What is a Florida medical marijuana bond?
Florida requires Medical Marijuana Treatment Centers (MMTCs) to post a $5 million surety bond to maintain a license for cultivating, distributing, and selling marijuana legally. MMTCs are commonly known as medical marijuana dispensaries in Florida. The marijuana bond ensures businesses comply with tax laws and industry regulations.
How much do marijuana bonds cost in Florida?
As stated above, you will be required to obtain either a $5 million or $2 million bond. If you have excellent credit, business and personal financials, and experience in the industry, your premium could be as low as 1% of the bond amount. For the $5 million bond, this would amount to $50,000 per year or $100,000 for two years. The $2 million bond would cost $20,000 per year or $40,000 every other year. These bonds are high risk and must be carefully underwritten.
Get Your Florida Marijuana Bond:
- Florida requires Medical Marijuana Treatment Centers (MMTCs) to post a $5 million surety bond to maintain a license for cultivating, distributing, and selling marijuana legally.
- The Office of Medical Marijuana Use implements the rules and oversees the use of medical marijuana.
- If an MMTC fails to perform according to the law or violates the Compassionate Medical Cannabis Act, the surety bond may offer compensation for the injured party.
- These bonds are high risk and must be carefully underwritten.
Current Bond Requirements in Florida
In the State of Florida, only licensed Medical Marijuana Treatment Centers may sell medical marijuana. They are the only businesses “authorized to dispense medical marijuana and low-THC cannabis to qualified patients and caregivers,” according to the Office of Medical Marijuana Use (OMMU). The OMMU, part of the Florida Department of Health, implements the rules and oversees the use of medical marijuana. It also grants medical marijuana businesses, if approved, a license to operate.
Getting Your Florida Medical Marijuana Business License
Every MMTC is required to receive authorization at three stages before dispensing medical marijuana or low-THC cannabis.
Surety Bond Requirements
The surety bond required to maintain this business license is the “Florida medical marijuana performance bond.” It ensures that MMTCs have the financial means to sustain a business throughout the two-year licensing cycle. The 2022 Florida Statutes require a $5 million surety bond that you must renew biannually. To obtain this bond, you must demonstrate the financial means to maintain operations during the two-year approval cycle.
You must post a $5 million performance bond unless you serve at least 1,000 qualified patients – then you may opt for a $2 million bond. If you’d rather, you may provide an irrevocable letter of credit or cash instead of a surety bond. Once you’re approved to operate your medical marijuana business, you must post your surety bond within ten business days. Learn more on The Florida Senate website.
2023 Update – Application Window
The most recent application window was April 24 to April 28, 2023. This was the first major opportunity for newcomers to the Florida cannabis market to apply for state licensure since 2017.
As mentioned above, applicants may post either a performance bond, cash, or a letter of credit. It’s important to note that if they post cash, they are not entitled to any interest accrued on the amount. However, ZipBonds is willing to accept collateral and can also provide applicants with interest accrued on cash collateral. Often, we can do these bonds with no collateral at all.
To apply, we would need the following information from each applicant:
- Copy of application that has been filed with the Florida Department of Health
- Bond Appliction
- CPA Prepared financial statements (for at least two years)
- Business plan
- Resumes of key employees
Other Helpful Resources
To learn more about the history and current state of marijuana legalization in Florida, check out these resources:
How do Florida cannabis bonds work?
The surety bond helps guarantee that only serious investors participate in the medical marijuana industry in Florida. Florida cannabis bonds involve three parties:
- Obligee: The Florida Department of Health (specifically, the Office of Medical Marijuana Use) that requires the bond
- Principal: The medical marijuana business that must buy the bond
- Surety: The financial company that issues and underwrites the bond
If a business (MMTC) fails to perform according to the law or violates the Compassionate Medical Cannabis Act, the surety bond may offer compensation for the injured party. The state (Florida Department of Health) is the only party that can legally file a claim on the surety bond.
Get Your Florida Marijuana Bond
ZipBonds is certified to provide Florida marijuana performance bonds. Start the application process by clicking the button 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 888-435-4191 and we can walk you through the process.
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.