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Expert Surety Bonds Since 2004
Need assistance? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Expert Surety Bonds Since 2004
A microbusiness combines three or more cannabis activities, and owners often assume that means three or more bonds. California measures this bond by licensed premises, not by activity. The requirement is at least $5,000 for each licensed premises, payable to the State of California on DCC Form 8113, and a Type 12 microbusiness operates its activities at one location.
A Type 12 cannabis microbusiness license from the Department of Cannabis Control requires proof of a surety bond of at least $5,000 payable to the State of California for each licensed premises, under 4 CCR section 15002. The bond is issued by a California licensed corporate surety on Form 8113 and covers the state's cost of destroying cannabis or cannabis products if a violation requires it, under Business and Professions Code section 26051.5(a).
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A microbusiness license lets one operator combine at least three of these activities at one location: cultivation (outdoor, mixed-light, indoor or nursery, up to 10,000 total square feet), manufacturing using non-volatile solvents, mechanical extraction or infusion, distribution or transport-only distribution, and storefront or non-storefront retail.
Section 15002 of Title 4 of the California Code of Regulations ties the bond to the licensed premises: proof of a surety bond of at least $5,000 payable to the State of California for each licensed premises. Adding a retail counter to a grow and a kitchen does not add a second $5,000 requirement by itself. If the business holds other licenses at other premises, those premises need coverage as well, and an aggregated bond may be used when the same business holds multiple licenses.
Business and Professions Code section 26051.5(a) requires a bond to cover the costs of destroying cannabis or cannabis products when a violation makes destruction necessary, including the department's administrative, investigatory and enforcement costs. A microbusiness can hold plants, extracts and finished retail goods at the same address, and the bond answers for disposal of any of them.
The bond uses DCC Form 8113, the Commercial Cannabis Licensee Bond, and must be issued by a corporate surety licensed to transact surety business in California. It starts on receipt of the license, runs concurrently with the license period, and ends only if the surety cancels with 30 days written notice to the department and the licensee.
The renewal window opens 60 calendar days before the license expires, and the renewal plus license fee must be submitted before the expiration date. Microbusiness license fees are based on gross annual revenue, so renewal includes revenue documents such as tax returns, city or county tax filings or a profit and loss statement.
The requirement in section 15002 is at least $5,000 for each licensed premises, not for each activity. A microbusiness combines its activities at one location under one Type 12 license.
That site is another licensed premises and needs its own coverage of at least $5,000. Section 15002 allows the same business to use one aggregated bond for multiple licenses. Confirm with DCC how the penal sum should read before the surety issues it.
The state's costs of destroying cannabis or cannabis products when a violation makes destruction necessary, including administrative, investigatory and enforcement costs, capped at the penal sum.
Yes, with 30 days written notice to DCC and to the licensee. Line up a replacement before that date so the license is not left without a bond.
The surety quotes an annual premium after reviewing the owners' credit and the business. The $5,000 is the bond's coverage limit, not its cost.
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