A marijuana surety bond is a bond that businesses need to obtain before they can open a medical or retail marijuana dispensary. There is no one nation-wide type of bond referred to as a marijuana surety bond. Instead, depending on state there are a number of bonds of different scope and purpose required for the licensing of medical or recreational marijuana dispensaries.
Currently, applications for medical and recreational marijuana dispensaries are mainly accepted in the state of Colorado. Other states such as Illinois, Connecticut, Florida and Nevada have a more restricted application process.
The marijuana bond required in the state of Colorado can be understood as a subcategory of another type of bonds - a sales tax bond.
How Does a Marijuana Surety Bond Work?
There are always three sides to a surety guarantee: the principal (business owner), the obligee (government) and the surety. The surety’s role is to provide a financial guarantee to the obligee that the principal will duly fulfill his contractual obligations.
In the case of Colorado, marijuana surety bonds, which are a type of sales tax bond, are meant to guarantee that medical or retail marijuana dispensaries will report their taxes for the sale of their goods, and pay these in due time.
If they do not report their taxes and effectively break state law, the surety may be required to step in and resolve the case by compensating the obligee.
Marijuana Surety Bonds Cost per State
A number of states where medical or recreational marijuana is legal require that businesses post a marijuana surety bond in order to receive a license. Currently, only the state of Colorado is accepting further applications for the licensing of medical and recreational marijuana dispensaries.
As with any other type of bond, applicants should know that they don’t have to pay the full amount of the bond but only a certain percentage - a so-called premium. This usually ranges between 1%-15% of the full bond amount. The exact amount of the premium mostly depends on the credit score of the business owner. See below for full information on bonding and licensing.
Colorado Medical and Retail Marijuana Bond
Colorado has two types of marijuana bonds - a medical marijuana dispensary license bond and a retail license marijuana bond. Both of these cost $5,000 and are of the sales tax bond variety. They need to be posted to the Colorado Department of Revenue.
City of Denver Medical and Retail Marijuana Bond
Additionally, the city of Denver has its own set of regulations, which requires dispensaries and retailers to post a second bond on top of the first one. Dispensaries need to post a $5,000 City of Denver medical marijuana surety bond. Retailers in the city of Denver need to post a retail marijuana license bond in the amount of $20,000.
Colorado Medical and Retail Marijuana Business Licensing
Licenses are issued by the State of Colorado's Marijuana Enforcement Division and additionally, if in Denver, by the City of Denver's Department of Excise and Licenses. Along with the marijuana bond, businesses must also submit the relevant applications forms and documentation.
Applications fees for a medical marijuana license in Colorado range from $7,000 to $15,000 depending on the type of center. The type of center (1, 2 or 3) is determined by the amount of patients which the center will have. Initial licensing fees range from $5,200 to $13,200, again depending on the type of center.
Application fee for a retail marijuana license is $5,000. License fees depend on the type of establishment (a store, a cultivation facility, etc.) range between $2,000 and $3,000.
Both types of licenses are valid for a one-year period and businesses receive a notification by mail about the expiration of their license 90 days earlier.
Bad Credit Surety Bond Program
With a bad credit you will likely have to pay a higher premium on your marijuana surety bond. This is so because bad credit signals greater financial instability. Therefore, the risk factor associated with such instability is calculated into the cost of the premium. An applicant with a bad credit will have to pay between 5%-15% of the total bond cost on their premium.
But even if you have bad credit, it is still possible to get a marijuana surety bond. Lance Surety Bonds has long-standing experience in obtaining the best prices even to higher-risk applicants.
Get Your Marijuana Bond Today
Lance Surety Bond Associates has direct access to the best bond programs in the country. Through our well-developed network of partner surety bond companies, all of which are A-Rated and T-Listed, we can offer you the best price for your marijuana bond.
Want to know the amount of your marijuana surety bond premium? Apply online
through our website to receive a quote free of charge! If you need more information or advice, you can also call us at (877)-514-5146 to speak to one of our licensed bond agents.