What Connecticut requires of cannabis and marijuana businesses
The Connecticut Department of Consumer Protection (DCP) licenses producers under the state's medical marijuana program, and those producers anchor the supply chain for the adult use market created in 2021. The producer application is one of the most demanding in the country, and its financial assurance package has two separate parts.
First, a facility performance bond of $2,000,000 guarantees that the applicant will complete construction of the production facility on time or pay the full penal sum to the state. Second, an operation bond of $1,500,000 guarantees a substantially uninterrupted supply of marijuana to the producer's usual dispensary facility customers during the license term.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| Connecticut Producer Facility Construction Performance Bond | $2,000,000 | Producer license applicants | State of Connecticut, Department of Consumer Protection | Conn. Gen. Stat. ch. 420f; Regs. Conn. State Agencies § 21a-408-1 et seq. |
| Connecticut Producer Facility Operation Bond | $1,500,000 | Licensed producers | State of Connecticut, Department of Consumer Protection | Conn. Gen. Stat. ch. 420f; Regs. Conn. State Agencies § 21a-408-1 et seq. |
What the bond guarantees
The operation bond is not an all or nothing forfeiture. The form steps the exposure down as the producer proves itself: the claim amount reduces to $1,000,000 after one year of operation without substantial interruption or violation, and to $500,000 after three years. The bond carries a five year tail unless the DCP releases it or another surety replaces it. Both instruments are underwritten on business and personal financial statements.
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 Connecticut cannabis and marijuana bonds
This obligation is larger than, or worded more heavily than, a simple compliance bond, so it is underwritten on financial disclosure: the application, a current personal financial statement from each owner holding ten percent or more, current business financial statements (CPA prepared for the largest bonds) and a copy of your complete state or local license application. A cannabis bond is in substance an unsecured credit instrument. The surety extends its credit to you in front of the regulator, so financial strength, operating experience and the exact wording of the bond form drive both the decision and the rate. Where the numbers are thin, partial collateral can close the gap. No applicant is automatically declined.
More on cost, credit and collateral.
The parties to a Connecticut bond
On a Connecticut bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is State of Connecticut, Department of Consumer Protection, and on the other bonds listed above the agency, county or city shown in the table. The surety is an insurance company admitted in Connecticut, placed by Surety One, Inc. as producer and underwriting manager. Who files in Connecticut: Producer license applicants ($2,000,000); Licensed producers ($1,500,000).
Claims, cancellation and renewal in Connecticut
If State of Connecticut, Department of Consumer Protection 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 the Connecticut obligation is large or carries performance, decommissioning or supply language, a claim can reach the full penal sum, which is why the indemnity agreement deserves the same attention as a personal guarantee on a loan.
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 Connecticut bond issued, step by step
- Confirm the form and amount. Ask Connecticut Department of Consumer Protection, Drug Control Division 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.
- Send financial statements. Personal financial statements from owners of ten percent or more, current business financials and your license application let us quote in about three to five business days.
- 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 Connecticut 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 Connecticut and other state requirements are logged with dates in regulatory updates, and an underwriter is available through the contact page.
What to send us
- Cannabis license bond application
- Personal financial statement from each owner of ten percent or more
- Current business financial statements
- A copy of your complete license application
Send documents to Cannabis@SuretyOne.com or apply online. Confirm the current form and amount with the Connecticut Department of Consumer Protection, Drug Control Division before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. Connecticut law uses the term "cannabis". Operators look for this bond as a Connecticut marijuana bond, a Connecticut marijuana license bond, a Connecticut cannabis bond and a Connecticut 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.
- Conn. Gen. Stat. Chapter 420f, Palliative Use of Marijuana (Connecticut General Assembly)
- Regulations of Connecticut State Agencies, Title 21a (eRegulations)
Connecticut marijuana and cannabis bond questions
Why does Connecticut use two bonds?
They secure two different risks. The construction bond protects the state against a licensee that wins one of a very small number of licenses and never builds. The operation bond protects patients against a supply failure once the facility is running.
Can the Connecticut operation bond be reduced?
Yes, by its own terms. One clean year reduces the exposure to $1,000,000 and three clean years reduce it to $500,000.
Is a Connecticut marijuana bond the same as a Connecticut cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. Connecticut 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 Connecticut 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 Connecticut bonds are rated individually. Quotes are free.
Can I get a Connecticut 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 .