New Mexico’s cannabis application process is one of the most straightforward and accessible in the country, but that doesn’t mean it’s easy to get a license.
With a little help, most applicants are able to set up an LLC or partnership to operate their business, but figuring out what a social equity plan is, or to where and in what order to submit your water or background checks, zoning approvals and water calculations are another thing altogether.
At Weeds., our team members literally wrote the book on licensing in New Mexico. Our founders served as the chairman and staff of Gov. Lujan Grisham’s legalization task force and as the state’s first director of the Cannabis Control Division. We teamed up to help entrepreneurs, established and startups alike, navigate the process and understand the risks and opportunities in the market.
New Mexico officially legalized adult-use cannabis on July 1, 2021, and started accepting applications in September 2021. In the first year, the application process underwent 3 significant changes (so far, the state has reliably issued new rules or changed internal processes governing licensing every 4-6 weeks). Many of the rules governing the process are still under emergency status (meaning they haven’t been finalized and can change overnight) or still being developed. Worse, cities were supposed to have local rules in place in 2021 but many are dragging their feet.
That means that requirements can change while your application is pending review, often requiring additional documentation throughout your process. In other words, expect some curveballs and be ready to roll with the punches. Relax, we’ve got this for you.
Sidebar: As of the writing of this report (July 2022), the State, some license categories no longer requires 1 document listed in the “required documents” list, but does they require an additional document not listed in the list for all licenses. This additional document must be emailed when you submit online in order to avoid a pause of your application review. For these reasons, we recommend you work with a professional licensing consultant with experience winning licenses over the past 30 days when you are preparing to submit.
Components of a New Mexico cannabis license
A New Mexico cannabis entrepreneur license has 11 major components. Each type of license (production, manufacturing, retail etc) may have additional components depending on the activity you pursue and your location.
Be careful when applying. While the online application portal only requires you to submit some documents at first, applicants are required to attest, under penalty of perjury, that they have each of these components in place and available for review upon request of the Cannabis Control Division. Failure to respond to those inquiries could delay or jeopardize your application.
Identify the business operating your license
- Company or LLC operating agreement
- Registration with state and local business registrations and federal and state tax authorities
Identify the people operating your business
- All owners and controlling persons must submit to state and federal background checks annually
Choosing the right building(s)
- Proof of local zoning compliance
- Compliance with building and fire codes
Social Equity Plan
Let’s face it: minority participation in cannabis industries has been suppressed by the impacts of the war on drugs and social inequities.
The state’s Cannabis Regulation Act requires the state to track diversity in the industry and create equity for minorities to share in the new opportunities.
To do that, the state requires every cannabis company to disclose demographic information about owners and controlling persons. Applicants must also develop a social equity plan to increase minority participation in the cannabis industry. Our social equity plans help new operators meet those requirements, maintain required reports and pay it forward to others.
Energy & Water Use Plan
The state’s Cannabis Regulation Act requires the state to track energy and water use in cannabis production and develop strategies to reduce that use over time.
To do that, the state requires every production (grower) applicant to calculate estimated uses for each room in their facility, then track that use and submit reports to the state on a regular basis. We’ve developed proprietary calculations based on your specific lighting and growing methods to help estimate that use (it’s a good tool to use when estimating utility costs, too!) then track your use and submit reports when required.
The state requires licensees to meet specific requirements for vehicles and staff involved in transporting cannabis between facilities. You must attest that you have a transportation plan available for review when you submit your application.
Chain of Custody Policies
Every cannabis flower or product sold in the state must be able to be traced back to the facility where it started as a seed or clone. In addition to using state-required track-and-trace software, applicants must develop procedures for tracking each plant as it moves through different stages (veg, flower, harvest, cure, extraction, etc) in their facility.
Testing, Wastage and Quality Assurance Policies
The state requires every cannabis plant and product headed to retail shelves to be tested, sometimes multiple times, as it moves between stages and facilities. You must also have procedures for how you will deal with batches that fail quality testing. With so much money on the line, testing and failed testing remediation are critical components of your business strategy.
Every licensee needs a waste plan. Since every plant and product must be tracked, licensees must notify the state when they “waste” plant parts or products. That means that spoiled products in retail and manufacturing must be set aside and destroyed in specific ways. Ditto for trimmed leaves, stalks, and roots after harvest.
Your company must have agreements in place with approved testing labs, or lab-approved sampling protocols on file, before beginning operations. But not all labs conduct all required tests you may need. You must also have wastage protocols and service agreements for waste hauling in place. At Weeds, we can introduce you to labs and wastage services for your business needs and develop your policies to stay compliant.
Security & Emergency Policies
Cannabis facilities must meet stringent security and safety rules to prevent the diversion of products to the black market and protect your employees and customers.
At Weeds. we work with you to ensure that cameras, locks, fences, vaults, and public areas all meet state-required security standards. These policies must be in place when you apply to the state for licensing.
Health and Safety
Cannabis is designed to be inhaled or ingested which means cannabis products must meet the same health and safety standards required for commercial food manufacturers and processors.
In most cases, applicants must obtain self-certification for food handling facilities from the State Environment Department and/or local food inspectors. You must also have recall procedures in place to notify the public if unsafe products associated with your license leave your facility.
Every employee is required to have a customized training plan to help them implement cannabis regulations and meet 14 key components detailed in state law and regulation. Applicants are required to attest that they have a training plan in place, ready to implement when they apply for their state license.
While local cities and counties are not allowed to “opt-out” of cannabis in New Mexico, they can impose limits on the time, place, and manner of cannabis businesses in their jurisdiction.
In most local jurisdictions, that means limits on where your facility can be located (and, in some cases, a cap on the number of businesses in the city limits), limits on hours you can operate, or requirements to meet cannabis-specific building codes.
Even if you receive a state license, you may not open or operate without local approvals. Local approvals generally include:
Local Zoning Verification
Almost every county and city limits cannabis businesses to specific zones. You must receive zoning approval before operating.
Local Business Registration
Although local cities can’t add additional licensing requirements, they can require you to obtain a business registration disclosing details about the company, its owners, and emergency procedures.
Local Health & Safety Inspections
Some cities and counties have their own health and safety laws in addition to the state. If your jurisdiction has these rules, you will likely be required to pass an inspection before opening.
Local Fire and Building Permits & Inspections
All commercial buildings in New Mexico must have a certificate of occupancy proving your building is safe to operate for your intended use. Since no buildings in the state were permitted for adult-use cannabis prior to legalization in 2021, every cannabis facility will need some type of new certificate.
In rural areas, the state’s Construction Industries Division and State Fire Marshal provide these services. In more urban areas, local inspectors may take on this job.
Because only licensed architects and building contractors are allowed to submit plans or modify commercial buildings, we recommend you work with an experienced cannabis building project manager such as Omni Projects Group to evaluate your local permitting needs.
Whew! That’s a lot.
No one expects new applicants to know how to do all of this. In our experience, the most experienced growers don’t make the best business people and the smartest business people don’t make good growers. That’s why we work with you to provide model policies, consultants, and experts to fill in the gaps no matter how you plan to operate and who is on your team.
Don’t worry, we’ve got this. Our team has built applications for companies and facilities around the state so when you start with Weeds you aren’t working alone or from scratch.
We provide our clients with more than the paperwork to obtain a state license. We help develop a licensing plan from seed-to-sale. And along the way, we provide you with a 600+ page book of model policies, recommended training standards, and access to our team and contact lists of professionals who know New Mexico cannabis.
In The Weeds.
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