Everything You Need to Know About Marijuana Surety Bonds

Surety Bond

A surety bond is a commitment for liability to another party’s debt. A surety bond contract is a contract involving three parties. One is the surety which is a guarantee or obligation to a second party, referred to as principal, to a third party also known as the obligee.

Marijuana Surety Bonds State-to-State – How Surety Bonds Are Covering the Cannabis Industry?

Cannabis is also referred to as marijuana. The marijuana industry is mainly about medical marijuana. Responsible and adult use of Marijuana is becoming popular. In California, a new surety bond for the state’s marijuana industry did get approved by The Department of Insurance. Growing marijuana is not easy, marijuana bonds and surety bonds enhance farmers on legal safety in the industry. For example, if mold contaminates a crop, it is illegal for the grower to just throw it away. The marijuana surety bond will enhance safe disposal while covering the disposal costs for the grower.

The state has marijuana licenses for 6 distinct categories. Each license needs a $ 5,000 surety bond. The first is the marijuana cultivation license which allows curing, drying, growing, harvesting, planting, and trimming marijuana. California marijuana Distributor License allows for the transportation of marijuana goods only among licensed cultivators, manufacturers, and distributors. A California marijuana Manufacturer License permits license holders to compound, prepare, produce, and propagate marijuana or its products through extraction, chemical synthesis, etc. A California marijuana Microbusiness License permits holders to cultivate, distribute, manufacture, and retail marijuana. Farming must be done in an area of no more than 10,000 square feet. Manufacturing is also limited to level 1, Type 6. Another license is the California marijuana Retailer License which permits holders to sell marijuana goods to clients by delivering them to the premises. The California marijuana Testing Laboratory License permits the holder to test marijuana and its products.

In addition to testing laboratories, all the six licenses have category “A”, adult-use cannabis, and category “M”, the medical user. The adult marijuana category is for those aged 21 years and above.

Counties and municipalities also govern marijuana bonds, creating marijuana surety bond ordinances. Examples include City of Coalinga Commercial Marijuana Operations Surety Bond worth $ 25,000, City of Los Angeles Commercial Marijuana Surety Bond worth $ 5,000, City of Palm Springs marijuana and Marijuana Tax Bond with varying prices, City of Shasta Lake Commercial marijuana Business Surety Bond $5,000, Yolo County Marijuana Surety Bond worth $ 10,000.

Both the adult and medical marijuana regulation and safety act require that entities be licensed to sell marijuana surety bonds. Most licensing categories require a $ 5,000 surety bond, but some regions will cost higher. Licensing process is however short. The marijuana surety bonds are underwritten individually. The cost will vary from one person to another based on one’s credit score. A company with good credit scores will receive lower marijuana surety bond rates even at 5% of the total bond amount, better than one with a bad credit rating. A bad credit score gives the opposite. Higher credit scores might charge your company only $ 250 per year for the $ 5,000 surety bond. A bad credit score offers the opposite.

The state is the Obligee for these marijuana surety bonds. Meaning the bond protects the state, ensuring that traders comply with the regulations. The marijuana surety bonds will always remain in force from the effective date unless canceled. The bond is thus renewed annually. The owner may cancel the surety bond within 30 days through a written notice to the Obligee.

Who Needs a Marijuana Surety Bond?

Marijuana surety bondshelp the state or municipality monitor and ensure companies have licenses to carry out marijuana business by state rules and regulations. At times, the owner of a marijuana-related business needs to secure a bond that is compliant with the state rules and regulations. This guarantees the owner’s financial responsibility should they violate governing laws. For the state to hold marijuana business owners and owners of these bonds accountable and to promote legal, and transparent behavior. Licensing may be required as necessary.

Securing Cannabis surety bonds is not difficult. You just place a request to or call bond issuers. Cannabis surety bonds are cheap, as low as $ 250, despite the perception that the surety bonds cost a lot. Charges vary depending on the type of bond you buy. The amount of the bond also plays a role. They generally cost between 1.5% to 6% of the required amount of the bond.

Before, using marijuana was illegal. The marijuana industry is an area that has attracted special interest and calls for accountability. This considered, lawmakers have turned to marijuana surety bonds. Bond requirements do not necessarily cut across the industry. The bond requirements will vary from level to level, and any marijuana business owner must be alert and up to tabs with legal and legislative developments.

Liability insurance benefits many companies. However, the cannabis industry has reaped the most benefits, given the numerous risks it faces and possible monetary losses. Cannabis insurance coverage is designed to protect you from different uncertainties. The coverage will be discussed later.

This is why every dispensary needs comprehensive cannabis dispensary insurance. This should include general liability coverage and product liability protection .

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Types of Cannabis Insurance Coverages

There are different types of marijuana insurance coverages. They cover general liability, product liability, crop coverage, workers compensation, umbrella coverage, equipment breakdown, cyber liability, loss of income and property coverage, etc.

OG Cannabis Insurancehas been in the Cannabis Industry for over eighteen years. We are bond experts. We cover the complicated trade of marijuana operations. We offer services at no extra fees and you do not have to wait long to secure your policy. We offer you insurance service in the following areas and thus we welcome calls and inquiries about our services:

Marijuana crop cultivators coverage:every trader needs a comprehensive insurance cover to shield against unforeseen catastrophic events and calamities. OG Cannabis Insurance offers you this insurance service in a manner exclusive to the cannabis industry. Our marijuana Cultivation insurance cover protects your crop. We place an insurable value at each stage of the growth cycle to ensure calamity at any stage is covered.

OG Cannabis Insurance covers seeds, clones or seedlings, vegetative plants, flower plants, harvested plants, and finished stock, and you are covered against theft, fire, ACV loss settlement. The coverage runs up to ten million US dollars and includes medical and recreational operations such as recreational marijuana, indoor crop activity, and greenhouse.

This coverage is important because it covers you against calamities and ensures company continuity should the insured events arise.

Cannabis Property Coverage: Businesspeople work all day and night developing products and services to meet the standards of the industry. Bankruptcy can mess you up and you, therefore, need cover for your property. The property range of insurance that we offer includes dispensary inventory. This covers marijuana, edibles, CBD products, and some non-cannabis products. Company personal property cover includes mobile business items like office supplies, furniture, computers, and machinery. Any property that is part of the building is covered under business personal property. Building: this covers structure housing everything for your company. Tenants’ betterments and improvements: these cover fixtures, alterations, installations, or additions to the rented space. Money and securities: this covers your profits and other monetarily important stuff on your company premises. Outdoor property: it includes fencing and signage used on the building’s exterior. Personal effects of others: this covers anything in the care and custody of the insured, that is the business owner. Employee dishonesty: employees may do something not for the interest of the company but their own, or rather for their own. The actions may result in financial losses. We cover the resultant financial losses for such actions.

Marijuana Dispensary coverage:this is a policy particular to dispensary. The coverages are of three types; General, product, and property liability. We are available to offer you dispensary coverage in Los Angeles, Arizona, Colorado, Maine, Michigan, Nevada, Oregon, or Washington. Call us for a free quote. In the free quote, we give what you are expected to pay up for particular coverage. General liability covers damage to rented space, medical limit. General liability also covers bodily injury or property damage, among others. We encourage you to get to know usbefore you contact us for a quote.