Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Colorado medical marijuana license bond needs.
What Are They?
Marijuana can be sold legally in Colorado for both medical and recreational use. Not all Colorado dispensaries sell both medical and recreational marijuana, but those that do must be licensed for both medical and recreational marijuana sales. This article focuses on medical marijuana dispensaries only, but be aware that there are additional bonding requirements for dispensaries selling marijuana for recreational use.
Colorado medical marijuana dispensaries are licensed at the state level by the Colorado Marijuana Enforcement Division, but a couple of municipalities also require a local license. A Colorado medical marijuana license bond obligates the dispensary owner to operate the business in accordance with Title 12, Article 43.3 of the Colorado Revised Statutes, which is the Colorado Medical Marijuana Code. Any violation that causes the state to incur a financial loss can result in a claim against the dispensary’s Colorado medical marijuana license bond.
Who Needs Them?
Purchasing a $5,000 Colorado medical marijuana license bond is a prerequisite for licensure of a medical marijuana dispensary. The bond must remain in force continuously to prevent license suspension or revocation.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
The surety bond agreement for a Colorado medical marijuana license bond brings together three parties in a legally binding contract:
- The Colorado Department of Revenue, Marijuana Enforcement Division, as the entity requiring the bond, is the “obligee.”
- The medical marijuana dispensary owner required to purchase the bond is the “principal.”
- The bond company underwriting and approving the bond is the “surety.”
The most common reason for claims against Colorado medical marijuana license bonds is failure to remit tax payments to the state. Upon receipt of a claim, the surety may attempt to negotiate a settlement, but if that’s unsuccessful, the claim must be paid.
Although the surety bond agreement places the legal responsibility for paying claims squarely on the shoulders of the principal, it’s common practice for the surety to pay a claim on behalf of the principal and then be repaid by the principal.
What Do They Cost?
Colorado medical marijuana license bonds are subject to underwriting. The premium rate is determined by the surety based largely on the principal’s personal credit score and financial strength. A principal with excellent credit typically pays a premium that’s in the range of 1% to 3% of the required $5,000 bond amount.
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Our surety bond professionals will get you the Colorado medical marijuana license bond you need at a competitive rate.