What is a Medical Marijuana Surety Bond?

With the legalization and decriminalization of medical marijuana in many states, laws have been introduced to regulate the industry.

As one way of ensuring the legal compliance of growers, producers, and distributors of medical marijuana products, many states require a surety bond to be posted by such parties. Similarly, in some states that allow for recreational marijuana products to be cultivated and sold, a similar bond may need to be posted.

These types of bonds are required for a variety of reasons. For example, you may need to post a medical marijuana surety bond:

  • To get a business license in your state
  • To guarantee that as a producer, cultivar, processor, seller or distributor of medical marijuana you will be compliant with all business standards and state requirements
  • To guarantee that the facility in which you perform any of these activities is in compliance with legal and medical requirements

Why do I need this bond?

When you post a bond, you agree that you will comply with some or all of the above requirements, depending on what is needed in your state.

If you violate these requirements, a claim can be made against your bond by the state or by any other aggrieved party. The surety will then investigate the claim and determine whether and what amount of compensation to extend to claimants.

If the claimant's losses are as high or even higher than the bond amount, the surety may extend the full compensation covered by the bond.

If you've never had to obtain a bond before, see our What is a surety bond guide for a detailed explanation of how bonds work!

Start your surety bond application today! Why us?
  • Quick turnaround - just 1-2 business days
  • Tailor-made advice on building a strong application
  • Exclusive bad credit programs

See the sections below to learn more about the cost of this bond, and how you can apply!

If you have any state-specific questions about medical marijuana bonds, call us at (866)-450-3412!

How Much Does it Cost to Get a Medical Marijuana Bond?

Depending on the state you will be operating in, you will be required to get a bond in a certain dollar amount.

Medical marijuana bonds vary in their amounts between as little as $5,000 and as much as $5,000,000 in some states. To find out what the amount of your bond must be, contact the agency that regulates medical marijuana in your state.

The cost of your bond then is equal to a percentage of its total amount. When you contact a surety to apply for a bond, it will determine that percentage, or rate, on the basis of several criteria.

Factors that determine your bond rate

Your personal credit score is the main factor that influences the cost of your bond. It is considered by sureties the most reliable indicator of thе likelihood of a claim being filed against a bond. Respectively, the higher your score is, the cheaper it is to get bonded.

Applicants with very good to moderate scores can expect to be offered a rate on their bond ranging between .75% and 5% of its total amount. Those with low or so-called bad scores are offered rates upward of 5%.

To more accurately determine your bond cost, sureties may also want to review your:

  • Personal and business financial statements
  • Fixed and liquid assets
  • Industry experience

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How Do Bond Claims Occur?

When you get bonded, you enter into an agreement to comply with various requirements and conditions. For example, your bond may require you to pay taxes on all of your medical marijuana product sales. Or, alternatively, you may be required to comply with various standards and rules when you cultivate, produce, or distribute such products.

If you violate the conditions of your bond, you are liable for any losses or damages that arise out of such a violation. For example, if you don't pay taxes on your sales, the state may file a claim against your bond to secure compensation in the amount of required taxes.

When a claim is filed, the surety that backs the bond must investigate the claim to determine whether it is legitimate and what the appropriate amount of compensation is. It will then typically extend compensation to claimants.

Once a claim is resolved, the bonded individual or business must reimburse the surety for any compensation it has extended to claimants.

With the amount of some medical marijuana bonds being so high, giving rise to a claim can be a very difficult and costly issue. The best strategy to avoid claims is to remain compliant with the conditions of your bond at all times!

Apply For Your Bond!

Ready to get your medical marijuana bond? Click on the banner below and complete the bond application form. We'll then contact you to provide you with a free quote and further details about the bonding process.

Start your surety bond application today! Why us?
  • The lowest possible rates
  • A 100% money-back guarantee
  • Access to specialty programs, not available to small agencies

For further information about these bonds or if you need assistance with your application, call us at (866)-450-3412!


About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post, Entrepreneur.com, Azcentral.com and many more.