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California Cannabis Surety Bonds

What is a California Cannabis Bond?

  • A California Cannabis Bond is a $5,000 surety bond that is required to be posted by cannabis business licensees before they are issued a license to conduct business in the State of California.
  • There are six (6) different cannabis licenses issued by the State of California, each of which requires a $5,000 surety bond. The licenses issued by the State are:
    • California Cannabis Cultivation License
    • California Cannabis Manufacturer License
    • California Cannabis Distributor License
    • California Cannabis Retailer License
    • California Cannabis Testing Laboratory License
    • California Cannabis Microbusiness License
  • California allows local city and county governments to pass their own regulations and ordinances concerning cannabis businesses as long as they also comply with the State’s requirements. Therefore, many municipalities have created ordinances in addition to the state’s regulations. Below, to the best of our knowledge, are the municipalities that have passed ordinances requiring cannabis businesses to post a surety bond:
    • City of Coalinga Commercial Marijuana Operations Surety Bond - $25,000
    • City of Los Angeles Commercial Cannabis Surety Bond - $5,000
    • City of Shasta Lake Commercial Cannabis Business Surety Bond - $5,000
    • Yolo County Cannabis Surety Bond - $10,000
    • City of Palm Springs Cannabis and Marijuana Tax Bond – Varies
  • We also write:
  • If you need a California Cannabis Surety Bond but don’t see it above, please give us a call on our toll free number, 1-800-480-3883. Legislation is always changing, so we may not have had the chance to update our website yet. Most bonds are required at the state level, but some may be required at the county and/or city level. Regardless if it is listed or not, we can write your bond!

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  • In 2015, California enacted Assembly Bill 243, Assembly Bill 226, and Senate Bill 643. These bills established a framework for medicinal cannabis businesses in California. These bills are known as the Medical Cannabis Regulation and Safety Act (MCRSA).
  • In 2016, Proposition 64 was voted into law. Proposition 64 is also known as the Adult Use of Marijuana Act (AUMA). The Act allowed for adults 21 years of age or older to grow, possess, and use recreational cannabis. It also made it legal to sell cannabis via a regulated business.
  • In 2017, Senate Bill 94 was passed by the California State Legislature. SB 94 integrated MCRSA with AUMA to create the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). The Bill created one system to govern both medical and adult use cannabis in the State of California. This bill included the requirement for all licensees to post a surety bond.
  • Unlike most other states, California uses the term “cannabis” instead of “marijuana” or “marihuana” to describe the plant. Cannabis, which is the scientific name and the correct way to identify the plant, is the genus of the plant.
  • California defines Cannabis as all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. Cannabis also means the separated resin, whether crude or purified, obtained from cannabis.
  • Per Senate Bill 94, each of the six licenses has two subcategories, except for testing laboratories. Cannabis licenses will be designated as either “A” (adult-use) or “M” (medical). Cannabis testing labs will be able to test both adult-use and medical cannabis products.
  • An “A-license” is issued for cannabis or cannabis products that are intended for adults who are 21 years of age and older and who do not possess a physician’s recommendation. This can also be referred to as a recreational cannabis license or a recreational marijuana license.
  • An “M-license” is issued for commercial cannabis activity involving medicinal cannabis. This can also be referred to as a medical cannabis license or a medical marijuana license.
  • Cannabis Cultivators are authorized to plant, harvest, grow, cure, dry, grade, or trim cannabis.
  • Cannabis Manufacturers are authorized to conduct the production, preparation, propagation, or compounding of cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis at a fixed location that packages or repackages cannabis or cannabis products or labels or relabels its container.
  • Cannabis Distributors are authorized to transport cannabis goods only between licensed cultivators, manufacturers, and distributors. They are responsible for transporting, arranging for testing, and conducting quality assurance review of cannabis goods. Distributors also ensure the cannabis goods comply with all labeling and packaging requirements.
  • Cannabis Retailers are authorized to sell cannabis goods to customers at their premises or by delivery. They are required to have a licensed premises but are not required to open the premise to the public.
  • Cannabis Testing Laboratories are authorized to offer or perform tests of cannabis or cannabis products. Testing labs are required to obtain and maintain ISO/IEC 17025 accreditation.
  • Cannabis Microbusinesses are authorized to engage in cultivation, manufacturing, distribution, and retail sale, or any combination of the four activities. They shall cultivate on an area of less than 10,000 square feet. They shall only participate in Level 1 manufacturing, Type 6.
  • California Marijuana Surety Bonds are individually underwritten so the cost can vary and is primarily dependent on the credit score of the applicant. Customers with good credit scores can qualify for a rate as low as 5% of the bond amount. Of course, we can typically handle all credit types - from excellent to poor - as such those terms vary.
  • For example, applicants with strong credit scores can pay as low as $250 per year for their surety bond.

The California Recreational Cannabis Surety Bond / California Medical Cannabis Surety Bond is in place to ensure the Principal (Cannabis Business) covers the costs of destruction of cannabis or cannabis products if necessitated by a violation of licensing requirements.

  • In June of 2017, the Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA) was signed into law. The Act created one regulatory framework for both medical cannabis and recreational cannabis.
  • Three state agencies were given the responsibility of developing, implementing, and overseeing the State’s cannabis industry. The three state agencies and their respective roles are:
    • The California Department of Consumer Affairs (DCA) established the Bureau of Cannabis Control (BCC), which is directed to draft regulations for medical and adult-use cannabis in California. The BCC is responsible for licensing distributors, retailers (dispensaries), testing labs and microbusinesses. The BCC was formerly the Bureau of Medical Cannabis Regulation (BMCR).
    • The California Department of Food & Agriculture (CDFA) created CalCannabis Cultivation Licensing, which is directed to draft regulations and license cultivators. CalCannabis is also responsible for implementing the Track-and-Trace System, which records the movement of cannabis plants from cultivation to final sale.
    • The California Department of Public Health (CDPH) established the Manufactured Cannabis Safety Branch (MCSB), which is directed to draft regulations and license manufacturers of cannabis products. The MCSB was formerly the Office of Medical Cannabis Safety (OMCS).
  • California Statutes, Section 26051.5.a.10, requires licensees to provide proof of a bond to cover the costs of destruction of cannabis or cannabis products if necessitated by a violation of licensing requirements.
  • The Obligee on the California Cannabis Surety Bond is the State of California.

California Marijuana Bonds remain in full force and effect from the effective date until they are cancelled. Therefore, the bond will renew every year and the bonding company will bill for the bond on an annual basis. The surety bond may be cancelled with thirty (30) days written notice to the Obligee.

Contact The ProSure Group! As surety bond experts in business since 1993, The ProSure Group has experience handling bonds of this type and has partnerships with more than 30 different surety companies, most of which are A.M. Best Rated and Treasury Listed. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.

What you will need to submit to obtain your license:

**The regulatory framework is not scheduled to be implemented until January 1, 2018. Therefore, the department is not currently accepting applications or issuing licenses. Check back after that date for more details about what you will need to submit to obtain your license.

If you don't see the bond you're looking for give us a call at (800) 480-3883 and speak to one of our many
California Cannabis Surety Bonds Experts!
Type Bond Obligee Bond Amount
License California Cannabis Cultivation Surety Bond State of California
$5,000
License California Cannabis Distributor Surety Bond State of California
$5,000
License California Cannabis Manufacturer Surety Bond State of California
$5,000
License California Cannabis Microbusiness Surety Bond State of California
$5,000
License California Cannabis Retailer Surety Bond State of California
$5,000
License California Cannabis Testing Laboratory Surety Bond State of California
$5,000
Permit Coalinga Commercial Marijuana Operations Surety Bond City of Coalinga
$25,000
License Los Angeles Commercial Cannabis Surety Bond City of Los Angeles
$5,000
Tax Palm Springs Cannabis and Marijuana Tax Bond City of Palm Springs
Varies
License Shasta Lake Commercial Cannabis Surety Performance Bond City of Shasta Lake
$5,000
License Yolo County Cannabis Surety Bond Yolo County
$10,000