Who needs the Ohio hemp processor bond
Ohio legalized hemp through Senate Bill 57 in 2019, codified in Chapter 928 of the Revised Code. The Department of Agriculture licenses cultivators under Ohio Adm. Code chapter 901:14-1 and processors under chapter 901:14-2. No person may process hemp without a hemp processing license, and the license runs for three years with an annual fee in years two and three, a background check for each key participant and an initial facility inspection.
The bond is the Department's standard of financial responsibility. Rule 901:14-2-07(A) applies it to any licensed processor who purchases raw, unprocessed hemp plant material. A processor that handles only material it grew itself, or that buys already processed inputs such as crude oil or distillate, should confirm with the Department whether the rule reaches its operation. Ohio cultivators do not file a bond.
The two bond amounts
| Raw hemp volume in the previous calendar year | Bond amount |
|---|---|
| $100,000 or less | $10,000 |
| More than $100,000 | $20,000 |
A new licensee with no prior year volume files the $10,000 bond. When volume crosses $100,000 the processor replaces it or increases it by rider to $20,000. Both amounts fall under our application only threshold, so an Ohio hemp processor bond is normally quoted and issued the same business day.
What the bond guarantees
The Ohio rule is unusually precise, and the precision favors the processor. The bond is subject to redemption by the state only upon a suspension, a revocation or the insolvency of the licensed processor, and only for the purpose of repaying the processor's obligations to creditors that are licensed cultivators. Redemption is limited to an amount equal to the claims those cultivators make. The bond is not a penalty that forfeits to the state, and a regulatory fine is not a bond claim. It is a payment guarantee for Ohio farmers, and nothing more.
The rule also fixes the surety's exposure. Regardless of the number of claims and the number of periods the bond covers, the maximum liability is the penal sum. In surety terms the bond is continuous and non-cumulative. A $20,000 bond that has been in force for three license years still carries $20,000 of total liability.
Term and cancellation
The bond must be continuous. It must also include a cancellation provision with a notice period of thirty days, and notice goes to both the processor and the Department. A processor whose bond is cancelled no longer meets the standard of financial responsibility, so a replacement should be on file before the thirty days run. The bond must be issued by a corporate surety authorized to do business under Ohio law.
Why a small bond still deserves attention
Ten or twenty thousand dollars is modest beside the value of a season's biomass, and Ohio cultivators know it. A processor with a clean bond record and prompt payment habits wins supply contracts that a slow payer does not. If a claim is ever paid, the surety recovers from the processor and its indemnitors under the indemnity agreement, and the paid loss follows the owners into every future bond application, in hemp or any other line. The inexpensive way to own this bond is to pay growers on the terms in the purchase contract.
How we underwrite it
We ask for the completed application with the name, home address and Social Security number of each owner, because the decision rests on a soft inquiry credit report. No financial statements are needed at these amounts. Damaged credit or a thin file routes the application to our non-standard program and does not produce an automatic decline.
Hemp and marijuana are regulated separately in Ohio
A company that processes both hemp and adult use or medical cannabis holds two different licenses from two different agencies. The Division of Cannabis Control's financial responsibility rule for cannabis processors requires a $250,000 bond or escrow, described on our Ohio cannabis bond page. The hemp bond on this page does not satisfy that rule, and the cannabis bond does not satisfy this one.
A bond is not insurance for the hemp business
A surety bond is a three party agreement among the principal (your business), the obligee (the agency or county) and the surety. It protects growers and the public, not the principal. If the surety pays a valid claim, it recovers the payment from the principal and the individual indemnitors under the general indemnity agreement signed at issuance. That is why underwriting looks at credit and working capital, and why paying growers on time and testing early are the cheapest risk controls a hemp operator has.
The federal backdrop
The Agriculture Improvement Act of 2018 removed hemp, defined as Cannabis sativa L. with no more than 0.3 percent delta-9 THC on a dry weight basis, from the Controlled Substances Act and let states run their own production plans under USDA approval. Congress revised the federal definition in late 2025, with changes scheduled to take effect in November 2026 that narrow the market for intoxicating hemp derived products. Fiber, grain and compliant cannabinoid operations continue, and so do the state and county bond rules described here. Processors of finished cannabinoid products should review their product lines with counsel.
What to send us
- The completed online application, or the cannabis and hemp license bond application (PDF), with the name, home address and Social Security number of each owner
- The bond amount the agency or county has given you, and its bond form if it uses its own
- For bonds above $25,000: a personal financial statement from each owner of ten percent or more and current business financial statements
Four steps to a filed bond
- Apply. Online in a few minutes. Review and quoting are free.
- Confirm the amount. We check the penal sum and form against the current rule.
- Bind. You approve the quote, pay the premium and sign the indemnity agreement.
- File. We deliver the executed bond to you, and to the obligee where it accepts electronic filing. Originals are sent overnight when a wet signature is required.
Questions? Call toll free (800) 373-2804, reach an underwriter at (919) 859-5294 or write to Cannabis@SuretyOne.com.
Primary sources
Official texts behind this page. We link to citation based addresses on legislature, code and agency sites because those are the least likely to move.
- Ohio Adm. Code 901:14-2-07, financial responsibility (Ohio Laws and Administrative Rules)
- Ohio Revised Code Chapter 928, hemp
- Agriculture Improvement Act of 2018, H.R. 2, 115th Congress (Congress.gov)
- 7 U.S.C. § 1639o, hemp definitions (Office of the Law Revision Counsel)
Regulator: Ohio Department of Agriculture Hemp Program. Confirm the current amount and form with the regulator before you file.
Ohio hemp bond questions
How much is the Ohio hemp processor bond?
$10,000 if your raw, unprocessed hemp volume in the previous calendar year was $100,000 or less, and $20,000 if it was more.
Can the State of Ohio keep the whole bond as a penalty?
No. The rule limits redemption to the amount of claims made by licensed cultivators the processor owes, and only after a suspension, revocation or insolvency.
Do Ohio hemp cultivators need a bond?
No. The financial responsibility rule applies to licensed processors who purchase raw hemp.
How long does the Ohio hemp bond last?
It is continuous. It stays in force until cancelled on thirty days notice to the processor and the Department.
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 .