What Massachusetts requires of cannabis and marijuana businesses
The Cannabis Control Commission regulates adult use Marijuana Establishments under 935 CMR 500.000 and Medical Marijuana Treatment Centers under 935 CMR 501.000. Both chapters contain the same financial assurance rule at section .105(16).
Before commencing operations, a licensee must provide proof of a surety bond in an amount equal to its licensure fee, payable to the Marijuana Regulation Fund. In the alternative it may place the required amount in an escrow account. Because license fees scale with canopy tier and license type, so does the bond.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| Massachusetts Marijuana Establishment Bond | Equal to the annual licensure fee | All Marijuana Establishments and MTCs, per license | Commonwealth of Massachusetts, Marijuana Regulation Fund | 935 CMR 500.105(16); 935 CMR 501.105(16) |
What the bond guarantees
The bond ensures payment of the costs the Commonwealth would incur for destroying cannabis goods when a violation makes destruction necessary, and for winding down an establishment that ceases to operate. Most Massachusetts bonds fall well under $25,000 and are written on the application alone, usually the same day.
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 Massachusetts 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 Massachusetts bond
On a Massachusetts bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is Commonwealth of Massachusetts, Marijuana Regulation Fund. The surety is an insurance company admitted in Massachusetts, placed by Surety One, Inc. as producer and underwriting manager. Who files in Massachusetts: All Marijuana Establishments and MTCs, per license (Equal to the annual licensure fee).
Claims, cancellation and renewal in Massachusetts
If Commonwealth of Massachusetts, Marijuana Regulation Fund 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 Massachusetts 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 marijuana license. We send renewal notices 45 days ahead, and renewing at least 30 days early removes the risk of a gap.
Getting a Massachusetts bond issued, step by step
- Confirm the form and amount. Ask Massachusetts Cannabis Control Commission 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 Massachusetts bond in good standing
- File and pay every marijuana 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 Massachusetts 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 Massachusetts Cannabis Control Commission before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. Massachusetts law uses the term "marijuana". Operators look for this bond as a Massachusetts marijuana bond, a Massachusetts marijuana license bond, a Massachusetts cannabis bond and a Massachusetts 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.
Massachusetts marijuana and cannabis bond questions
How do I work out my Massachusetts bond amount?
Look up the annual license fee for your license type and, for cultivators, your canopy tier. The bond equals that fee. If you hold several licenses you file a bond for each.
Do some Massachusetts towns require a bond too?
A host community may negotiate financial assurances in its agreement with the operator. That is separate from the Commission's bond. Send us the language and we will tell you whether a surety bond satisfies it.
Is a Massachusetts marijuana bond the same as a Massachusetts cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. Massachusetts law uses the term marijuana, operators search under all of these names, and the bond form and amount are the same whichever word you use.
How much does a Massachusetts 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 Massachusetts bonds are rated individually. Quotes are free.
Can I get a Massachusetts marijuana 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 .