Surety Bond Encyclopedia

Medical Marijuana Treatment Center Bond - Statewide in Florida

Brief Summary

A newly approved Florida medical marijuana treatment center posts a $5 million performance bond. The $2 million figure people quote applies only to a center already serving at least 1,000 qualified patients. A bond from a top rated surety meets the requirement without locking $5 million in cash or a bank letter of credit with the Department of Health.

Fla. Stat. 381.986(8)(b)7 requires an approved medical marijuana treatment center applicant to post a $5 million performance bond with the Florida Department of Health. A center serving at least 1,000 qualified patients is only required to maintain a $2 million bond. The bond must come from an authorized surety insurance company rated in one of the three highest rating categories by a nationally recognized rating service, and an irrevocable letter of credit or cash may be used instead.

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How to Apply for a Medical Marijuana Treatment Center Bond:

Receive approval of the treatment center application from the Department of Health.
Confirm your qualified patient count, which decides between $5 million and $2 million.
Prepare certified financial statements showing ability to operate for the 2-year approval cycle.
Confirm the surety is rated in one of the three highest categories by a nationally recognized rating service.
Deliver the signed performance bond, or an irrevocable letter of credit or cash, to the department.

Detailed Information About the Florida Medical Marijuana Treatment Center Bond:

$5 million first, $2 million later

The statute ties the lower figure to patients actually served. Upon approval, the applicant must post a $5 million performance bond. Only a medical marijuana treatment center serving at least 1,000 qualified patients is allowed to maintain the smaller $2 million bond.

Who can write it

Not every surety qualifies. The bond must be issued by an authorized surety insurance company rated in one of the three highest rating categories by a nationally recognized rating service. Check the carrier's rating before the bond is issued.

Letter of credit or cash instead

Under 381.986(8)(b)7.b the applicant may instead provide an irrevocable letter of credit payable to the department or provide cash to the department. Cash is deposited in the Grants and Donations Trust Fund within the Department of Health, subject to the same conditions as the bond regarding forfeiture, and any interest earned is used by the department to administer the section.

Where the bond fits in licensure

The bond sits within the applicant's showing of financial ability to maintain operations for the duration of the 2-year approval cycle, which also calls for certified financial statements provided to the department. Licenses are renewed biennially. The Office of Medical Marijuana Use within the Department of Health runs the program, and a treatment center must hold cultivation, processing and dispensing authorizations before it dispenses. Confirm the current bond form and filing steps with the Office of Medical Marijuana Use before the bond is issued.

Eligibility and Requirements for a Florida Medical Marijuana Treatment Center Bond:

Obligee: Florida Department of Health.
$5 million performance bond upon approval.
$2 million for a center serving at least 1,000 qualified patients.
Authorized surety insurance company rated in one of the three highest rating categories.
Biennial license renewal under Fla. Stat. 381.986(8)(b).

Florida Medical Marijuana Treatment Center Bond FAQs:

Can a new licensee post the $2 million bond?

The statute says the applicant must post $5 million upon approval, and that a center serving at least 1,000 qualified patients is only required to maintain $2 million. The lower amount follows the patient count.

Which surety companies are acceptable?

An authorized surety insurance company rated in one of the three highest rating categories by a nationally recognized rating service.

Can we post cash or a letter of credit instead?

Yes. Section 381.986(8)(b)7.b allows an irrevocable letter of credit payable to the department, or cash. Cash is deposited in the Grants and Donations Trust Fund within the Department of Health under the same forfeiture conditions as the bond.

How does the bond relate to the financial statements requirement?

Both sit in the same subparagraph, which requires financial ability to maintain operations for the 2-year approval cycle, including certified financial statements provided to the department.

How often is the treatment center license renewed?

Biennially, when the licensee meets the requirements of section 381.986 and pays the biennial renewal fee.