California Cannabis License Bonds

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California cannabis cultivation farm

What is a California cannabis bond?

Businesses that perform cannabis-related activities – cultivating, distributing, selling, and manufacturing – must post a surety bond to operate legally in the state of California. Testing labs, event organizers, and micro-businesses must also post a bond. The bonding requirement applies to businesses that work with marijuana for both recreational and medical purposes. This marijuana bond is considered an “environmental surety bond” because of its purpose. If the state decides that your cannabis or cannabis product should be destroyed, your surety bond should cover the cost incurred (by the state of California) for destroying goods and materials sold or manufactured in violation of the law.

Get Your California Cannabis Bond:

Quick Takeaways

  • Businesses that perform cannabis-related activities, such as cultivating, distributing, selling, and manufacturing, must post a surety bond to operate legally in the state of California.
  • If the state decides that your cannabis or a cannabis product should be destroyed (due to a licensure violation), your surety bond should cover the costs incurred by the state.
  • The Department of Cannabis Control is responsible for regulating the marijuana industry at the state level.
  • The required bond amount is $5,000.

California Cannabis Bond Requirements

State Level

Recently, California merged three state cannabis authorities (Department of Food and Agriculture, Department of Public Health, and Bureau of Cannabis Control) into one new department. The Department of Cannabis Control (DCC) is now responsible for regulating the marijuana industry at the state level. It licenses and regulates all commercial cannabis activity in California. The required bond coverage is $5,000 for retailers, cultivators, distributors, testing labs, event organizers, and microbusinesses. You must obtain your surety bond before you can get your business license. This bond ensures “payment of the cost incurred for the destruction of cannabis or cannabis products necessitated by the violation of the Act or the regulations adopted thereunder.” Read the California Code of Regulations Title 4 Division 19 to learn more about applicable licensing requirements. They are not requiring original copies of the bond, as you can upload a scanned copy of the bond with your license requirements.

Local Level

On the local level, the following counties and cities may also have bonding requirements for marijuana businesses: Cities
  • City of Coalinga: $25,000 bond
  • City of Los Angeles: $5,000 bond
  • City of Palm Springs: Varies
  • City of Shasta Lake: $5,000 bond
Counties
  • Mendocino County
  • San Bernadino County
  • Yolo County
  • Humboldt County

How much do marijuana bonds cost in California?

California marijuana bonds may cost between $175 and $325 per year and can be issued instantly. Your bond will remain active until canceled. When it’s time to renew your bond each year, your surety provider will bill you. You may cancel your bond by providing your obligee with a 30 days’ written notice. But remember that you can’t legally operate without a surety bond.
How does a California cannabis bond work?
Cannabis license bonds guarantee that California businesses comply with state, city, or county laws and regulations. The bonds may ensure that companies pay taxes, follow license and permit stipulations, and conduct legal and ethical business activities. A California marijuana bond is a three-party, legally binding contract involving:
  1. An obligee: The State of California
  2. A principal: The marijuana business
  3. A surety: The company that issues and backs the bond
The obligee may file a claim against the bond if the principal violates the contract. The surety will investigate to determine if the claim is valid. If it is, the surety may settle the claim and pay the obligee if the principal is unable or unwilling. The principal must then repay the surety in full.

Types of Cannabis Licenses in California

After deciding between a recreational (Adult Use/A-License) or medical (Medicinal/M-License) marijuana business, you will need to obtain a license for the specific type of business you want to run.
  • Cannabis Cultivator (Type 1, 2, 3, or 4)
  • Cannabis Manufacturer (Type 6 or 7)
  • Cannabis Testing Laboratory (Type 8)
  • Cannabis Retailer (Type 9 or 10)
  • Cannabis Distributor (Type 11 or 13)
  • Cannabis Microbusiness (Type 12)
  • Cannabis Event Organizer (Type 14)
For example, if you want to be a medical marijuana retailer with a physical location, you would need a Type 10M license. If you’re going to sell both medical and recreational marijuana, you’d need Type 10M and Type 10A licenses. You would also need separate licenses for every business location you have. Read more on the Department of Cannabis Control website.

Cannabis License Requirements

Requirements can vary by license type. Use the following guides for specific instructions on applying for the license(s) you need for your business.

Applying for or Renewing Your License

How to Apply
  1. Complete any local permitting processes.
  2. Understand state regulations for your business.
  3. Gather application documents and information.
  4. Create a licensing system account.
  5. Complete your application.
  6. Pay an application fee and submit your application.
  7. Pay a license fee.
  8. Post your license.
How to Renew
  1. Wait for the renewal window to open (up to 60 days before your license expires).
  2. Review and update your information.
  3. Pay a license fee.
  4. Submit your application.
  5. Post your new license certificate.

Get a Marijuana Bond in California

We can help you find the right marijuana bond for your business. ZipBonds offers the fastest and most secure option for getting bonded. Our all-digital platform is intuitive and straightforward. Begin your application online or call us at 888-435-4191 to speak with an agent directly.

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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.