Error: Cannot install in Homebrew on ARM processor in Intel default prefix (/usr/local)

For what it's worth, before installing Homebrew you will need to install Rosetta2 emulator for the new ARM silicon (M1 chip). I just installed Rosetta2 via terminal using:

/usr/sbin/softwareupdate --install-rosetta --agree-to-license

This will install rosetta2 with no extra button clicks.

After installing Rosetta2 above you can then use the Homebrew cmd and install Homebrew for ARM M1 chip: arch -x86_64 /bin/bash -c "$(curl -fsSL https://raw.githubusercontent.com/Homebrew/install/master/install.sh)"

Once Homebrew for M1 ARM is installed use this Homebrew command to install packages: arch -x86_64 brew install <package>

Homebrew needs to be installed in two places on Apple silicon: in /usr/local for rosetta-emulated (Intel) code, and /opt/homebrew for ARM64. These are somewhat hard-coded and the /opt/homebrew one MUST be used for ARM code, as it stands today, and is non-negotiable. However, it's easy enough to install and you can follow the general instructions on the official docs. You open a Rosetta shell first.

% arch -x86_64 zsh
% cd /usr/local && mkdir homebrew
% curl -L https://github.com/Homebrew/brew/tarball/master | tar xz --strip 1 -C homebrew

Later, to install tools under intel you can use the arch command per-command or open a zsh terminal as above.

arch -x86_64 /usr/local/homebrew/bin/brew install sometool

For the ARM architecture, you don't need to use arch but you do need to use the full path of the homebrew command.

/opt/homebrew/bin/brew install sometool

You could rename the brew commands to something like brew86 and brewARM to help keep them separate.

Did a temporary fix by enabling Open using Rosetta option in the terminal app from Utilities folder.

However, it would be great to know the actual solution for this question to use the native way.