California Cannabis Surety Bonds

• In 2015, California enacted Assembly Bill 243, Assembly Bill 226, and Senate Bill 643. These bills established a framework for medicinal cannabis businesses in California. These bills are known as the Medical Cannabis Regulation and Safety Act (MCRSA).
• In 2016, Proposition 64 was voted into law. Proposition 64 is also known as the Adult Use of Marijuana Act (AUMA). The Act allowed for adults 21 years of age or older to grow, possess, and use recreational cannabis. It also made it legal to sell cannabis via a regulated business.
• In 2017, Senate Bill 94 was passed by the California State Legislature. SB 94 integrated MCRSA with AUMA to create the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA). The Bill created one system to govern both medical and adult use cannabis in the State of California. This bill included the requirement for all licensees to post a surety bond.
• Unlike most other states, California uses the term “cannabis” instead of “marijuana” or “marihuana” to describe the plant. Cannabis, which is the scientific name and the correct way to identify the plant, is the genus of the plant.
• California defines Cannabis as all parts of the plant Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. Cannabis also means the separated resin, whether crude or purified, obtained from cannabis.
• Per Senate Bill 94, each of the six licenses has two subcategories, except for testing laboratories. Cannabis licenses will be designated as either “A” (adult-use) or “M” (medical). Cannabis testing labs will be able to test both adult-use and medical cannabis products.
• An “A-license” is issued for cannabis or cannabis products that are intended for adults who are 21 years of age and older and who do not possess a physician’s recommendation. This can also be referred to as a recreational cannabis license or a recreational marijuana license.
• An “M-license” is issued for commercial cannabis activity involving medicinal cannabis. This can also be referred to as a medical cannabis license or a medical marijuana license.
• Cannabis Cultivators are authorized to plant, harvest, grow, cure, dry, grade, or trim cannabis.
• Cannabis Manufacturers are authorized to conduct the production, preparation, propagation, or compounding of cannabis or cannabis products either directly or indirectly or by extraction methods, or independently by means of chemical synthesis, or by a combination of extraction and chemical synthesis at a fixed location that packages or repackages cannabis or cannabis products or labels or relabels its container.
• Cannabis Distributors are authorized to transport cannabis goods only between licensed cultivators, manufacturers, and distributors. They are responsible for transporting, arranging for testing, and conducting quality assurance review of cannabis goods. Distributors also ensure the cannabis goods comply with all labeling and packaging requirements.
• Cannabis Retailers are authorized to sell cannabis goods to customers at their premises or by delivery. They are required to have a licensed premises but are not required to open the premise to the public.
• Cannabis Testing Laboratories are authorized to offer or perform tests of cannabis or cannabis products. Testing labs are required to obtain and maintain ISO/IEC 17025 accreditation.
• Cannabis Microbusinesses are authorized to engage in cultivation, manufacturing, distribution, and retail sale, or any combination of the four activities. They shall cultivate on an area of less than 10,000 square feet. They shall only participate in Level 1 manufacturing, Type 6.

The California Recreational Cannabis Surety Bond / California Medical Cannabis Surety Bond is in place to ensure the Principal (Cannabis Business) covers the costs of destruction of cannabis or cannabis products if necessitated by a violation of licensing requirements.

• In June of 2017, the Medical and Adult Use Cannabis Regulation and Safety Act (MAUCRSA) was signed into law. The Act created one regulatory framework for both medical cannabis and recreational cannabis.
• Three state agencies were given the responsibility of developing, implementing, and overseeing the State’s cannabis industry. The three state agencies and their respective roles are:
  • The California Department of Consumer Affairs (DCA) established the Bureau of Cannabis Control (BCC), which is directed to draft regulations for medical and adult-use cannabis in California. The BCC is responsible for licensing distributors, retailers (dispensaries), testing labs and microbusinesses. The BCC was formerly the Bureau of Medical Cannabis Regulation (BMCR).
  • The California Department of Food & Agriculture (CDFA) created CalCannabis Cultivation Licensing, which is directed to draft regulations and license cultivators. CalCannabis is also responsible for implementing the Track-and-Trace System, which records the movement of cannabis plants from cultivation to final sale.
  • The California Department of Public Health (CDPH) established the Manufactured Cannabis Safety Branch (MCSB), which is directed to draft regulations and license manufacturers of cannabis products. The MCSB was formerly the Office of Medical Cannabis Safety (OMCS).
• California Statutes, Section 26051.5.a.10, requires licensees to provide proof of a bond to cover the costs of destruction of cannabis or cannabis products if necessitated by a violation of licensing requirements.
• The Obligee on the California Cannabis Surety Bond is the State of California.

California Marijuana Bonds remain in full force and effect from the effective date until they are cancelled. Therefore, the bond will renew every year and the bonding company will bill for the bond on an annual basis. The surety bond may be cancelled with thirty (30) days written notice to the Obligee.

Contact The ProSure Group! As surety bond experts in business since 1993, The ProSure Group has experience handling bonds of this type and has partnerships with more than 30 different surety companies, most of which are A.M. Best Rated and Treasury Listed. This ensures that we get you the best, most competitive pricing and terms available in the marketplace. You just need to complete our simple application and one of our specialists will quickly contact you.