Surety Bond Encyclopedia

Medical Marijuana Testing Laboratory ($75,000) Bond - Statewide in Ohio

Brief Summary

The $75,000 figure is only where a testing lab starts. Ohio lets a lab that stays fully operational and compliant cut it by $25,000 after one calendar year, by another $25,000 after the second, and ask to drop it after three. Posting a surety bond instead of funding escrow keeps that $75,000 in the lab while you get there.

Ohio Administrative Code 1301:18-3-08 requires every cannabis testing laboratory to show financial responsibility before the Division of Cannabis Control issues or renews its certificate of operation. The lab must carry commercial general liability insurance covering products liability and also keep either a $75,000 escrow account with a chartered financial institution within Ohio or a $75,000 surety bond from a corporate surety licensed in Ohio under Chapter 3929.

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How to Apply for a Medical Marijuana Testing Laboratory ($75,000) Bond:

Legal business name and license number exactly as the Division of Cannabis Control has them.
Owner and financial information for the surety's underwriting review.
Bond application, signed indemnity agreement and premium payment.
Executed $75,000 surety bond delivered to the division before the certificate of operation is issued.
Proof of commercial general liability insurance that covers products liability.
A record of each compliant calendar year, to support a later reduction request.

Detailed Information About the Ohio Medical Marijuana Testing Laboratory ($75,000) Bond:

Two pieces, not one

The rule asks for both of the following. First, commercial general liability insurance covering products liability, written by an insurer authorized in Ohio. Second, either an escrow account or a surety bond. For a testing laboratory, the escrow or bond is $75,000. The same rule sets $750,000 for level one cultivators, $75,000 for level two cultivators, $250,000 for processors and $50,000 for dispensaries.

The amount comes down over time

After one calendar year in which the lab stayed fully operational without substantial interruption and complied with Chapter 1301:18 and Ohio Revised Code Chapters 3780 and 3796, it may seek a $25,000 reduction, taking it to $50,000. After two consecutive years, another $25,000 comes off, leaving $25,000. After three consecutive years the requirement can be ended with the division's approval.

How the bond has to be written

The surety must be a corporate surety licensed under Ohio Revised Code Chapter 3929. It cannot cancel the bond without prior written authorization from the division. If a bond is cancelled or an escrow released, the lab has to submit new evidence of financial responsibility on or before the cancellation takes effect. The financial responsibility may be payable to the division if the lab fails to comply with the mandates of the rules.

Where it fits in licensing

Under ORC 3796.09, testing applicants apply to the Division of Cannabis Control and must show sufficient liquid capital and the ability to meet financial responsibility requirements. Under OAC 1301:18-7-01, a lab has twelve months from its provisional license to obtain a certificate of operation and cannot test until it has one. The bond or escrow has to be in place before that certificate is issued and again at each renewal.

Eligibility and Requirements for a Ohio Medical Marijuana Testing Laboratory ($75,000) Bond:

$75,000 for a testing laboratory, by escrow account or surety bond.
Corporate surety licensed under Ohio Revised Code Chapter 3929.
No cancellation without prior written authorization from the division.
Replacement evidence filed on or before any cancellation takes effect.
Commercial general liability insurance covering products liability from an Ohio authorized insurer.

Ohio Medical Marijuana Testing Laboratory ($75,000) Bond FAQs:

Is the bond always $75,000?

That is the starting amount for a testing laboratory. After one compliant calendar year the lab may reduce it by $25,000, after two consecutive years by another $25,000, and after three consecutive years the division may approve ending it.

Can we fund an escrow account instead?

Yes. OAC 1301:18-3-08 allows a $75,000 escrow account with a chartered financial institution within Ohio in place of the surety bond. The institution cannot release the funds without the division's prior written authorization.

Does the bond replace our liability insurance?

No. The rule requires commercial general liability insurance covering products liability in addition to the escrow or bond.

When does the bond have to be in place?

Before the Division of Cannabis Control issues or renews the lab's certificate of operation. A lab has twelve months from its provisional license to obtain that certificate.

What happens if the surety cancels?

The surety needs the division's prior written authorization to cancel, and the lab must submit new evidence of financial responsibility on or before the cancellation date.