What California requires of cannabis and marijuana businesses
California is the largest cannabis bond market in the country. Business and Professions Code § 26051.5(a)(10) requires every applicant for a state commercial cannabis license to furnish a bond, and the Department of Cannabis Control (DCC) sets the terms in its regulations at Cal. Code Regs. tit. 4, § 15008. The bond is $5,000, payable to the State of California, and it must be issued by a corporate surety licensed to transact surety business in the state.
The rule applies to every license type: cultivators, manufacturers, distributors, retailers, delivery retailers, microbusinesses, testing laboratories and event organizers. Before July 2021 three agencies split the work (the Bureau of Cannabis Control, CalCannabis at the Department of Food and Agriculture and the Manufactured Cannabis Safety Branch at Public Health). Those programs were consolidated into the DCC, and the legacy bond forms were replaced by a single DCC form.
The state bond is only the first layer. California counties and cities regulate cannabis under their own ordinances, and a long list of them require a local permit bond, a cultivation tax bond or both.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| DCC Commercial Cannabis License Bond | $5,000 | All state license types, one bond per license | State of California, Department of Cannabis Control | Bus. & Prof. Code § 26051.5(a)(10); 4 CCR § 15008 |
| California Cannabis Microbusiness Bond | $5,000 | Microbusiness licensees | Department of Cannabis Control | 4 CCR § 15008 |
| California Marijuana Dispensary (Retailer) Bond | $5,000 | Storefront and delivery retailers | Department of Cannabis Control | 4 CCR § 15008 |
| Calaveras County Commercial Cannabis Permit Bond | Set by the County | County cannabis permit holders | Calaveras County | County cannabis ordinance |
| Crescent City Commercial Cannabis Bond | Set by the City | City cannabis permit holders | City of Crescent City | City cannabis ordinance |
| Humboldt County Cannabis Cultivation Tax Bond | Based on tax liability | Permitted cultivators | Humboldt County | County cultivation tax ordinance |
| Nevada County Commercial Medicinal Cannabis Permit Bond | Set by the County | County permit holders | Nevada County | County cannabis ordinance |
| San Mateo Commercial Cannabis Bond | Set by the permitting authority | Local permit holders | San Mateo permitting authority | Local cannabis ordinance |
| Shasta Lake Commercial Cannabis Bond | $5,000 | City cannabis businesses | City of Shasta Lake | City cannabis ordinance |
| Trinity County Cannabis Cultivation Tax Bond | Based on tax liability | Permitted cultivators | Trinity County | County cultivation tax ordinance |
| Yolo County Marijuana Cultivation Bond | $10,000 typical | County licensed cultivators | Yolo County | County cannabis ordinance |
What the bond guarantees
The DCC bond covers the State's cost of destroying cannabis goods when destruction is made necessary by a licensee's violation of the law or its license. It is a compliance instrument with a small penal sum, which is why it is fast to underwrite. An operator holding cultivation, distribution and retail licenses posts three separate $5,000 bonds. County hemp bonds in Lake, Stanislaus and Tehama are covered on our California hemp bond page at /hemp-bonds/california/.
Like every surety bond, this is a three party agreement and it is not insurance for the operator. If the surety pays a valid claim to the obligee, the principal must reimburse the surety under the general indemnity agreement signed when the bond is issued. Read how the different cannabis bond obligations work.
How we underwrite California cannabis and marijuana bonds
Bonds at this size are transactional. For a penal sum of $25,000 or less we underwrite and quote on the strength of a completed cannabis license bond application alone, and most are issued the same business day. Personal credit is one input and the inquiry is a soft pull that does not affect your score. Damaged credit or no credit history does not mean a decline. It routes the file to our non-standard program.
More on cost, credit and collateral.
The parties to a California bond
On a California bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is State of California, Department of Cannabis Control, and on the other bonds listed above the agency, county or city shown in the table. The surety is an insurance company admitted in California, placed by Surety One, Inc. as producer and underwriting manager. Who files in California: All state license types, one bond per license ($5,000); Microbusiness licensees ($5,000); Storefront and delivery retailers ($5,000); County cannabis permit holders (Set by the County); City cannabis permit holders (Set by the City); Permitted cultivators (Based on tax liability).
Claims, cancellation and renewal in California
If State of California, Department of Cannabis Control believes the bonded obligation has been breached, it makes a written claim on the surety. The surety opens a file, asks for documentation and notifies you, and you have the opportunity to respond and to cure. A valid, unresolved claim is paid up to the penal sum, and the surety then recovers that payment and its expenses from the business and the individual indemnitors. Because a California bond of this size secures a defined compliance or tax duty, claims are rare and usually follow an abandoned license or an unpaid assessment.
Most forms let the surety cancel on written notice to the obligee, commonly 30 to 90 days. If a replacement is not on file before the effective date, the regulator can suspend the cannabis license. We send renewal notices 45 days ahead, and renewing at least 30 days early removes the risk of a gap.
Getting a California bond issued, step by step
- Confirm the form and amount. Ask California Department of Cannabis Control for the current bond form and penal sum, or send us the license type and we will confirm them.
- Apply. Complete the online application. It collects the business details and the name, home address and Social Security number of each owner for a soft inquiry credit report.
- Receive the quote, usually the same business day. No financial statements are needed at this size.
- Bind and file. Pay the premium and sign the indemnity agreement. We deliver the executed bond to you and, where it accepts electronic filing, to the obligee. Wet signature originals go out overnight.
Keeping a California bond in good standing
- File and pay every cannabis tax and fee on time. Delinquent taxes are the most common trigger for claims.
- Keep seed to sale records reconciled to physical inventory, and document every destruction event with photographs, witnesses and waste manifests.
- Tell us before you change the business name, ownership, location or license type, so the bond can be amended by rider before the regulator notices a mismatch.
- Protect the personal credit of every indemnitor and keep quarterly financial statements. Both are reviewed at renewal.
Terms such as penal sum, obligee and indemnitor are defined in the glossary. Changes to California and other state requirements are logged with dates in regulatory updates, and an underwriter is available through the contact page.
What to send us
Send documents to Cannabis@SuretyOne.com or apply online. Confirm the current form and amount with the California Department of Cannabis Control before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. California law uses the term "cannabis". Operators look for this bond as a California marijuana bond, a California marijuana license bond, a California cannabis bond and a California cannabis surety bond. They are one instrument, and this site uses the words interchangeably. See marijuana surety bonds.
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.
California marijuana and cannabis bond questions
Do I need a separate California bond for each license?
Yes. The $5,000 bond attaches to the license, not the company. A vertically integrated operator with five licenses files five bonds. We issue them together on one application.
Are the old CalCannabis and Manufactured Cannabis Safety Branch bonds still used?
No new bonds are written on those forms. When the three licensing programs merged into the Department of Cannabis Control in 2021, the DCC became the obligee. Bonds written on legacy forms are replaced on the DCC form at renewal.
How do I find out whether my city or county wants its own bond?
Ask the local permitting office for its cannabis ordinance and permit checklist, or send us the jurisdiction and we will confirm the form and amount. Local bonds often use their own wording even where the amount matches the state bond.
Is a California marijuana bond the same as a California cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. California law uses the term cannabis, operators search under all of these names, and the bond form and amount are the same whichever word you use.
How much does a California cannabis or marijuana surety bond cost?
You pay a premium, not the penal sum. The premium is a small fraction of the bond amount and depends on the size and wording of the obligation, your credit and your financial strength. Small compliance bonds carry low fixed annual premiums. Larger California bonds are rated individually. Quotes are free.
Can I get a California cannabis bond with bad credit?
Yes in most cases. Surety One does not automatically decline any applicant. Files with damaged or limited credit go to our non-standard program, which carries a higher rate and sometimes partial collateral.
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 .