Dispensary
This is imperative to your dispensary’s success. After all, how else will you sell cannabis if nobody knows you exist? Effective marketing will help you differentiate your cannabis brand, stand apart from your competitors, and get more walk-in traffic and sales.
Here are some marketing tactics to consider:
One of the most important things you can do is set up your dispensary for a Google My Business listing. This will pull your dispensary up under the map when someone searches something like “dispensary in Albuquerque” or “dispensary near me.” A Google My Business listing also allows customers to leave reviews, and great reviews mean good business for you!
Social media is a great way to advertise, too, but you can’t always utilize paid ads under current federal cannabis laws. You can use the platform though, and you should! You’ll just be limited as to what you can post. Posting about company culture, your values, and other cannabis-related information is fine. You just can’t post pictures of the cannabis itself or someone consuming it. Organic growth on social media is great though, necessary even. You can also launch an influencer campaign with local influencers and figures to spread the word about your New Mexico dispensary. Other marketing tactics to consider include branding, email marketing, and search engine optimization.
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