The laws around cannabis are changing fast. It seems like we went from cannabis being completely outlawed to legal in 19 states and counting. New Mexico became one of them in April 2021.
Many entrepreneurs see nothing but opportunities to open a dispensary or other type of business. Like every other state that legalized cannabis, dispensaries in New Mexico have a lot of regulatory hurdles.
What are those hurdles and how can you navigate them? Read on to learn about recreational sales of cannabis in New Mexico.
Laws for Dispensaries in New Mexico
The Cannabis Regulation Act came into effect on June 29, 2021. People can possess no more than two ounces of cannabis or 800 grams of edibles outside their homes. Individuals can grow up to 6 plants per person, with a maximum of 12 plants.
For dispensaries in New Mexico, you can apply for a license to operate. What’s unique about New Mexico’s law is that there isn’t a cap on the number of licenses. There aren’t limits on how many establishments a licensee can operate.
Under the law as it stands, you’d be able to apply to operate a dispensary with the possibility of expanding to new locations.
Cannabis sales have to begin sometime in the first quarter of 2022. A date isn’t set as of yet.
The law establishes the Cannabis Control Division, which oversees dispensaries and cannabis-related operations within New Mexico.
The Cannabis Control Division works with local officials to assist cannabis businesses. The law prevents municipalities from banning cannabis businesses. That’s another reason why you’d want to start a dispensary in New Mexico.
Most other states allow towns to ban cannabis businesses.
Keep in mind that the law is evolving. You’ll need to stay up-to-date on changes. Get in touch with your local legislators.
Meet with them and let them know how the law works and what needs to change. That can make a big difference to your cannabis business.
What if they suddenly decide to limit the number of licenses? Your entire expansion plan could get blown up.
Tax Laws for Dispensaries
What’s the main driver behind the legalization of cannabis? It isn’t that legislators suddenly realized that cannabis is largely harmless. It’s money.
State revenues continue to drop and the demand for services has never been higher. How do states reconcile these budget shortfalls? They legalize things like gambling and cannabis and tax them big time.
That means you have a heck of a tax burden to navigate.
For federal taxes, you can’t operate like a normal business. That’s because marijuana is still classified as an illegal substance. Under Section 280 E of the IRS Code, you can’t deduct business expenses to lower your tax bill.
Businesses are normally allowed to deduct regular operating expenses, such as legal fees, professional services, advertising, rent, and office supplies.
Dispensaries and other marijuana businesses can’t do that. They can reduce their taxes by applying the cost of good sold.
For state taxes, the law applies a 12% cannabis excise tax on all sales of cannabis products in 2022. This increases on an annual basis, with a maximum of 18%.
Medical marijuana dispensaries have a major advantage here. They’re not subject to the cannabis excise tax.
Legislators are still figuring out other tax guidelines. You definitely want to work with an accountant that specializes in cannabis businesses.
Cannabis businesses are under a lot of scrutiny and get audited a lot. A good accountant will protect you and your business.
Starting a Dispensary in New Mexico
Do you think you have what it takes to start a dispensary in New Mexico? Come up with a business plan for your dispensary.
This helps you fully understand the risks and challenges of operating a new business. You’ll also discover the possibilities since this is a brand new market.
The business plan contains your financial projections. You’ll go over your startup expenses, sales projections, and operational expenses.
This is your chance to find out if your idea for a dispensary is profitable. It’s also your roadmap to build a successful business. You may also want to consider speaking with 1 or 2 cannabis extraction consultants, so that you start things off on the right foot.
You’re going to need to stock your dispensary with quality items. You’ll need to find cannabis farmers and product vendors to sell other items at your shop.
You don’t want to be held responsible for product issues. If you do have a product liability case, you’d need to work with a firm like Buckingham Barrera Law Firm.
Design the Customer Experience
One piece of owning a business that many people overlook at first is the customer. You want to have people return to your dispensary over and over. A great customer experience will make sure that happens.
How do you want customers to feel when they walk into your dispensary? Many are walking into a dispensary to buy cannabis for the first time.
You want to make sure you put them at ease and educate them about different strains. This puts them at ease and builds trust. You might have an area in the dispensary for people to sit and enjoy their purchases.
This attention to the client experience early on will help you have a successful business.
Get on Board with Recreational Sales of Cannabis
Dispensaries in New Mexico are getting ready to open and operate legally. Thanks to the Cannabis Regulation Act, recreational sales can take place in the state early next year.
If you want to join them, you need to act quickly. Get your business plan and financing together. You’ll need to have a team of experts help you navigate the laws.
Of course, you have to stay on guard to manage any changes in the law. You can be sure that they will happen and impact your business.
For more great business tips, head over to the blog for more great articles.