Medical Marijuana Bonds

Fifteen states and Washington DC currently allow medical marijuana prescriptions to be written for certain ailments. The Colorado state government leads the pack in regulating its medical marijuana industry as it's the only state to implement the use of medical marijuana bonds.

How medical marijuana bonds work

Medical marijuana bonds function as do other surety bonds; each bond acts as a legally binding contract between three entities to guarantee a certain level of professional performance. When it comes to medical marijuana bonds, the those involved include:

• a principal ‹ the medical marijuana dispensary that maintains the bond as a financial guarantee that all applicable taxes will be paid according to law
• an obligee ‹ the state agency that requires dispensaries to purchase a bond to help guarantee a certain level of professional performance
• a surety ‹ the agency that sells the bond and establishes a binding relationship between the principal and obligee to guarantee the quality of work to be done

Current medical marijuana bond laws

The number of medical marijuana dispensaries in Colorado has recently been on the rise. When industries begin to boom, the government agencies responsible for them look for ways to regulate businesses and protect consumer interests. It's highly likely that other states will soon begin to follow suit with Colorado and develop their own bonds to help regulate their medical marijuana industries.

Section 12-43.3-304 of the Colorado Medical Marijuana Code mandates each medical marijuana dispensary to maintain a $5,000 bond in which the Colorado Department of Revenue will act as obligee. The medical marijuana bond functions as a tax bond, which means it guarantees that a bonded medical marijuana dispensary will pay all applicable taxes as necessary. If a bonded dispensary should fail to do so, the government can collect on the bond up to its full amount, which is $5,000 in this case.

Get licensed as a medical marijuana dispensary

Purchasing a surety bond might not seem like the most difficult or intricate step of the licensing process, especially when its penal sum is so small. However, the Colorado Department of Revenue only has one licensing deadline each year for this industry. This means business owners who want to open medical marijuana dispensaries only have one chance each year to apply for a license.

Those planning to submit an application to be licensed as a dispensary for 2011 to 2012 should find a surety provider as soon as possible. Purchasing a medical marijuana license bond can be a bit more challenging than purchasing other bonds. Some underwriters are unwilling to issue medical marijuana bonds, even though at $5,000 the penal sum and potential risk are both relatively small.

Get a medical marijuana bond

The complicated licensing process requires applicants to pay close attention to when they need to submit their medical marijuana bonds to the state, especially since surety providers typically avoiding executing bonds months ahead of schedule. Sureties cannot know an applicant¹s financial stability months from now, which can make the licensing process a headache for potential dispensaries and surety providers alike.

Applicants hoping to run a medical marijuana dispensary must now submit proof of their purchased surety bonds to the Colorado Department of Revenue by May 1, which is a change from the original July 1 due date. This means that new medical marijuana dispensaries have two less months to find a surety provider to execute what's considered to be a somewhat taboo bond. SuretyBonds.com works with a number of underwriters, some of which are very willing to work with the medical marijuana bond.