What Utah requires of cannabis and marijuana businesses
Utah's Medical Cannabis Act licenses cannabis production establishments through the Department of Agriculture and Food (UDAF). The statute originally asked applicants to prove $500,000 in liquid assets. The legislature replaced that test with a performance bond in Utah Code § 4-41a-201(2)(b)(iv), and UDAF publishes a separate bond form for each establishment type.
When the program launched the cultivation facility bond was $250,000. UDAF's current cultivation form is written at $100,000. Processing facilities and independent testing laboratories post $50,000. Each bond runs to the State of Utah, Department of Agriculture and Food.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| Utah Cannabis Cultivation Performance Bond | $100,000 on the current UDAF form (originally $250,000) | Cannabis cultivation facilities | State of Utah, Department of Agriculture and Food | Utah Code § 4-41a-201(2)(b)(iv); Utah Admin. Code R68-27 |
| Utah Cannabis Processor Performance Bond | $50,000 | Cannabis processing facilities | State of Utah, Department of Agriculture and Food | Utah Code § 4-41a-201(2)(b)(iv); Utah Admin. Code R68-28 |
| Utah Independent Cannabis Testing Laboratory Performance Bond | $50,000 | Independent cannabis testing laboratories | State of Utah, Department of Agriculture and Food | Utah Code § 4-41a-201(2)(b)(iv) |
What the bond guarantees
Liability under the Utah form arises on two conditions: the principal is licensed, and it fails to strictly comply with Title 4, Chapter 41a and the orders and rules issued under it. For a cultivator that reaches location and square footage limits, security, inventory control, facility agent requirements, pesticide and fertilizer restrictions, transportation, recalls, storage and handling, and waste disposal. The bond expires when the license is withdrawn, lapses or is revoked, except for liability already incurred, and the surety may cancel on 30 days notice.
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 Utah 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 Utah bond
On a Utah bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is State of Utah, Department of Agriculture and Food, and on the other bonds listed above the agency, county or city shown in the table. The surety is an insurance company admitted in Utah, placed by Surety One, Inc. as producer and underwriting manager. Who files in Utah: Cannabis cultivation facilities ($100,000 on the current UDAF form (originally $250,000)); Cannabis processing facilities ($50,000); Independent cannabis testing laboratories ($50,000).
Claims, cancellation and renewal in Utah
If State of Utah, Department of Agriculture and Food 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 Utah 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 cannabis license. We send renewal notices 45 days ahead, and renewing at least 30 days early removes the risk of a gap.
Getting a Utah bond issued, step by step
- Confirm the form and amount. Ask Utah Department of Agriculture and Food 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 Utah bond in good standing
- File and pay every medical 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 Utah 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
- UDAF medical cannabis program
Send documents to Cannabis@SuretyOne.com or apply online. Confirm the current form and amount with the Utah Department of Agriculture and Food before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. Utah law uses the term "medical cannabis". Operators look for this bond as a Utah marijuana bond, a Utah marijuana license bond, a Utah cannabis bond and a Utah 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.
- Utah Code § 4-41a-201, cannabis production establishment license (Utah State Legislature)
- Utah Department of Agriculture and Food, medical cannabis
Utah marijuana and cannabis bond questions
Is the Utah cultivation bond $250,000 or $100,000?
Both figures are in circulation. The program opened at $250,000 and UDAF's updated cultivation bond form is written at $100,000. We issue on the form and amount UDAF gives you with your license materials.
Do Utah medical cannabis pharmacies post this bond?
The bonds described here are for production establishments licensed by UDAF. Pharmacies are licensed separately. Send us your application checklist and we will confirm what applies.
Is a Utah marijuana bond the same as a Utah cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. Utah law uses the term medical 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 Utah 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 Utah bonds are rated individually. Quotes are free.
Can I get a Utah medical 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 .