Commercial Cannabis ($25,000) Bond - City of Fontana, CA in California

Brief Summary

Fontana caps commercial cannabis permits at three, and none of them can open without a signed operating agreement that includes proof of a $25,000 bond. A surety bond meets that term for a yearly premium and leaves your cash free for buildout.

Every commercial cannabis business in Fontana must sign an operating agreement with the City before it opens, and Section 7 of the City's agreement requires proof of a $25,000 bond. The bond covers the City's cost of enforcing Chapter 33 of the Fontana Municipal Code and the agreement if a licensing violation makes enforcement necessary. Chapter 33 calls for this security deposit or bond with the permit application, in an amount set by the City Council.

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How to Apply for a Commercial Cannabis ($25,000) Bond:

• Apply for one of the three commercial cannabis permits under Fontana Municipal Code Chapter 33.
• Provide the security deposit or bond with the application as Section 33-8 requires.
• Obtain the $25,000 bond naming the City of Fontana as obligee.
• Sign the operating agreement with the City before the permit issues and operations begin.
• Obtain a Fontana cannabis business license.
• File for permit renewal no more than 120 days and at least 60 days before expiration.

Detailed Information About the California Commercial Cannabis ($25,000) Bond:

Where the $25,000 figure comes from

Chapter 33 of the Fontana Municipal Code requires each applicant to provide the City a security deposit or bond for code compliance costs, in an amount established by the City Council, with the application (Section 33-8). Section 33-9 repeats the requirement at permit award, stating the City may use it if it needs code enforcement or legal help to secure compliance with Chapter 33 and state cannabis law. The City's operating agreement, which Section 33-21 requires before a permit issues and operations begin, sets the amount at $25,000 in Section 7.

Do not confuse it with the defense fund

The operating agreement has a second $25,000 figure. Section 15.3 requires the business to deposit an initial $25,000 into a fund within 30 days after any claim or lawsuit is filed against the City over the permit, and to keep that fund topped up. That is a cash deposit for City defense costs. It is separate from the bond and a surety bond does not satisfy it.

Permit term and renewal

Fontana allows no more than three commercial cannabis permits citywide. Each permit expires three years after issuance. Renewal applications go to the City Manager's office no more than 120 days before expiration, and filing less than 60 days before expiration can trigger a late fee. The operating agreement itself runs for an initial term of three years. A Fontana cannabis business license is also required. Keep the bond in force for the life of the permit and agreement, and confirm the bond form with the City Manager's office before the bond is issued.

Eligibility and Requirements for a California Commercial Cannabis ($25,000) Bond:

• Bond amount of $25,000 under Section 7 of the City's operating agreement.
• Bond covers City enforcement costs caused by a licensing violation.
• Separate $25,000 cash defense fund deposit if a claim is filed against the City.
• Annual sworn revenue statement and independent CPA financial audit.
• Valid State of California cannabis license.

California Commercial Cannabis ($25,000) Bond FAQs:

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