New Mexico Releases First Draft of Cannabis Producer Rules

If you are about to enter the cannabis industry in New Mexico – or are already established and awaiting news on how the industry will be regulated here – you may have been anticipating the first draft of the cannabis producer rules that were released earlier this year.

These proposed rules cover issues such as security, transportation, water rights and facilities as well as proposed licensing for cannabis producers, microbusinesses, and medical cannabis producers.

The rules are intended to help businesses in the state gear up for the legalization of the recreational sale and usage of cannabis.

They do not yet cover rules for the manufacturing, testing and selling of cannabis products, which will follow shortly, according to the state Regulation and Licensing Department.

As you consider the rules outlined below, remember that these are draft regulations and were released partly to get constructive feedback from the public before being finalized.

The new producer rules in New Mexico

The proposed cannabis producer rules run to 30 pages in length. Following are the main highlights for businesses intending to apply for a license:

  • To open a new business, producers must be able to demonstrate that they have water rights and a “sufficient” water supply.
  • Security cameras are required.
  • Business owners must submit to state and federal criminal background checks.
  • Anyone convicted of certain felony offenses, such as fraud, embezzlement or trafficking controlled substances will be ineligible for a license.
  • Businesses can operate several facilities but must abide by plant count maximums, for which three ranges are proposed (see the following section)
  • Dispensaries must make a reasonable effort to sell 25 percent of their monthly cannabis sales to qualified medical marijuana patients or caregivers (to avoid a medical shortage).
  • All dispensaries must be at least 300 feet away from a school or daycare and comply with all local zoning and safety laws.

The three levels of producer licenses 

Under the rules proposed by the Regulation and Licensing Department in New Mexico, cannabis producers will need to apply for a license based on the number of plants they grow.

This will be separated into three levels, as follows:

  • Level 1: 201 – 2,500 plants
  • Level 2: 2,501 – 3,500 plants
  • Level 3: 3,501 – 4,500 plants

License holders can apply to increase their plant amount by increments of 500 when applying for license renewal and at one other time each year.

Proposed cannabis producer license fees in New Mexico

For large businesses, proposed license fees are $2,500 per year for the first site and $1,000 for every additional site. There is also a proposed charge of between $18 and $22 per plant, depending on production levels.

The proposed rules do not preclude microbusinesses with single locations, which are permitted to grow up to 200 plants for a reduced license fee of $500 (up to 100 plants) or $1,000 to grow up to 200 plants. There is no per-plant fee for these licenses.

Commercial cannabis sales in New Mexico are due to start by April 1st, 2022 and these proposed regulations need to be nailed down as soon as possible in preparation for that date.

One of the main pieces of expected feedback is about the limits placed on plant numbers, which may be considered by some potential producers to be too low considering that cannabis usage for medical purposes has increased markedly in recent years. This was a hot issue when the subject of the legalization rules was first broached last year.

For aspiring production businesses, it’s important to become acquainted with these proposals so that you can begin planning your entry into the industry with a robust business plan that will “pass muster”

If you have a legal issue with your existing cannabis business or need help setting up and applying for a license for a new business, call (505) 445-4444 to talk to a knowledgeable cannabis lawyer at Legal Solutions of New Mexico in Albuquerque.