Cannabis Retail License Restrictions in New Mexico: What Cannabusinesses Need to Know About 'Deli-style' Services

By James Nechleba

Sep 14, 2022

One of the more iconic aspects of shopping at a cannabis dispensary is the “deli-style” experience of selecting flower. In the cannabis industry, deli-style refers to displaying cannabis flower in large jars for customers and patients, who can ask to view and smell the product before requesting to purchase a specified measured amount. In the same way you can specify you want a quarter-pound of salami at a deli, you can specify that you want a quarter ounce of “sour diesel.”

Cannabis retailers in New Mexico that want to provide their customers with this experience need to be aware that this cannot be done under a basic cannabis retailer license. Operators who wish to sell cannabis flower via deli style must also obtain a manufacturer’s license and ensure their municipality permits that kind of license in that location.

The New Mexico Regulation and Licensing Department’s Cannabis Control Division (CCD) rules break cannabis manufacturer licenses into four classifications:

  • Class I: A licensee that only packages or repackages cannabis products, or labels or relabels the cannabis product container

  • Class II: A licensee that conducts Class I activities, and manufactures edible products or topical products using infusion processes, or other types of cannabis products other than extracts or concentrates, and does not conduct extractions

  • Class III: A licensee that conducts Class I and Class II activities, and extracts using mechanical methods or nonvolatile solvents

  • Class IV: A licensee that conducts Class I, Class II, and Class III activities, and extracts using volatile solvents or supercritical CO2

As CCD published in March 2022, a New Mexico cannabis retailer must have the proper Class I manufacturer’s license if they’re going to sell cannabis flower deli-style because they will have to package and label containers at the same premises where they sell commercial and/or medical cannabis.

Obtaining the proper cannabis business license is one thing, but it's quite another to obtain the proper corresponding local permissions. Many local jurisdictions created their local ordinances based on the Cannabis Regulation Act’s language prior to the CCD’s adoption of rules and distinguishing classes of manufacturers. Subsequently, there are many local jurisdictions that don’t permit retailers and manufacturers in the same land use zone. Moreover, without local approval, the CCD will only issue a 6-month provisional license, which will not permit a retailer to provide their deli-style experience.

While this knowledge can dampen cannabis retailers’ spirits, many localities may have some method by which businesses can request variances. This typically involves a public hearing and argument as to why a business license should be issued in contravention of the established local ordinances.

When dealing with local governments and regulators, cannabis businesses need a trusted and experienced advocate on their side. Attorneys at Vicente Sederberg LLP have served in this role for over a decade, fiercely advocating for our clients to achieve the best possible outcomes. Contact us if your business needs regulatory guidance or needs to request licensing or zoning variances with your locality.

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