What is a California Marijuana Surety Bond?

California Marijuana Surety Bond

 

A California Marijuana Surety Bond is classified into several marijuana surety bond types. Most individuals in the California Marijuana industry need the General $5,000 California Marijuana Surety Bond.  This includes growers, manufacturers and retail locations.(this entire cycle is often referred to as “seed to sale”).  In addition to the general $5,000 Californa Marijuana Surety Bond, some specific counties in California require a separate surety bond.

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Who are the three California  Cannabis Licensing Entities that require Surety Bonds?   

If you are obtaining California cannabis surety bonds, you will be purchasing your surety bond specifically to comply with the requirements of these three following California cannabis licensing entities:

1)  The Bureau of Cannabis Control (BCC) is the lead agency in developing regulations for medical and adult-use cannabis in California. BCC is responsible for licensing retailers, distributors, testing labs and microbusinesses.

2)  The Manufactured Cannabis Safety Branch, a division of the California Department of Public Health (CDPH)is responsible for regulating the manufacturers of cannabis-infused edibles for both medical and nonmedical use.

3)  Cal Cannabis Cultivation Licensing, a division of the California Department of Food and Agriculture (CDFA), is responsible for licensing cultivators of medicinal and adult-use (recreational) cannabis and implementing a track-and-trace system to record the movement of marijuana through the distribution chain.

Potentially, if you are conducting distribution, manufacturing, and cultivation, you could need at least three separate surety bonds (to satisfy the requirements of each licensing entity).   We suggest that you contact us to determine the proper number (and type) of surety bonds required for your business.

How much does a California Marijuana Surety Bond cost? 

Usually, the bond premium (cost) is $220 to $300 per bond.

General Information for Marijuana Surety Bonds in California:

According to the Medical Cannabis Regulation and Safety Act (MCRSA), a “dispensary” is described as “a facility where medical cannabis, medical cannabis products, or devices for the use of medical cannabis or medical cannabis products are offered, either individually or in any combination, for retail sale, including an establishment that delivers, pursuant to express authorization by local ordinance, medical cannabis and medical cannabis products as part of a retail sale.”

Two kinds of dispensary licenses under the MCRSA:

  • Type 10 for a general dispensary
  • Type 10A defined as simply as a “dispensary.”

California will be the fifth state to legalize recreational pot following Alaska, Colorado, Oregon, and Washington. A Retail Marijuana License Bond involves retail cannabis shops and recreational pot sellers.

The bonds also act as guarantees that these businesses will meet their licensure and permit requirements before lawfully conducting business.

Who are the parties involved in a Surety Bond?

Marijuana surety bonds, like all surety bonds, are an agreement between three parties:

  • Obligee: the state or municipality requiring the licensing.
  • Principal: the business seeking licensure and permit to conduct business in the marijuana sector.
  • Surety: the company that provides financially backed guarantees to the Obligee that the Principal will act in compliance with the set regulations of the state or municipality.

California marijuana bonds enable the Surety to be financially subject to actions carried out by the Principal. If the principal does unfavorably administer business, the Obligee could make claims against the marijuana bonds to help regain any financial damages or cover any huge fees or penalties charged to the Principal for those actions.

 

Why do you need a California Marijuana Surety Bond?

My most business owners, the only reason they obtain the Marijuana surety bond is that the State of California mandates that you have it.  You will not be able to obtain your Cannabis license without the necessary surety bonds. You could face judicial actions, substantial fines, and penalties if you do not comply with state or municipal laws regarding legal marijuana transactions and operations.

Before opening a marijuana dispensary or retail shop in California, make sure that you fully understand its legal implications and laws that you will need to follow.

 

Are there other types of California Marijuana Surety Bonds?

Yes. While Medical Marijuana and Retail Marijuana License Bonds are two of the general types of California marijuana surety bonds, there are other types required by a specific city or that adhere to a certain function.

City of Coalinga Marijuana Operation Surety Bond

According to the Section 9-5.128 of the Coalinga Municipal Code, no person or entity shall operate a commercial marijuana operation within the City of Coalinga without initially obtaining a commercial marijuana regulatory permit from the city government. The regulatory permit shall be site specific and shall identify the commercial marijuana activities that will be allowed at the site. As part of the permit requirements, a $25,000 marijuana surety bond must be sufficiently filed to secure claims that occur under the Permit as they correlate to the destruction of the cannabis or cannabis products.

Typically, a copy of the bond form from the City of Coalinga is required.

Yolo County Marijuana Surety Bond

For Yolo County, a $10,000 surety bond is required specifically for issues related to Yolo County.   The conditions of the bond are to ensure that the Principal fully complies with the provisions of Chapter 20 to Title 5 of the Yolo County Code, as currently written or later amended,  Click to see details of the Yolo County Marijuana Surety Bond.

Shasta County Marijuana Surety Bond

For those doing business in Shasta County will need a $5,000 surety bond specifically for Shasta County.  Note:  Getting the Shasta County bond, does not eliminate the need for the statewide California $5,000 Cannabis Surety Bond.  Both bonds are needed to transact business in Shasta County.

Los Angeles Commercial Cannabis Surety Bond

This type of marijuana surety bond is for cultivators, distributors, manufacturers, retailers and non-retailers, transporters, and testing facilities of commercial cannabis in the City of Los Angeles. This guarantees the payment of due taxes and compliance with city regulations in getting the licensure requirements to conduct business.

The regulations equally track initial state regulations under the MCRSA.

How do I obtain a California Marijuana Surety Bond?

Find a reputable and experienced surety bond provider that can provide you this particular type of California surety bond. Some states have legalized both medical and recreational weed, while other states have only legalized medical marijuana. And other states just do not legalize marijuana at all.

It is crucial that your Surety understands your bonding needs and the type of marijuana business that you are going to operate to obtain your license and/or permit.

You will need to submit to your Surety:

  • Completed surety bond application
  • Usually, no other documentation is required.

In need of a marijuana surety bond for your business? Get bonded by contacting us today!

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