Your brakes just need a minor adjustment. The first thing to do is to make sure your brake cable has been stretched. So with the wheel on, squeeze the brake pretty hard a bunch of times. You should feel that the brakes loosen up a bit. This is good.
Next level: There are two small black screws on the side of your brakes. If you play with adjusting them, you'll be able to give yourself another mm of space and the wheel should be able to spin freely. Later in your relationship with the bike, you might end up tightening them as the pads wear, etc.
The last adjustment is to give yourself a bit more slack on the brake cable itself. Near the end of the cable where there is that small metal hat- you can de-crimp the cable using the supplied hex/allen wrench, loosen it a mm or two and then re-crimp tightly. If the more subtle adjustments don't work, this will solve your problem, possibly in combination with some adjustment to the screws.
If you find yourself frustrated by a brake-related issue like this, just drop us a line at email@example.com and we'll get you sorted.
Some helpful videos for brake adjustments
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