What you need to know – California cannabis surety bonds


In February of 2018, the state of California created its own surety bonding program for the cannabis industry. Businesses within the industry are required to obtain a cannabis surety bond, also commonly referred to as a license bond, before they can commence their business operations. California’s cannabis bonding program is governed by the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). While certain counties or municipalities may require additional bonds, The state of California has created six unique types of bonds related to the cannabis industry:

  • California Cannabis Cultivation License ($5,000)
  • California Cannabis Distributor License ($5,000)
  • California Cannabis Manufacturer License ($5,000)
  • California Cannabis Microbusiness License ($5,000)
  • California Cannabis Testing Laboratory License ($5,000)
  • California Cannabis Retailer License ($5,000)

While each of the above listed bonds are slightly different, they all accomplish the same purpose of ensuring the licensees remain in compliance with the rules and regulations set forth by the MAUCRSA.

Certain counties and cities such as Yolo County, Coalinga, and Shasta Lake have their own bonding requirements. These regulations are often changing, so please be sure to check with your insurance provider to ensure you are receiving the most up-to-date information.

Why is it important to obtain a cannabis bond in California?

To legally operate within the cannabis industry in California, you must obtain a cannabis surety bond. The surety bond protects the public if the license holder does not comply with all rules and regulations. For example, if any crop becomes contaminated, the business must properly destroy the crop in accordance with the MAUCRSA. If it is determined that the business entity is out of compliance, the bond may be called by the state.

How much will I have to pay for my California cannabis bond?

The amount of premium that you will be charged for your California cannabis bond will depend on serval factors such as credit history, length of time in business, record with regulatory agencies, tax-payment history, amongst others. Applicants who are established in the cannabis industry with strong financials will receive a better quote than those who have less experience in the industry or and credit-related issues. However, having substandard credit will NOT automatically disqualify you from receiving a bond. In most cases, if you need a bond, you will be required to fill out an application which will be reviewed by an underwriter. The underwriter will review the application and quote you a rate.

Working with Lexington National

Lexington National is one of several insurers that is licensed to write cannabis surety bonds in California. Lexington National works with brokers to write cannabis surety bonds. If you have any questions about cannabis bonds, feel free to email me at jake@lnic.com or fill out the contact form below and someone will get back to you within a few hours if the form is submitted during regular business hours. Lexington National is a family-owned and operated admitted insurance carrier and takes pride in being very easy to work with.