What North Dakota requires of cannabis and marijuana businesses
North Dakota authorizes medical marijuana through a closed system of compassion centers under N.D.C.C. ch. 19-24.1. A compassion center is registered either as a manufacturing facility, which produces and processes usable marijuana for sale to dispensaries, or as a dispensary, which purchases from manufacturers and dispenses to registered patients and caregivers. The statute caps the count at two manufacturers and eight dispensaries unless the Department finds more are needed for patient access.
Section 19-24.1-15 lists the requirements for registration, and a surety bond is among them. The statute does not fix a dollar figure. The Department sets the amount, and indications have been that it will not exceed $1,000,000.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| North Dakota Compassion Center Bond (Manufacturing Facility) | Set by the Department, up to $1,000,000 | Registered manufacturing facilities | State of North Dakota | N.D.C.C. § 19-24.1-15 |
| North Dakota Compassion Center Bond (Dispensary) | Set by the Department, up to $1,000,000 | Registered dispensaries | State of North Dakota | N.D.C.C. § 19-24.1-15 |
What the bond guarantees
The bond must ensure the protection of public health and safety and the environment in the event of abandonment, default or other inability or unwillingness to meet the requirements of the chapter. That is decommissioning language, so the bond is underwritten with personal and business 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 North Dakota 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 North Dakota bond
On a North Dakota bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is State of North Dakota, and on the other bonds listed above the agency, county or city shown in the table. The surety is an insurance company admitted in North Dakota, placed by Surety One, Inc. as producer and underwriting manager. Who files in North Dakota: Registered manufacturing facilities (Set by the Department, up to $1,000,000); Registered dispensaries (Set by the Department, up to $1,000,000).
Claims, cancellation and renewal in North Dakota
If State of North Dakota 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 North Dakota 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 medical marijuana license. We send renewal notices 45 days ahead, and renewing at least 30 days early removes the risk of a gap.
Getting a North Dakota bond issued, step by step
- Confirm the form and amount. Ask North Dakota Health and Human Services, Medical Marijuana Program 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 North Dakota bond in good standing
- File and pay every medical 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 North Dakota 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 North Dakota Health and Human Services, Medical Marijuana Program before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. North Dakota law uses the term "medical marijuana". Operators look for this bond as a North Dakota marijuana bond, a North Dakota marijuana license bond, a North Dakota cannabis bond and a North Dakota 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.
North Dakota marijuana and cannabis bond questions
How is the North Dakota bond amount decided?
The Department sets it for each registration. Send us the figure from your registration materials and we will quote to it.
Who regulates the program now?
The Medical Marijuana Program sits within North Dakota Health and Human Services, the successor to the Department of Health.
Is a North Dakota marijuana bond the same as a North Dakota cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. North Dakota law uses the term medical 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 North Dakota 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 North Dakota bonds are rated individually. Quotes are free.
Can I get a North Dakota medical 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 .