Retail recreational cannabis businesses can open as early as April 1 in New Mexico. However, there are a host of challenges and steps for business owners to consider before opening a recreational dispensary. This includes zoning laws, application and permit fees, a security plan and more which may vary on a state and local level. Rules and laws around cannabis may also evolve as time goes on.
Getting started
Although it’s legal for recreational and medicinal use in New Mexico, cannabis is still a Schedule 1 drug at the federal level.
Due to its illegal federal status, cannabis business owners can see some extra financial hurdles other businesses don’t, according to Carlos N. Martinez, an attorney for Legal Solutions for New Mexico. Martinez said that retail owners will have to contend with Revenue Code 280E, which requires that no business deduction or credits can be made from those associated with “trafficking” Schedule 1 and 2 drugs (i.e. cannabis).
Banks or federally insured financial institutions are generally hesitant to do business in the cannabis industry, according to Martinez. He said cannabis businesses are primarily self-funded or have private investors.
There is a loan program for small-scale cannabis businesses or “microbusinesses” (those that sell and grow up to 200 plants) set up by the New Mexico Finance Authority. These loans extend to five years and have between two to three percent interest.
Retail cannabis businesses have to also turn in an application to the Cannabis Control Division, the state agency that regulates cannabis. Cannabis retail licensees will have to pay an annual $2,500 fee. Vertically integrated businesses, or business that would include other stages of production such as growing and manufacturing, must pay a $7,500 annual fee and $10 for each mature cannabis plant they grow.
Retail cannabis applicants first have to create a social, economic plan based on a requirement from the New Mexico Regulation and Licensing Department: “The applicant’s plan should include race, ethnicity, gender, age, and residential status of licensee, controlling persons and employees of applicant and whether the applicant, controlling persons, employees or the locations where the cannabis products are produced are located in an underserved rural community, including tribal, acequia, land grant-merced, federally designated opportunity zone, or other rural historic communities.”
Retail applicants will then have to undergo a criminal history background check.
Next, after applicants certify, they will also have to adhere to local zoning ordinances and obtain a local business license prior to beginning operations.
Lastly, a recent change was made in the application process requiring applicants to attest to having a diagram of the premises of the business and be able to present it to compliance officers or inspectors.
“The retail license is the least difficult, I would say, for the application process itself. However, the local community really sets a lot of the requirements for business licensing for zoning,” said Cannabis Control Division director Kristen Thomson.
Zoning
Thomson said that the Cannabis Regulation Act gives local communities the “authority to make reasonable restrictions on time, place and manner of cannabis sales.”
There are separate zoning ordinances for the Town of Taos and Taos County.
“The state is pretty clear that you cannot treat a cannabis operation any differently than you would treat any other business. For that reason, we’re treating this just like we do every other retail, commercial endeavor in the county,” Andy Jones, the senior planner for Taos County.
Jones said there are a few caveats though. Cannabis retail businesses have to go through a special use permit process before businesses can do any construction. This includes a pre-application conference with the county that will talk about everything required in the application. Jones said they have 30 days to review the application once they submit it, and must pay a $250 application fee. Sometimes, the county will ask for additional information, Jones said. This may include input from a state licensed engineer or architect to handle issues surrounding the construction and site plan. Requirements for land use for cannabis-related activities is covered in Taos County ordinance Section 4.18.
Once the permit is completed, the retail owners have to go before the Taos County Planning Commission in a public hearing to determine that the applicant met all the development and land use regulations laid out in the county ordinances.
“The applicant has to submit a narrative that is consistent and sensitive with the existing traditional and historic uses of the neighborhood and doesn’t have a negative visual impact,” said Jones.
There will also be a 30-day period for when people that live 1,000 feet from the proposed establishment can appeal the commission’s decision.
The town of Taos has similar requirements for regulating recreational cannabis establishments. Under the town’s ordinance 21-07, cannabis establishments cannot be located within 300 feet of a school, daycare center or another cannabis establishment. The ordinance states that only cannabis producers and manufacturers cannot set up within 300 feet of the Historic Taos Plaza or a residence.
Mobile, portable or temporary buildings and drive-through cannabis locations are prohibited by the town.
“All that the Town requires is that a proposed retail cannabis operation meet the zoning requirements in the Town’s Recreational Marijuana Ordinance, get a Town business registration, and show proof of application to the state (as evidenced by a state permit or temporary/provisional permit). All of this starts with having a physical address for the business. If a business has a potential location under consideration I would suggest that they contact our Planning Department with the address and ask us to verify its eligibility for the business,” said Rick Bellis, manager for the town of Taos, in a written statement.
Both Bellis and Jones acknowledged that state regulatory agencies have been at times slow in communication but add that agencies had a limited amount of time to set up rules and regulations.
“They’re setting up an entire new industry… They’ve been tasked with doing this in an incredibly short amount of time. But, it has been a learning curve for us and I imagine for them too,” said Jones.
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