What is a CT medical marijuana bond?
In Connecticut, the Department of Consumer Protection (DCP) requires medical marijuana producers and dispensaries to obtain a license before operating. To get approved for a business license, applicants who wish to run a marijuana production facility must also supply surety bonds.
First, an applicant must submit a medical marijuana facility performance bond to guarantee the successful and timely construction of the facility. Then they must provide a second performance bond that ensures uninterrupted operation to supply dispensaries with marijuana continually.
Get Your Connecticut Marijuana Bond:
- Applicants who wish to run a marijuana production facility must submit surety bonds to get approved for a business license.
- Production facilities must obtain a $2 million performance bond after the Department of Consumer Protection has selected them to receive a business license and before medical marijuana cultivation begins.
- When the bond for construction becomes null and void, a $1.5 million performance bond for the operation of the facility will take effect.
- The bond penalty may be reduced if the producer reaches certain milestones.
Surety Bond Requirements for Medical Marijuana Production Facilities in CT
Production facilities are secure indoor facilities that may cultivate marijuana for medical purposes and sell it to state-licensed dispensaries. These entities must acquire two surety bonds to become licensed to operate in the state of Connecticut, according to House Bill No. 5389 and the state’s Medical Marijuana Program requirements.
1. Connecticut Medical Marijuana Producer Performance Bond (for the Construction of a Production Facility)
Production facilities must submit a $2 million performance bond after the DCP has selected them to receive a business license and before medical marijuana cultivation begins. By accepting the license and submitting the bond, the business agrees to construct a fully operational production facility and commence marijuana production on time.
If the business fails to construct the facility successfully, then the surety must pay the State the penal sum. When the business successfully meets the obligation, the bond will no longer be necessary (and will become null and void).
2. Connecticut Medical Marijuana Producer Performance Bond (for the Operation of a Production Facility)
When the performance bond for construction becomes null and void, this bond will take effect. Producers must post this $1.5 million performance bond and abide by its terms. The bond form states that the business is obligated to operate the production facility in a way that provides an uninterrupted, substantial supply of marijuana to dispensary customers.
If the producer fails to meet the obligation, the surety must pay the State the penal sum.
The penalty may be reduced if the principal (producer) has met these milestones:
- The production facility has remained operational without substantial interruption or violations for one year (a $1 million reduction).
- The production facility has remained operational without substantial interruption or violations for two consecutive years following the initial one-year period (a $500,000 reduction).
This surety bond will expire when the production facility reaches its fifth anniversary OR decides not to renew its business license.
How much do marijuana bonds cost in Connecticut?
Marijuana bonds must be carefully underwritten due to the high-risk nature of the industry. You will pay a small percentage of the full bond amount required. The better your credit score and personal and business financials, the lower your rate may be. You might pay around 1-5% of the penal sum if you have good credit.
Medical Marijuana Connecticut Licensing Process
Get Your Connecticut Medical Marijuana Bond
ZipBonds is certified to provide Connecticut medical marijuana performance bonds. Start the application process by selecting the correct surety bond below. ZipBonds offers the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. If you have any questions along the way, call us at 888-435-4191.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.