Hemp and CBD surety bonds
The 2018 Agricultural Improvement Act removed hemp from Schedule I and handed regulation to state agriculture departments. Several of them now bond cultivators, processors and the dealers who buy from farmers.
Why hemp is bonded differently from marijuana
In December 2018 hemp production for all uses became lawful under federal law. The USDA Office of General Counsel followed with a legal opinion confirming the end of the hemp prohibition, and extracts of industrial hemp, including cannabidiol (CBD), left Schedule I of the Controlled Substances Act. Hemp is an agricultural commodity, so its bonds look like agricultural bonds. They protect growers who deliver a crop and wait to be paid, and they secure permit conditions set by county agricultural commissioners.
| State | Bond | Penal sum | Authority |
|---|---|---|---|
| Georgia | Georgia Hemp Processor Bond | 2% of prior year purchases from Georgia growers, minimum $20,000, maximum $1,000,000 | O.C.G.A. § 2-23-6.1 |
| Ohio | Ohio Hemp Processor Bond | $10,000 or $20,000 by prior year volume | Ohio Adm. Code 901:14-2-07 |
| Colorado | Colorado Commodity Handler or Farm Products Dealer Bond | 2% of annual purchases, $10,000 minimum, $1,000,000 maximum | C.R.S. Title 35, Articles 36 and 37 |
| California | California County Industrial Hemp Permit Bond | Set by county ordinance, usually by acreage | Cal. Food & Agric. Code div. 24; county ordinances |
Each state has its own page with the statute or ordinance, the bond form, the claim process and what we need to underwrite it: Georgia, Ohio, Colorado and California.
Processor and handler bonds
A processor or commodity handler bond guarantees payment to the producers who sell to the licensee. The amount is usually tied to purchase volume: two percent of prior year purchases in Georgia and Colorado, and a two step schedule of $10,000 or $20,000 in Ohio. A growing processor should expect the requirement to grow with it. Underwriting looks at working capital and payables, because the claim scenario is a processor that cannot pay its farmers.
County permit bonds
California counties such as Lake, Stanislaus and Tehama condition an industrial hemp permit on a bond that secures the county's cost of abatement if a crop tests hot or a site is abandoned. Amounts are set by acreage, from $2,500 in Stanislaus County to $2,500 per acre in Tehama County. See California county hemp bonds.
State programs
- California Industrial Hemp Program
- Colorado Industrial Hemp Program
- Georgia Department of Agriculture
- Ohio Department of Agriculture
The hemp bonding landscape is still expanding as states bring permitting regimes online and as Congress revisits the definition of hemp. If your state has asked for a bond that is not listed here, send us the form.
Written and reviewed by C. Constantin Poindexter, MA, JD, CPCU, AFSB, ASLI, ARe, AINS, AIS, CPLP, CICS. Founder of Surety One, Inc., Cannabis Insurance Coverage Specialist, attorney and surety underwriter for more than thirty years. Author of The Contractor's Guide to Surety Bonds. View his cannabis insurance credentials. Last reviewed .
Get your cannabis bond quoted today
Application review and quoting are free, and there is no obligation to buy. Bonds of $25,000 or less are usually issued the same business day.