What Is a California Commercial Cannabis Licensee Bond?
As of 2018, commercial cannabis licensees in California have to obtain a surety bond. The commercial cannabis licensee bond is one of the requirements you have to meet before you start your operations.
This bond ensures that licensees will follow all applicable state rules and regulations. More specifically, it can cover the costs of destruction of medical cannabis in case you have violated any licensing criteria and are required to do so.
Similarly to other surety bonds, your commercial cannabis licensee bond works like a three-party contract. Your business is the principal. The Bureau of Cannabis Control is the obligee which requires the bonding. The surety is the third party that provides the bond.
Questions about Medical Marijuana Bond in California
When do you have to obtain this surety bond?
All commercial cannabis licensees in California need to post a surety bond in the amount of $5,000. It should be presented to the Bureau of Cannabis Control, which is the licensing authority. You should use the official bond form.
The bond ensures your compliance with the Medicinal and Adult-Use Cannabis Regulations and Safety Act (MAUCRSA). It is defined in Division 10 of California’s Business and Professions Code.
How much do I have to pay for getting bonded?
Your surety bond cost is based on the bond amount which you have to obtain. In the case of California commercial licensee bonds, this is $5,000. However, to get bonded, you need to pay only a fraction of it, which is called the bond premium. If your finances are stable you can expect a rate between 1% to 3% of the bond amount.
How exactly is your cost set? Your surety has to examine a number of factors. It assesses the strength of your personal and business finances to measure the level of bonding risk. The criteria that matter include your personal credit score, business finances, and any assets and liquidity you can showcase. Your bond price will be lower if these factors are strong and show trustworthiness.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|California commercial cannabis licensee bond||$5,000||$100||$100-$125||$125-$250||$250-$500|
Can I get a California commercial cannabis licensee bond with bad credit?
Yes, with Lance Surety Bonds you are able to get bonded even if your finances are far from perfect. We are operating our Bad Credit Surety Bonds program for applicants with low credit scores, tax liens, bankruptcies, and civil judgements.
The usual bonding rates for bad credit applicants are in the range of 5%-10%. Still, we are able to offer you a great bonding option tailored to your circumstances. This is due to our excellent collaboration with a number of A-rated, T-listed surety companies.
How do I apply for my bond?
Do you want to learn more about the way bonding works? Don’t miss out our How to Get Bonded page, which is an in-depth resource on the topic.
For further question, don’t hesitate to call us at (877) 514-5146. Lance Surety Bonds’ experts will be happy to assist you.
What happens if I get a bond claim?
The purpose of your California commercial cannabis licensee bond is to protect the state and the general public from potential unlawful activities you may engage in. If you fail to abide by the law, you may get a claim against the surety bond. This is how affected parties can seek a financial compensation. The amount can be up to the penal sum of your bond, which is $5,000.
At first, it may be your surety that covers the costs to ensure a quick reimbursement. However, you have to repay it in full afterwards. Thus, bond claims are a financial and reputational threat that is best to be avoided.
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What Our Clients Have To Say?
Kimberlee AblesQuick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
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