What is a Connecticut Marijuana Surety Bond?

Connecticut Marijuana Surety BondIn Connecticut, medical marijuana dispensaries and producers are required to procure licenses from the Commissioner of Consumer Protection. The Commissioner of Consumer Protection will determine the appropriate number of dispensaries and producers to meet the needs of qualified patients and adopt regulations to provide for the licensure, standards, and locations for dispensaries and producers.

However, like most marijuana surety bonds that are part of the license requirements, the Connecticut Department of Consumer Protection (Obligee) has required particular bonds for the construction and operation of already-licensed medical marijuana production facilities.

There are two types of Connecticut marijuana surety bonds:

Medical Marijuana Producer Performance Bond for the Construction of a Production Facility

By accepting the license, the medical marijuana producers (Principal) are required to construct a fully operational production facility and able to commence production of medical marijuana as indicated in the license application.

Medical Marijuana Producer Performance Bond for the Operation of a Production Facility

Upon acceptance of license and successful construction of a production facility, medical marijuana producers are obligated to operate the facility in a manner that provides a substantially uninterrupted supply of marijuana to its usual dispensary facility customers during the term of the license.

 

What are the conditions of the Connecticut Marijuana Surety Bond?

For the construction of a production facility, the performance bond is conditioned that if the Commissioner of DCP determines, after a hearing pursuant to the Uniform Administrative Procedures Act, sections 4-166 to 4-189, inclusive, of the Connecticut General Statutes, that the medical marijuana producer has failed to complete the construction of a production facility, then the Surety will immediately pay the penal sum to the State.

If the Commissioner of DCP determines that the medical marijuana producer has timely and successfully met its obligation to construct a fully operational production facility and able to initiate production of marijuana as indicated in the license application, then the bond will be considered null and void. Until such time, the bond will remain in full force and effect.

For the operation of a production facility, the bond condition states that if the Commissioner of DCP determines, after a hearing pursuant to the Uniform Administrative Procedures Act, sections 4-166 to 4-189, inclusive, of the Connecticut General Statutes, that the medical marijuana producer has failed to provide a substantially uninterrupted supply of marijuana to its usual dispensary facility customers during the term of the license, then the Surety will pay the penal sum to the State.

If the production facility remained operational without substantial interruption and any violation of the Act or sections 21a-408-1 to 21a-408-70, inclusive, of the Regulations of Connecticut State Agencies for the second period of two consecutive years or it, voluntarily chooses not to renew license and notifies the DCP in accordance with section 21a-408-23(f) of the Regulations of
Connecticut State Agencies, then, the obligation of the bond will be null and void. Until such time, the bond will remain effectively valid.

 

How much does a Connecticut Marijuana Surety Bond cost?

The bond cost is typically the percentage of the bond amount, which ranges from 1%-5%. The bond amount varies depending on the type of bond.

For the Medical Marijuana Producer Performance Bond for the Construction of a Production Facility, the bond amount is $2,000,000 and replaced by $1,500,000 upon the completion of the construction.

For the Medical Marijuana Producer Performance Bond for the Operation of a Production Facility. The bond amount remains as $1,500,000 for maintaining its operations.If the production facility remains operational without substantial interruption and any violations, the bond amount will be reduced to $500,000.

To know more about your bond costs and requirements, get your FREE quote here!

 

How do I obtain a Connecticut Marijuana Surety Bond?

The initial step is to find an experienced and knowledgeable surety bond provider that can provide you this type of surety bond. A certified surety underwriter will take a comprehensive look at your bonding capacity to know if you qualify for the bond.

You will need to submit the following requirements:

  • Completed bond application
  • Bond forms (can be obtained from the State Department of Consumer Protection):
  1. For the construction of a production facility
  2. For the operation of a production facility
  • Financial documents (bank account balances, income statements, other sources of revenue, letters of credit, etc.)
  • Other documents as required (license, facility permits, etc.)

If you need to obtain this type of bond in your state, please do not hesitate to contact us!

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