Cannabis surety bonds range from $5,000 to $5,000,000. They provide a financial guarantee to states or municipalities that companies will follow laws and regulations tied to their licenses.
These bonds work in two key ways:
- They require companies to undergo financial and credit scrutiny. This ensures leadership is qualified and poses a low risk.
- If a company violates bond terms and causes financial loss, the state or municipality can file a claim. If valid, the surety pays up to the bond amount and seeks reimbursement from the company.
Challenges in Getting Cannabis Surety Bonds
Securing cannabis surety bonds isn’t easy. Federal and state governments often disagree on cannabis legalization, making the market limited. Underwriting requirements also vary by bond size and location.
Additionally, companies with multiple licenses—whether in one state or across several—must secure separate bonds for each license.
Common license types include:
- Grower
- Cultivator
- Dispensary (medical and recreational)
- Retailer
Costs and Steps to Obtain Cannabis Surety Bonds
The state or municipality requiring the bond sets the bond amount. Premium costs range from 1.5% to 15% of the total bond amount. Your credit and financial standing determine the final rate.
To get started, work with an expert. At Kapnick, our surety expert collaborates with cannabis specialists to streamline the process. Steps include:
- Completing an application
- Running a credit check
- Providing financial details for the company and all owners
Compliance is critical in the fast-changing cannabis industry. That’s why partnering with experts like Kapnick ensures a smooth and reliable process.
