What Vermont requires of cannabis and marijuana businesses
The Vermont Cannabis Control Board was created by 7 V.S.A. § 843 to implement and administer adult use and medical cannabis. Among its first licensing rules was Board Rule 1.4.5(b), which requires a license applicant to provide a surety bond or alternative financial assurance to be held in case the establishment ceases operations.
The Board's guidance sets the amount in two bands. Tier 2 manufacturers and Tier 2 and Tier 3 cultivators provide $2,500. Retailers, wholesalers, Tier 3 manufacturers, Tier 4 through Tier 6 cultivators and integrated licensees provide $5,000.
| Bond | Penal sum | Who files it | Obligee | Authority |
|---|---|---|---|---|
| Vermont Cannabis Cessation of Operations Bond | $2,500 | Tier 2 manufacturers; Tier 2 and Tier 3 cultivators | Vermont Cannabis Control Board | 7 V.S.A. § 843; Board Rule 1.4.5(b) |
| Vermont Cannabis Cessation of Operations Bond | $5,000 | Retailers, wholesalers, Tier 3 manufacturers, Tier 4 to 6 cultivators, integrated licensees | Vermont Cannabis Control Board | 7 V.S.A. § 843; Board Rule 1.4.5(b) |
What the bond guarantees
The bond funds an orderly shutdown: securing and destroying remaining cannabis and cleaning up what a closed operator leaves behind. The amounts are deliberately small, in keeping with a program built around small cultivators and social equity applicants. These bonds are written on the application alone.
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 Vermont 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 Vermont bond
On a Vermont bond the principal is your licensed business, named exactly as it appears on the license or application. The obligee is Vermont Cannabis Control Board, and on the other bonds listed above the agency, county or city shown in the table. The surety is an insurance company admitted in Vermont, placed by Surety One, Inc. as producer and underwriting manager. Who files in Vermont: Tier 2 manufacturers; Tier 2 and Tier 3 cultivators ($2,500); Retailers, wholesalers, Tier 3 manufacturers, Tier 4 to 6 cultivators, integrated licensees ($5,000).
Claims, cancellation and renewal in Vermont
If Vermont Cannabis Control Board 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 Vermont 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 Vermont bond issued, step by step
- Confirm the form and amount. Ask Vermont Cannabis Control Board 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 Vermont 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 Vermont 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 Vermont Cannabis Control Board before you file.
A note on vocabulary: cannabis and marijuana are the same plant and, for bonding purposes, the same business. Vermont law uses the term "cannabis". Operators look for this bond as a Vermont marijuana bond, a Vermont marijuana license bond, a Vermont cannabis bond and a Vermont 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.
Vermont marijuana and cannabis bond questions
Is escrow cheaper than a bond in Vermont?
Escrow means depositing the full $2,500 or $5,000. The bond costs a small fraction of that each year. For most licensees the bond is the cheaper way to comply.
Do the smallest Vermont cultivators need a bond?
The Board's guidance lists Tier 2 and above. Confirm your tier's requirement with the Board when you apply.
Is a Vermont marijuana bond the same as a Vermont cannabis bond?
Yes. Marijuana bond, cannabis bond, marijuana license bond and cannabis surety bond are different names for the same instrument. Vermont 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 Vermont 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 Vermont bonds are rated individually. Quotes are free.
Can I get a Vermont 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 .