Illinois Medical Marijuana Surety Bonds

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What is an Illinois medical marijuana surety bond?

In Illinois, if you want to run a medical marijuana business (cultivation or dispensing facility), you must obtain a surety bond. Three distinct bonds are required for different purposes:

  • Dispensing organization registration bond
  • Medical cannabis cultivation center construction bond
  • Medical cannabis cultivation center production bond

We will break each of these surety bonds down in this guide, so you know which one(s) you need to operate your business legally. These bonds help regulate the medical marijuana industry in Illinois, holding businesses accountable to the law. You must post your cannabis bond before engaging in any marijuana-related business activity.

Get Your Illinois Marijuana Bond:

Quick Takeaways

  • You must post your cannabis bond(s) before engaging in any marijuana-related business activity.
  • To acquire, renew, or reactivate a registration to operate a dispensary, you must post a $50,000 bond (or maintain an escrow or surety account).
  • A $2 million surety bond is required after a business submits a license application to become a medical cannabis cultivation center.
  • A $1.5 million medical cannabis cultivation center production bond will become active once a cultivation center successfully meets its construction obligation.

Current Bond Requirements in Illinois

1. Medical Cannabis Dispensing Organization Registration Bond

To acquire, renew, or reactivate a registration to operate a dispensary, you must post a $50,000 registration bond (or maintain an escrow account), as required by the Illinois Department of Financial and Professional Regulation (IDFPR). The bond will ensure that you meet the financial responsibilities set by the state. Here are some of the criteria (from Section 1290.120) you must meet to maintain your surety bond and registration:

  • Successfully complete dispensary construction on time.
  • Operate in a way that provides an uninterrupted supply of cannabis.
  • Faithfully pay registration renewal fees.
  • Keep accurate books and records.
  • Make regulatorily required reports.
  • Comply with state tax requirements.
  • Conduct your dispensary according to the Compassionate Use of Medical Cannabis Program Act and Part 1290 (Rules for Administration).

2. Medical Cannabis Cultivation Center Construction Bond

A $2 million surety bond is required after a business submits a license application to the Illinois Department of Agriculture to become a medical cannabis cultivation center. Once the applicant (principal) is selected to receive a permit and accepts it, they must agree to construct a cultivation center. The cultivation center must be fully operational and producing medical cannabis within six months upon issuance of the permit.

Once the principal successfully meets this obligation, the bond becomes null and void. Until then, it must remain active. If the principal fails to meet its obligations in a timely and successful manner, the surety must pay the penal sum. The principal is then responsible for repaying the surety in full.

3. Medical Cannabis Cultivation Center Production Bond

This performance bond automatically becomes active once a cultivation center successfully meets “its obligation to construct a production facility that is fully operational and able to commence production of marijuana.” At this time, the $2 million construction bond becomes null and void.

The penal sum for the production bond is $1.5 million. At this stage, the principal must fulfill the following obligations:

  • Maintain uninterrupted production of medical cannabis for at least 90 consecutive days after facility construction is complete.
  • Continually operate the cultivation center to provide an uninterrupted supply of medical cannabis to licensed dispensaries.

If the principal fails to fulfill these obligations, the surety must immediately pay the state the entire penal sum. Conversely, the sum may be reduced if the principal successfully achieves various milestones. For example, if the cultivation center continues to operate successfully, it may qualify for a bond penalty that’s reduced by $500,000. See the bond form details for more information.

How much do marijuana bonds cost in Illinois?

The cost of your bond will depend on which bond you need, your credit score, and your financial credentials. You might pay as low as 1-2% of the total bond amount required with a good credit score.

How to Get the Marijuana Bond You Need in Illinois

To obtain an Illinois marijuana bond, start by filling out the application below. You will need to fill out the correct surety bond form with the state of Illinois and provide applicable financial documents. Once we have all the relevant information, a surety expert will underwrite your bond.

Get Your Illinois Marijuana Bond

ZipBonds is certified to provide Illinois marijuana performance bonds. We offer 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.

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About ZipBonds.com

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.