New Mexico Cannabis Startup Guide

Starting a cannabis company in New Mexico? We’ve put together a state-specific guide covering everything from available license types to fees, regulations, and what you should include in a New Mexico cannabis business plan. Jump to a section by clicking below, or go straight to our sample cannabis business plan.

New Mexico medical cannabis business startup guide and planning banner

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Cannabis license types
Recreational vs. medical cannabis
Fees and other barriers to entry
Are cannabis business plans required in New Mexico?
What to include in a business plan
How to research city regulations
Helpful links
Get expert help

Overview of legal cannabis in New Mexico

Since SB 523 passed in 2007, New Mexico adults can possess up to 8 ounces of cannabis every 90 days if they have a written recommendation from a doctor. They can also grow marijuana at home. More than 90,000 patients have registered for medical marijuana use in the state. Medical marijuana dispensary sales in New Mexico could be as high as $220 million in 2021.

In March of 2021, the New Mexico legislature passed House Bill 2, legalizing commercial (adult-use) cannabis. Governor Michelle Lujan Grisham signed the bill into law the following month.

Commercial cannabis sales are slated to begin by April of 2022. The state’s Regulation & Licensing Department released the Rules & Regulations for the program in August 2022.

Recreational vs medical cannabis

New Mexico’s cannabis laws allow adults to possess up to 2 ounces of cannabis and grow up to 6 plants. The commercial license application window will open in January 2022, with sales expected to begin in April.

A New Mexico citizen can enroll in the State’s medical marijuana program with a recommendation from a health care professional licensed to prescribe mediation. Patients can grow up to 16 plants (but only 4 can be mature), and also purchase cannabis from medical dispensaries. Medical cannabis registries are vertically-integrated, and there are 122 licensed dispensaries located throughout the states. Thes businesses can grow and sell recreational marijuana and products, as long as concentrates have 70% THC or less. There are no plans to add more medical cannabis licenses.

Cannabis business license types

While medical cannabis businesses must be vertically integrated non-profits, New Mexico's commercial licenses allow businesses to participate in the industry in a variety of ways.

Retailer: Also referred to as a dispensary, this is a retail storefront where anyone 21 and over can purchase cannabis products.

Producer: These businesses, also called cultivators or grow operations, grow cannabis plants indoors or outdoors. Marijuana is then either sold through a dispensary or sold to a business that will create products with it, such as edibles or oils. Some cultivators are “vertically integrated,” meaning they grow, process, and sell cannabis to the public.

Manufacturer: Cannabis manufacturers (or processors) purchase cannabis from cultivators or other product manufacturers, then produce items like edibles and extracts. There are four types of manufacturer licenses in New Mexico; labeler/repackaging of cannabis products, edible or infusion producer, extract producer using only nonvolitile compounds, and extract producer using volatile compounds or CO2.

Courier: A cannabis courier transports cannabis to and from licensed producers, manufacturers, retailers, and testing laboratories. It's unclear whether New Mexico couriers will be able to deliver to individual customers.

Testing Laboratory: Consumers and regulators alike demand consistency and quality control in cannabis products, which creates demand for marijuana testing labs. In New Mexico, marijuana testing labs analyze products for microbiological contaminants, mycotoxins, solvent residue, THC, and CBD.

Vertically-Integrated: A vertically-integrated engages in multiple cannabis activities under a single license. Typically, a company cultivates and then sells its products through its own retail locations. Companies that are vertically integrated can also act as producers if they use their own cultivated flower.

Producer Microbusiness: Producer microbusinesses are producers with less than 200 plants under canopy.

Integrated Microbusiness: An integrated cannabis microbusiness, like a vertically-integrated cannabis company, has multiple cannabis activities under one license, but on a smaller scale. Cultivation is limited to 200 plants, just like the producer microbusiness.

Cannabis Consumption Area: New Mexico has yet to define policies for cannabis consumption areas, but it is on the fee schedule, suggesting that it will be an available license type once the commercial program begins.

Research Laboratory: Research laboratories conduct research on cannabis and cannabanoids. A license allows them to purchase cannabis products from producers and manufacturers for the purposes of research.

Ancillary business: If you don’t want to grow or sell cannabis in New Mexico, there are plenty of other ways to be part of the booming cannabis industry. You can create a marijuana app, payment processing service, advertising agency, consulting firm, pest management product, accounting firm, automated plant watering system, security service, packaging labeling service, or legal firm--and that’s just the tip of the iceberg!

Fees and other barriers to entry

Local governments may forbid cannabis companies or certain locations, so check city and county regulations. The following information is only for commercial (adult-use) cannabis because the state appears to be halting the acceptance of new medical licenses.

Application fees: The cost of a license varies depending on the type of license. The application fee schedule is still being finalized.

License fees: Annual license fees, like application fees, vary depending on the operation. Licensing fees for retailers, manufacturers, and testing labs will be $2,500 per year. Producer licenses cost $2,500 plus a $10 per plant fee. A license for vertically integrated plants costs $7,500 plus $10 per plant. Microbusiness licenses cost between $1,000 and $2,500 per year, while courier licenses are $250 per year.

Background check: You have to consent to a criminal history background check annually to get (and renew) a cannabis business license in New Mexico.

Do you need a cannabis business plan in New Mexico?

New Mexico hasn't said whether commercial cannabis applications will need a business plan, but it was required for a medical license, so it's likely it will be required for commercial applications as well. Plus, creating a business plan will make your life easier--your application already has to include your sales and distribution plan, qualifications, production plan, board member expertise, and security plan, some of which naturally overlap with a business plan. And if you plan on raising funding from investors, you definitely need a business plan.

What to include in your business plan

Here’s what an New Mexico marijuana business plan should include:
  • Product/service description: Will you run a producer/dispensary, testing lab, cannabis consulting firm, product manufacturer, or something else? What’s unique about your business? Be as specific as you can. If you’ll open a marijuana dispensary, which strains of flower and/or manufactured products will you sell?

  • Market research: If you’re opening a dispensary, how many people live within five miles? If you’ll wholesale manufactured products, how many dispensaries will you sell to? If you’re creating an app, who will be the user base, and why would they use your app instead of someone else’s? Use concrete numbers verified by a third party whenever possible (instead of estimates).

  • Competitors: Who will you compete with, both directly and indirectly? What do they do well and poorly? What is their online reputation? How will you differentiate your company?

  • Management team: Summarize your qualifications and those of others on your management team. If not included elsewhere in your application, you have to provide the qualifications of your board of directors, including a doctor and nurse.

  • Financials: This part can be tricky. You need a five-year financial forecast, including projected annual revenue, operating expenses, costs, and net profit. Each year’s projected revenue should include not only revenue but also your margin and direct costs. You can forecast revenue by estimating how much product you think you’ll sell (based on market potential), your retail price, your production cost, and how much you’ll spend on payroll, rent, and other expenses. Your cash flow statement will show that you’ll have enough cash to stay operational. You might want to include a sensitivity analysis (best- and worst-case scenarios), which shows 15% higher and 15% lower revenue than your initial forecast. For marijuana cultivators, it’s important to do a sensitivity analysis based on future potentialities of the wholesale price per pound. You can also include a break-even analysis, showing which month you will be profitable.

  • New Mexico-specific requirements: If not included elsewhere in your application, you should include details in your business plan about your security policy, packaging, and anything else required by the state.

  • Investor proposal: If you are presenting your plan to investors, how are you valuing the shares? Consult with your attorney to make sure you are within state and federal compliance. Sometimes, you’ll need your attorney to draw up an offering memorandum, often called a private placement memorandum (PPM). A PPM informs potential investors on the details of the investment vehicle (your company) and potential risks associated with the investment.
How to research city regulations

Google your city or municipality name and “cannabis regulations” or “marijuana laws” (here’s some info about Albuquerque). If your city or municipality’s website doesn’t have information about cannabis, check recent local news coverage or contact your city clerk, city manager, or town hall.

Helpful Links
Get expert help

Confused or overwhelmed yet? That’s normal. With such a highly regulated industry, and one with different rules in every state, starting a cannabis company can be very complex. Get help with your cannabis business plan from Masterplans, the industry leaders. We’ve worked with hundreds of cannabis entrepreneurs like yourself to create investor-ready documents and presentations so you can not only meet regulations but get the funding you need. Click below for your free, confidential consultation:

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