What is an Alaska Marijuana Surety Bond?
Since 2015, marijuana sales commenced in Alaska and has generated millions in tax revenue. A recent study shows that the industry could generate much as $8 million in marijuana taxes, with more than $20 million projected by 2020.
To legally sell marijuana in Alaska, you must be over 21 years old and a state-licensed dispensary, cultivator facility, or retailer. These cannabis establishments are regulated by Alaska state marijuana laws. Unlicensed sellers and illegal sales could lead to fines with a penalty of $10,000 and are subject to criminal prosecution.
As part of the licensing requirement, the State of Alaska requires marijuana establishments to post a Marijuana-Cannabis Surety Bond.
There are three types of Alaska marijuana surety bonds:
Medical Marijuana Dispensary Bonds
A Medical Marijuana Dispensary Bond is part of the licensing requirement that guarantees that all medical marijuana dispensaries operating in Alaska will adhere to state laws concerning the sale and distribution of medical marijuana.
Retail Marijuana Tax Bond
The Retail Marijuana Tax Bond is specifically required in the Municipality of Anchorage. This bond is a performance guarantee that in the event the retailer fails to file marijuana tax returns and tax payments on time, the Surety will be held liable to the municipality up to the penal sum of the surety bond.
According to AMC 12.50.160: “To ensure that a retailer performs its fiduciary responsibility to timely collect, account for, safeguard, and remit taxes levied by this chapter, the retailer shall provide a guarantee to one or more of the methods specified in this section. A guarantee is required to be provided by all retailers in the amount that the Chief Fiscal Officer estimates to be an average amount of annual sales tax collected by the retailer, a comparable retailer(s), industry averages, or $10,000.00 whichever is higher.”
Marijuana Cultivation Facility Bond
For growers and cultivators, a Marijuana Cultivation Facility Bond ensures payment of excise taxes. The Marijuana Control Board may not issue a license under AS 17.38 until the department has received and the Department of Law has approved the bond.
What are the conditions of an Alaska Marijuana Surety Bond?
For the Medical Marijuana Dispensary Bond, dispensaries must post this bond to be registered and licensed by the state.
For the Anchorage Retail Marijuana Tax Bond, the bond shall be payable to the municipality and shall be conditioned upon payment in full of the tax, including penalties and interest due and to become due and to owe to the municipality by the said retailer during the effective period of the bond under the provisions of AMC 12.50.
Tax payments must be filed and the retail sales tax remitted on or before the last day of the month following the month during the occurrence of retail sales of marijuana and marijuana products.
For the Marijuana Cultivation Facility Bond, the bond shall ensure that cultivated marijuana plants are not visible to the public without the use of optical aids (aircraft of binoculars) and must prevent any and all unauthorized access. The property where the marijuana is cultivated must be in the lawful possession of the cultivator.
Violation of Alaska marijuana growing laws is subject to a fine of up to $750. Upon receipt of the bond and its subsequent approval, the department shall notify the Marijuana Control Board that the marijuana cultivation facility has met the bond requirement.
How much does an Alaska Marijuana Surety Bond Cost?
The bond cost (bond premium) is a percentage of the bond amount, which ranges between 1%-5% of the total bond amount. Your financial capacity and credit score rank among the factors when determining the premium along with the bond amount.
Dispensaries, retailers, and cultivators must furnish a cash or surety bond of $5,000, payable to the department and approved by the Department of Law.
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How do I obtain an Alaska Marijuana Surety Bond?
Find a surety provider that is authorized to underwrite and issue medical and retail marijuana bonds for Alaska.
You can easily get one by following these simple steps:
STEP 1: Apply for the bond
You need to submit a bond application.
STEP 2: Underwriting
To qualify, you MAY need to submit these requirements, alongside your completed bond application:
- Financial documents MAY be required (bank account statements, escrow account balances, capital, sources of income, tax payment history, letters of credit, etc.)
- Bond forms
- Possible other requirements as needed (land use/facility use permit, seller's permit, etc.)
STEP 3: Bond execution
Once the underwriter has conducted the pre-qualification process, we will immediately issue the bond to you!
If you ever need this type of surety bond for your business, please do not hesitate to contact us!