How to Open a Dispensary in New Mexico: Operating & Marketing in NM

New Mexico legalized medical cannabis in 2007 and recreational cannabis in 2021. While the sales of adult-use cannabis are just getting started in the state, the potential for profit is profound. Many prospective cannabusiness owners are scouting dispensary locations, making plans, and applying for the required licenses. Opening a dispensary takes several steps to get to the point where you can actually open your doors. Below is a closer look at how to open a dispensary in New Mexico.

How to Open a Dispensary in New Mexico

1. Get to know NM cannabis laws

The state of NM has done a really good job of laying out laws and regulations surrounding commercial cannabis. As you make your way into the business as a retailer, it will be important that you get really familiar with the laws that will affect how you run your business. Cannabis is still a new business, and some regulations get updated frequently as state agencies get more familiar with navigating the new territory.

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As you get prepared to open your dispensary, examine the laws set forth by the New Mexico Regulations & Licensing Department (NMRLD). These laws can dictate:

• Where you are allowed to open a dispensary
• What types of products you will be allowed to carry
• How products should be packaged, labeled, and displayed
• How to handle in-store setup, security, and identifying customers
• Who can legally open a dispensary and who can be employed at the place of business
• What types of advertising you can use to market your dispensary

2. Create a business plan

Creating a business plan for your new dispensary is important for a few reasons. For one, in order to be granted a license to be a cannabis retailer, the NMRLD may require you to provide certain details about your business plan. Two, if you intend to seek funding to open the business, any lender will want to see that you have well-designed plans in place. Your business plan should include details like:

• An executive summary of the planned business
• Details about the dispensary location
• Products and services you intend to offer and where you intend to source inventory
• A brief marketing strategy and general marketing analysis
• Financial planning overview, including operational costs

3. Secure funding to open the business

Opening a cannabis dispensary in New Mexico can be costly compared to opening some businesses. You will face a list of costs, including:

• Fees for cannabis business licensing
• Costs for the physical storefront, including secure storage and displays
• Costs associated with securing cannabis plants or inventory
• Funds for marketing and advertising
• Funds for staffing the dispensary in the beginning of operations

Securing funding for opening a cannabis dispensary in NM can be a little more of a challenge. A lot of traditional banks and lenders do not offer financing for cannabis-related businesses. However, the New Mexico Finance Authority did, however, approve a move in 2021 to provide business loans of up to $250,000 to qualified small-scale cannabis entrepreneurs.

3. Obtain the proper commercial licenses

In order to be granted access to the cannabis industry in New Mexico, you will have to apply for the proper licenses. The type you need can depend on the exact setup of your business. Most dispensaries will need the standard retail license, but several other types of licenses may also apply. The types are covered in depth below.

To obtain your cannabis business license, you will need:

• A social and economic equity plan
• Proof of age for every person in direct control of the business
• A criminal history screening and Department of Public Safety authorization
• Premises diagram attestation
• Funds to cover the necessary application fees

How to Get a Dispensary License in New Mexico

When you are trying to determine how to open a dispensary in New Mexico, getting the right license is a huge first step. The adult-use licenses offered by the state vary depending on how the business functions. Below is a general overview of each type of license and the costs involved.

1. Retailer License

Cost: $2,500 annually, $1,000 each additional location

2. Manufacturer’s License

A manufacturer’s license in NM allows the business to manufacture cannabis products and package them. Products must be properly tested by a testing lab approved by the state before they can be sold.

Cost: $2,500 annually, $1,000 each additional facility

3. Producer’s License

Cost: $2,500 annually, $1,000 annually for additional premises, and per plant fees of $10 for commercial cannabis and $5 for medical cannabis

4. Cannabis Consumption Lounge

A cannabis consumption lounge permit allows you to create a place on your business premises that allows cannabis to be consumed on-site. Keep in mind, local ordinances may also dictate whether this activity is allowed at your place of business.

Cost: Up to $2,500.00 annually

5. Cannabis Courier License

A cannabis courier license allows for the transport and delivery of cannabis to qualified customers. This will be important if you intend to offer cannabis delivery.

Cost: $250.00 annual license fee, $100 annually for each location

6. Vertically Integrated Cannabis Business License

The vertically integrated cannabis license allows business owners to get all licenses under one license instead of paying for multiple types. Dispensary, courier, cultivator, and cannabis manufacturer can be combined.

Cost: $7,500.00 annual license fee, $1,000 for each licensed location; per-plant producer fees of $10 for commercial cannabis and $5 for medical cannabis

7. Integrated Cannabis Microbusiness

With this license, business owners have scalability to create their own custom license that supports multiple business objectives. Fees for this license are figured by how many cannabis activities take place at one business. Options include production, retail, transport, courier, and manufacturing.

Cost: $1,000.00 annual fee for two activities, $1,500.00 annual fee for three activities, $2,000.00 annual fee for four activities, $2,500.00 annual fee for five activities

Rules for Marketing Your Dispensary in New Mexico

The rules for advertising and marketing in New Mexico are broken down into three distinct sections, according to Title 16.8.3 NMAC. One perk of the laws in NM is the fact that they are so straightforward and not quite as stringent as the policies in some states. Of course, all regulations and prohibitions are subject to change as the adult-use cannabis industry matures. Below is a general overview of the three sections on advertising and marketing your dispensary in New Mexico as of 2022.

1. Required Practices

When advertising or marketing your cannabis dispensary, whether that is digital marketing or otherwise, NM state sets forth a list of required practices that have to be followed. These include:

• Responsible for advertising – All ads and marketing materials must identify the name of the business, clearly and legibly.
• Audience age expectations – All print or digital communications must be placed where at least 70 percent of the audience is expected to be 21 or older. Reliable data on audience composition should be used to determine proper ad placement; this data may be requested by the division, so keep records.
• Statements and warnings – All ads and marketing materials must state “Please Consume Responsibly.” The ad materials must also offer several warnings that are at least 10 percent of the size of the largest font used on the ad, including:
  • Keep out of reach of children
  • For use by only adults 21 and older
  • This product is not approved by the FDA to treat, cure, or prevent disease. Product has not been evaluated by the FDA for safety, quality, or effectiveness.
  • Do not drive or operate machinery while influenced by cannabis
  • There may be long-term adverse health effects from cannabis consumption, as well as added risks for pregnant or breastfeeding women or women who may become pregnant.

2. Prohibited Practices

Marketing your dispensary in New Mexico must be done in a way that abides by the following prohibitions:

• Advertising cannot occur on any broadcast media like TV or radio, internet pop-up ads, or on mass-transit vehicles. These rules apply unless broadcast media is available to subscribers that are 21 or older or someone 21 or older has solicited the advertising.
• Advertising cannot be misleading or deceptive in a way that would provoke a false impression. This includes misleading advertising based on ambiguity or commission of information.
• Advertising cannot make unsubstantiated medical benefit claims. Claims are only allowed with substantial supportive medical evidence for claims.
• Advertising materials like signage, billboards, or visual media cannot be located within 300 feet of schools, daycares, or churches.
• Marketing materials cannot contain symbols, images, celebrities, or celebrity representations that would appeal to minors.
• Marketing materials cannot use predatory practices or be targeted at minors.
• Marketing materials cannot be modeled after other brands.

3. Cannabis Business Branding

“Branding” refers to the name, design features, or logo used by the brand for marketing purposes. This particular section is relatively straightforward. Essentially, NM states that branding cannot contain anything appealing to a child, such as:

• Cartoons or characters that would be enticing to children
• A resemblance to a non-cannabis product that is typically marketed to children
• Symbols, images, celebrities, or celebrity-like images that are commonly targeted at marketing to minors

Check Local Ordinances on Cannabis Marketing

While NM’s regulations are relatively relaxed compared to some other states where marketing is concerned, they may not be as simple as they seem. The New Mexico Regulation & Licensing Department has specifically stated that the laws are more relaxed so that localities can establish their own more stringent advertising and marketing rules. Therefore, be sure to check with local governing agencies to keep any advertising efforts compliant at every level.

Need help with marketing your dispensary in New Mexico?

From drafting an email marketing plan to building a website SEO strategy, everything about marketing cannabis comes along with its nuances because of regulations. Things can get a little complicated in the process, but CannaPlanners is here to help. If you would like help navigating through the complexities of marketing your NM dispensary, reach out, so we can discuss how we can help you out.