California Marijuana Surety Bonds

As the cannabis industry grows, so will the need for marijuana surety bonds. States and cities have surety bond requirements in place to ensure that companies conduct their business as required by state and local regulations, as well as pay their taxes. California currently has the most marijuana surety bond requirements.

There are three entities within the California state government that regulate the cannabis industry: the Bureau of Cannabis Control (BCC), Manufactured Cannabis Safety Branch, and Cal Cannabis Cultivation Licensing. Each branch monitors different types of cannabis businesses and has its own bonding requirements. Cultivators, retailers, distributors, testing laboratories, microbusinesses, event organizers, and manufacturers in the marijuana industry must obtain a surety bond in order to apply for and maintain a business license. If engaged in more than one sector, multiple bonds must be obtained.

Below is a list of the cannabis or marijuana-related surety bond requirements that currently exist in California:

  • Cannabis Cultivator License Bond (Bond Amount: $5,000) – Cannabis Cultivators are required to have a surety bond in order to apply and maintain a business license to plant, harvest, grow, and prepare cannabis products from plants. The bond form can be found here.
  • Cannabis Retailers License Bond (Bond Amount: $5,000) – Cannabis Retailers are required to have a surety bond in order to apply and maintain a business license to sell cannabis products to consumers either at their storefront or by delivery. The bond form can be found here.
  • Cannabis Distributor License Bond (Bond Amount: $5,000) – Cannabis Distributors are required to have a surety bond in order to apply and maintain a business license to transport cannabis and cannabis goods between manufacturers and cultivators. The bond form can be found here.
  • Cannabis Microbusiness License Bond (Bond Amount: $5,000) – Cannabis Microbusinesses are required to have a surety bond in order to apply and maintain a business license to cultivate, manufacture, distribute, and perform retail sales of cannabis products. The business must perform cultivation in an area less than 10,000 square feet. There are limitations to the manufacturing they can perform. The bond form can be found here.
  • Cannabis Testing Laboratory License Bond (Bond Amount: $5,000) – Cannabis Testing Labs are required to have a surety bond in order to apply and maintain a business license in addition to obtaining an ISO/IEC 17025 accreditation to perform tests of cannabis products. The bond form can be found here.
  • Cannabis Manufacturer License Bond (Bond Amount: $5,000) – Cannabis Manufacturers are required to have a surety bond in order to apply and maintain a business license to produce, prepare, and work with the compounding of cannabis products in order to repackage the product in various forms. The bond form can be found here.
  • $25,000 City of Coalinga Commercial Marijuana Operations Surety Bond (Bond Amount: $25,000) – Cannabis cultivation, processing, extraction, manufacturing, testing, and distribution must obtain a surety bond in order to obtain a conditional use permit and regulatory permit to conduct business within the city of Coalinga. This bond must be purchased in addition to the $5,000 bond required by the state of California. The bond form can be found here.
  • $5,000 City of Los Angeles Commercial Cannabis Surety Bond (Bond Amount: $5,000) – Cannabis related businesses must obtain an additional surety bond if they are conducting business within city limits of Los Angeles in order to guarantee payment of taxes and compliance with city regulations.
  • $5,000 City of Shasta Lake Commercial Cannabis Business Surety Bond (Bond Amount: $5,000) – Cultivators, distributors, manufacturers, retailers, and testing labs must obtain a surety bond with the city in order to obtain a business license. More information can be found here.
  • Yolo County Cannabis Surety Bond (Bond Amount: $10,000) – Manufacturers, cultivators, and distributors in Yolo county must obtain an additional license and permit bond in order to conduct cannabis-related business. More information can be found here.
  • City of Palm Desert Cannabis and Marijuana Tax Bond (Bond Amount: Varies) – Recreational and medical retailers and operations must obtain a surety bond in order to ensure all taxes are paid. Bond requirements are at the discretion of the City Manager. More information can be found here.
  • Shasta County Cannabis Surety Bond (Bond Amount: $5,000) – In order to obtain a license, all cannabis-related businesses will need to purchase an additional Shasta county cannabis license bond. More information can be found here.

California Wholesale Motor Vehicle Dealer Bonds

A $10,000 Surety Bond of Motorcycle Dealer, Motorcycle Lessor-Retailer, ATV Dealer or Wholesale –Only Dealer (Vehicle Code Sections 11612, 11710 and 11710.1) is different than the $50,000 California Dealer Bond (Vehicle Code Section 11710) mentioned in the previous post.

Key differences are the nature of the dealership, the bond amount, and the number of vehicles sold. This bond covers motorcycles dealers or lessors, wholesale vehicle dealers, and ATV dealers with sales of less than 25 vehicles a year. The premium ranges from $100 to $2,500 based on the principal’s credit. The CA Wholesale MVD is not always required to be renewed after the first year.

The three parties of a California Motor Vehicle Dealers Bond:

  • Obligee: State of California Department of Motor Vehicles – Licensing Operations Division, Occupational Licensing Branch, P.O. Box 932342, MS:L224, Sacramento, CA 94232-3420
  • Principal: The Wholesale Motor Vehicle Dealer
  • Surety: The Surety Company

Targeting Dealers

The State of California maintains a list of all vehicle dealerships in an online database that is free and open to the public. Utilize the website to search by city to find all registered dealerships in a specific area that may need services with shopping rates for their surety bond.

Helpful Links

California Motor Vehicle Dealer Bonds

Did you know every car dealer in California is required to have a California Motor Vehicle Dealers Bond for $50,000 in order to maintain or obtain a business license? The Surety Division team at AAU: Allied American Underwriters can assist with a marketing strategy to target these bonds, including how to get a leads list. More information about Vehicle Dealerships licensing requirements can be found on the California Department of Motor Vehicles website.

California Motor Vehicle Dealer Bond Details

The bond protects the Obligee (State of California DMV) by transferring the cost of ensuring the public is compensated for damages resulting from a licensed business breaking licensing laws to a surety bond company. This bond must be issued by an insurance carrier admitted by the Department of Insurance. The Motor Vehicle Dealer Bond should not be confused with the Wholesale Dealer bond, required for wholesale motor vehicle dealers in the amount of $10,000.

The three parties of a California Motor Vehicle Dealers Bond:

  • Obligee: State of California Department of Motor Vehicles – Licensing Operations Division, Occupational Licensing Branch, P.O. Box 932342, MS:L224, Sacramento, CA 94232-3420
  • Principal: The Motor Vehicle Dealer
  • Surety: The Surety Company

Targeting Dealers

  • Use the How To Find CA Dealerships – Bond sheet to obtain a list of dealer contacts.
  • In order to obtain their license, all new dealers must attend a class. Contacting the business who offers the educational course may lead to a steady stream of bond applicants.