Medical Marijuana Bond

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Medical marijuana bonds protect the (currently) eighteen states and Washington D.C. that allow medical marijuana prescriptions to be written for specific ailments. As of now, Colorado is the only state that currently uses surety bonds to regulate the medical marijuana industry.

Medical marijuana bonds are similar to insurance policies in that they provide protection to a party who needs protections financially if the other party defaults or decides not to pay. If a business that provides medical marijuana ends up defaulting or doesn’t pay on taxes, the bonding company would be able to issue a payment to the state.

Medical marijuana bonds function the same way as other surety bonds. Three parties are bound together to ensure that industry standards are upheld. For medical marijuana bonds, the three parties included are the principal, obligee, and surety. The principal is the medical marijuana dispensary that maintains the bond as a pledge that taxes will be paid in accordance with the law, the obligee is the state agency that requires dispensaries to purchase a bond to reinforce industry standards, and the surety is the agency that issues the bond and backs the principal’s pledge to pay taxes appropriately.

The medical marijuana bond is a tax bond. It guarantees that the bonded medical marijuana dispensary will pay all taxes appropriately. If the dispensary fails to do this, the government can make a claim on the bond to collect compensation.