Frequently Asked Questions

Commercial Marijuana-Cannabis Surety Bond

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Q: What is a cannabis surety bond?

A: A cannabis surety bond is a type of financial guarantee required in the cannabis industry by certain states or local jurisdictions. It serves as a form of protection for the government and consumers in case a cannabis business fails to fulfill its obligations.  In the case of OMMA, the bond is secured to protect the public should a grow site be abandoned or asked to cease and desist. 

 

Q: Why is a cannabis surety bond required?

A: Cannabis surety bonds are typically required as a regulatory measure to ensure compliance and protect the interests of the government and consumers. They provide financial recourse if a licensed cannabis business fails to meet its legal and financial obligations.

• Bonds and business insurance are two ways to help you manage risk and protect against financial losses.

• Bonds are required in a variety of business situations and Oklahoma now requires Cultivators to be bonded.  Oklahoma marijuana law requires growers to have a minimum $50,000 Surety Bond and deems it unlawful to operate without acquiring a bond. 

• Grower license applicants must submit proof of one of the following to OMMA:

• A surety bond for at least $50,000 per license; or

• Proof that the licensee has owned the licensed premises for at least 5 years.

 

Q: How will a surety bond protect me?

A: The bond is secured to protect the public should a cultivation site be abandoned or asked to cease and desist.You as the license holder are considered “The Principal” and if you fail to maintain the property, “The Obligee”, or the one who is named responsible for restoring the property, will file a claim to recover losses.The insurance company, known as “The Surety” will determine if the claim filed is valid and will make payment to the one doing the work, which in this case is “’The Obligee.”The Surety does expect The Principal to reimburse them for any claims paid.If The Principal fails to reimburse The Surety, a line of credit is extended to The Obligee.

 

Q: How much does this Surety Bond Cost?

A: The bond cost is a percentage of the bond amount.  The bond cost is called the “Bond Premium”, and this is the amount that you must pay.  Usually, the price is a percentage of the $50,000 Bond. 

• In addition, Oklahoma has a General Liability & Product Liability referendum that will require General Liability (GL) & Product Liability (PL) by 1.1.2024.  We can bundle your GL, PL & Bond program and save premium costs so you can focus on growing your business.