What is an Illinois Marijuana Surety Bond?

Illinois Marijuana Surety BondFollowing in the footsteps of other states that have legalized medical marijuana, Illinois has removed state-level criminal penalties from the medical use and cultivation of cannabis. The state has tapped into the medical cannabis industry for the health and welfare of its citizens.

In Illinois, licensed medical marijuana businesses (cultivators and dispensing organizations) are required by the state to post surety bonds for timely payment of sales tax revenues and guaranteeing lawful performance in the cultivation, manufacture, and dispensing of medical cannabis.

These bonds, pursuant to the Illinois Compassionate Use of Medical Cannabis Pilot Program Act (“Act”), 410 ILCS 130/1 et. seq, is mandated in order for marijuana dispensaries or other licensed entities to obtain their license to operate.

Medical Cannabis Dispensing Organization Registration Surety Bond

The Medical Cannabis Dispensing Organization Registration Surety Bond is part of the registration and licensing requirements before being able to legally conduct business in the state. It requires dispensing organizations to also pay the required sales and use taxes due to the state government. The bond is conditioned to be bound by the laws and regulations of the Illinois Department of Financial and Professional Regulation, Division of Professional Regulation (Obligee).

Medical Cannabis Cultivation Center Surety Bond

The Medical Cannabis Cultivation Center Surety Bond, which serves as a performance bond and provides proof of financial responsibility, is required for cultivation facilities to ensure the faithful performance of their continuous construction and operations. This bond is a requirement once the cultivation center has made an application to the Illinois Department of Agriculture (Obligee) to be licensed.

 

What are the conditions of the Illinois Marijuana Surety Bond?

Medical Cannabis Dispensing Organization Registration Surety Bond

The condition of this bond guarantees that the dispensing organization (Principal) “timely and successfully completes dispensary construction, operates in a manner that provides an uninterrupted supply of cannabis, faithfully pays registration renewal fees, keeps accurate books and records, makes regulatorily required reports, complies with State tax requirements, and conducts the dispensary in conformity with the Act and the Division’s Illinois Administrative Rules. 68 IAC 1290.”

Medical Cannabis Cultivation Center Surety Bond

The condition of this bond ensures the continuous production for any reason for more than ninety (90) consecutive days after it has completed construction of the facility and uninterrupted supply of medical cannabis to licensed dispensaries during the term of the license.

 

How much does an Illinois Marijuana Surety Bond cost?

The costs of the bond, which is the percentage of the bond amount, may vary depending on the applicant’s credit score. The percentage usually ranges from 1%-5% of the bond amount.

For the medical cannabis dispensary registration, the bond amount is $50,000.

For the medical cannabis cultivation center performance bond, the bond amount is $1,500,000. The sum of the bond is reduced if the cultivation facility meets certain milestones (such as continuous operation without committing any violations). The reduction is $500,000.

Know more about your bond costs and requirements by getting your FREE quote here!

 

How can I obtain an Illinois Marijuana Surety Bond?

A reputable and authorized surety bond agency can issue this type of surety bond for cannabis establishments.

here are the basic steps to qualify for bonding:

STEP 1: Apply for the bond

You need to submit a bond application. make sure that all required fields are filled up.

STEP 2: Underwriting

We will ask you a couple of relevant information needed for the bond. It’s crucial to provide all of the necessary information to your surety underwriter.This will include your financial history, job performance history, and your credit score. An underwriter will carefully evaluate all those.

The underwriter will carefully evaluate all these:

  • Completed bond application
  • Bond forms (copies can be obtained from the two Departments)
  1. Medical Cannabis Dispensing Organization Registration Surety Bond
  2. Medical Cannabis Cultivation Center Surety Bond
  • Financial documents (anything that would demonstrate your financial capacity – bank balances, income statements, proof of tax payments, etc.)
  • Other requirements as needed (business plans, facility/land use permits, copies of your registration/licensing application, seller’s permit, etc.)

STEP 3: Bond execution

Once the underwriter is done with the underwriting process, we will immediately issue the bond and send it to you!

Ready to start on your bond? Contact us today!

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