Dispensaries are fast becoming one of the hottest trends in the holistic treatment sector. Currently, there are 30 states in the US that have legalized the use of cannabis for both medical and recreational use. New Mexico gained approval for legal recreational use in the summer of 2021 which allowed locals the opportunity to open and expand this market for profit. In September of 2021, New Mexico officially began offering licenses for dispensaries. To date, there have been thousands of applications submitted with even more expected as the local market begins to pick up steam. If you are interested in opening a legal cannabis dispensary in New Mexico, there are some things you should know. We have put together a comprehensive guide that will cover all you need to know about opening a legal dispensary in New Mexico.
How Long Has Cannabis Been Legal in New Mexico?
Like several other states, New Mexico legalized medical cannabis use many years ago. Specifically, medical marijuana became legal in the state in 2007. Following the legalization, 35 special licenses were given to specific businesses to process, develop, and distribute cannabis and cannabis products in the state. At the time, these businesses were allowed to maintain no more than 150 seedlings and plants at once. There were no limits placed on the number of dispensaries or pharmaceutical locations each business could have. In 2015, the number of plants was increased to 450, and that has more substantially been increased to 20,000 as of 2021. This increase represents a direct result of the initial market being worth around $25 million to growing to be valued at over $200 million in just 7 years.
How Were Dispensaries Legalized in New Mexico?
Recreational cannabis use was legalized in June of 2021. This was achieved via the Cannabis Regulation Act or CRA. This law was devised to legalize not only recreational cannabis use but also legalize the sale of cannabis through approved dispensaries. The CRA also established cannabis laws and placed the burden of regulation on the Cannabis Control Division. Those who are interested in obtaining a dispensary license will need to go through the New Mexico CCD. This applies to both recreational and medical cannabis dispensaries. The application form for a New Mexico legal dispensary license can be completed via the CDD website online.
New Mexico Cannabis Market Outlook
There are currently 120 dispensaries in New Mexico that hold valid licenses. In 2017, the legal cannabis market was valued at just under $120 million dollars which has increased further in recent years. As of the time of this post, the market is mainly made up of in-stain chain dispensaries with a handful of applications from out-of-state operators. The most successful chain so far is Ultra Health, which operates 29 stores in New Mexico. It also happens to be the most polarizing having been a target for political attacks and lawsuits. For those looking to break into this market, the long-term outlook is extremely promising. Currently, the market for legalized cannabis in New Mexico is valued at around $350 million dollars. This number is set to rise and will surpass $1 billion within the next 5 years.
What Do You Need to Start A Dispensary in New Mexico?
With the massive projected growth of the legal cannabis market, now is the ideal time to put your hat in the ring. Unlike some other traditional businesses, there are a few more steps required in order to set up a dispensary in New Mexico. We will go into the steps in detail later, but first, let’s talk about what you will need to get started.
To start, you will need to have plenty of cash on hand. In order to submit an application, the processing fee is set at an even $10,000 for all business levels. The cost of initial licensing is $30,000 for 150 plants or less. For every additional 50 plants you plan to add to your dispensary, you will need to increase the licensing fee by $10,000. So, as an example, if you plan to grow 250 plants, you will need to pay $10,000 for the application processing, and $50,000 for the dispensary license.
You will also need to know the rules, regulations, taxes, and zoning requirements. Those can be found in detail (here). These regulations may change over time, and it is the responsibility of the dispensary owner to stay up to date on these changes. You will also need to invest in a New Mexico-compliant cannabis POS system. One that includes inventory management and also can connect with the state monitoring system BioTrack is also required.
A location will need to be finalized for your dispensary, and you will also need to set aside funds for décor, a comprehensive security system, locked displays, delivery services, insurance, and more. The initial investment needed for a small to moderate operation will range from $150k to $300k depending on a few different market factors. This amount can be financed, or it can be backed with personal funds. It is worth noting that not all major banks offer financing for legal cannabis-related businesses at this time.
How Soon Can You Open A New Mexico Dispensary?
The application process has been open since September of 2021. However, not all licenses are approved. If you are able to secure approval, keep in mind that retail locations are not slotted to be approved until 2022. The good thing about this delayed date is that those looking to run a successful business will get the time they need to ensure full compliance. The state has not placed any limits on the number of dispensaries they will allow, however, they may restrict density to keep the market competitive.
Getting Your New Mexico Dispensary Off The Ground
Now that you know some of the basics of what you will need to get started, let’s take a look at our quick start guide. Once you familiarize yourself with the local cannabis laws in New Mexico, our guide will help you get your dispensary business off the ground and off to a good start. It is also a good idea to hire a local lawyer versed in cannabis law in New Mexico to review your paperwork and ensure that you are in compliance before submitting an application. Let’s get started!
Create A Detailed Business Plan
As with any business venture, having a properly thought out plan is the best way to ensure success. Create a business that is well formulated to take sudden market changes and eventualities into account. With New Mexico dispensaries, there must also be strict attention to compliances baked into any business plans formulated. As a dispensary owner, your business plan should have both long-term and short-term strategies laid out to meet the needs of the local customer base.
The plan should include how the owner and employees will verify age requirements for each purchase, how purchase limits will be tracked and enforced, and also a plan for warning labels on the packaging. This should include a comprehensive plan that will cover additional outlets in the event that your dispensary expands in the future. Your business plan also should detail which cannabis-specific POS and inventory management system will be used and if it is BioTrack compliant. In addition to a basic business plan, all cannabis-based businesses must also provide a social and economic equality plan with their application. This plan is intended to show how your business will encourage social, economic, and diversity efforts within your business and the community in which you serve.
Your business plan will also include a market analysis, a list of potential retail locations, and your funding plans. A healthy business plan will also include a marketing plan and a timeline that shows your profit to loss projections for at least the first five years.
Secure A Cannabis POS System that is New Mexico Compliant
One of the most important aspects of running a legal dispensary in New Mexico is maintaining proper records. To this end, it is important that you invest in a cannabis POS system that is both highly reliable and BioTrack compliant. A good POS system will help ensure smooth efficiency during sales and also will help you maintain proper compliance measures. A cannabis inventory management system and POS portal will enable you to integrate seamlessly with the BioTrack reporting system. One of the top POS systems on the market is from POSaBit, though many others are also New Mexico regulation compliant.
Features that you should look for include ID scanning and verification, product equivalency conversions, purchase limit enforcement tools, and reporting and tracking tools. With the right POC, not only will your business run efficiently, but you will also prevent regulation headaches down the line. At the same time, you should consider purchasing hardware for your dispensary that is compatible with your chosen POS system. Tablets, applications, and locking mechanisms that can be operated in conjunction with your POS system will further make your New Mexico dispensary more efficient.
Market Research and Location Scouting
Understanding your target market and settling on a location for your dispensary is just as important as getting a license. You will need to ensure that your business is located in an area that is easy to reach and one that is dispensary friendly. For example, chances are if you try to park your business in a location with little foot traffic and no parking, you won’t be able to attract many customers. Look for a location that is easy to reach and situated in a moderate to high traffic area. Keep in mind that your business will need to be located at least 350 feet away from any educational center, church, or other specialized building. Some locals have specific zoning requirements for dispensaries, while others won’t. Speaking with a local New Mexico realtor versed in the needs of a cannabis dispensary will be the best way to choose a hot location.
Market research is one of the most important aspects of any successful business venture. Research the market in your area so that you can develop a clear marketing plan that targets local New Mexico cannabis users effectively. The needs in each area will differ, for some areas, a certain strain may be popular while in others, edibles may be the preferred product. Understanding the local market not only will make your daily operations easier but will also help you to grow your business. Your POS system can also give you valuable feedback that helps you choose which products and strains to stock in the future.
Market research is not limited to local consumers. It is also important to research your local competition. There is a lot of competition in the New Mexico dispensary market even though it is still rather young. Find a way to set your location apart from the competition by offering a better service, or perhaps better rates. Make your shopping experience the forefront of your business and then focus on aesthetics. Build a following for your brand based on unique principles and watch your sales grow.
Secure Licensing, Hire Well, and Grow!
Once you have all of the other steps taken care of, then you will need to secure funding. It will take between $100k and $250k to get set up, which includes the cost of the New Mexico dispensary license. If you have savings, you plan to use them great, otherwise, it is a good idea to a loan for your business well in advance. Submit your application, and once you get your approval, it is time to set up your dispensary. This includes building out your retail location, hiring and training staff, and online advertising as well as in your local community. Give your dispensary at least a year to really gain traction, like any business, it takes time to build branding after an initial launch.