Surety Bond Quarterly - Fall 2014 - 27

WhAT IS CLEAr IS ThAT vArIOUS JUrISdICTIONS
ArE STrUggLINg WITh hOW TO rEgULATE ThE
INdUSTrY ANd WhAT KINd OF BONd MANdATES
ShOULd BE IMPLEMENTEd.
Colorado recently made news by
legalizing the use of marijuana for
recreational purposes. The state
passed legislation allowing retail
marijuana businesses to operate
legally. Effective January 1, 2014,
all retail marijuana businesses are
required to obtain a Colorado retail
Marijuana license Bond in
the
amount of $5,000 as a condition of
licensure.
This bond is conditioned on the
principal reporting and paying all
sales and use taxes due the state.
In addition, the City and County of
Denver has its own retail Marijuana
license Bond in the amount of
$20,000, conditioned on the payment
of taxes due to the City and County
of Denver.
CONNECTICUT
Connecticut recently enacted a law
to regulate medical marijuana producers
and dispensaries. Among
other things, the Medical Marijuana
Producer Performance Bond (for
the Construction of a Production
Facility) must have the following
characteristics:
* The bond must be irrevocable.
* The bond must guarantee construction
of the production facility within
a specific time frame.
* The penal sum of the bond is
$2 million.
It should be well noted that this
Connecticut medical marijuana bond
is a type of forfeiture bond, as the
surety must pay the full bond amount
in the event of any claim. It is presumed
that Connecticut did not consult
with the surety industry on this
bond requirement.
FLORIDA
The Florida Compassionate Medical
Cannabis Act of 2014 was signed into
law on June 16. Under this new law,
five nurseries in the state of Florida
will be opened to grow, process,
and dispense certain cannabis and
cannabis oil extracts. Under the
law's strict requirements, only professional
nurseries that have operated
for at least 30 years and hold a
valid certificate of registration from
the Department of Agriculture and
Consumer Services for the cultivation
of more than 400,000 plants will be
eligible to be one of the five nurseries
selected. Significantly, nurseries
will be required to obtain a $5 million
bond and demonstrate that they have
the financial ability to maintain operations
for the duration of the two-year
approval process.
ILLINOIS
Under Illinois' Compassionate Use of
Medical Cannabis Pilot Program Act
and the implementing regulations,
each cultivation center, as a requirement
of registration, must provide
to the Department of Agriculture
(Department) evidence of financial
responsibility for failure to timely
and successfully complete construction
or failure to operate in a
manner that provides an uninterrupted
supply of cannabis. Evidence
of financial responsibility shall be
provided by either (1) an escrow
account in an Illinois financial institution
in the amount of $2 million; or
(2) a surety bond in the amount of
$2 million, with the cultivation center
as the principal on the bond and
the Department as the obligee. The
bond must be written by a surety
company authorized and licensed
through the Illinois Department
of Insurance.
In addition, under the relevant
law and regulations, each dispensing
organization, as a requirement
of registration, must provide the
Department evidence of financial
responsibility in the event of failure
to timely and successfully complete
construction or failure to operate in
a manner that provides an uninterrupted
supply of cannabis.
Evidence of financial responsibility
shall be provided by either (1) an
escrow account in an Illinois financial
institution in the amount of $50,000;
or (2) a surety bond in the amount
of $50,000.
NEVADA
The Nevada Medical Marijuana
Program is a state registry program,
and, in early June 2014, the
las Vegas City Council adopted regulations
for medical marijuana establishments.
The City implemented a
$250,000 surety bond requirement
for license applications submitted
to the las Vegas Department
of Planning for medical marijuana
establishments. Pursuant to the
implementing regulations, the bond
will "hold harmless, indemnify, and
defend the City against all claims and
litigation arising from the issuance
of a permit and/or licenses, including
any claims and litigation arising
from the establishment, operation,
or ownership of the medical marijuana
establishment ...."
Please note that these marijuana
surety bond laws and regulations are
subject to amendment and change.
Some folks have articulated concerns
that some of the marijuana
surety bond penal sums are too
high and the terms and conditions
are onerous. Indeed, there may not
be a vibrant market for some of these
bonds, unless statutory and regulatory
modifications are made.
In addition, it is likely that other
states in the near future will implement
a marijuana surety bond
requirement for businesses that
want to cultivate, package, and/or
dispense marijuana, in an effort to
regulate both the medical and the
recreational marijuana industries.
The penal sum of those bonds and
the conditions for recovery under
such bonds remain to be seen. ●
NatioNal assoCiatioN of surety BoNd ProduCers | WWW.NASBP.orG 27
http://WWW.NASBP.orG

Surety Bond Quarterly - Fall 2014

Table of Contents for the Digital Edition of Surety Bond Quarterly - Fall 2014

2014-2015 NASBP Executive Committee
NASBP Upcoming Meetings and Workshops
From the CEO: Successful construction relationships require the right relationship
Practical Insights: What you need to know - bond and lien notice pitfalls
SuretyLearn.org: An invaluable resource
Advocacy update
Nov. 12-3 Conference addresses the twists and turns of best value selection - and other timely topics
Surety Bond Guarantee Program changes for the better
Front Line Underwriting: Choosing a quality construction CPA
Getting in the weeds: Requirements of marijuana surety bonds
Encrypting email
It’s Finally Here: The new revenue recognition standard
CPAs standing in the GAAP
Resource Directory
Index to Advertisers
Surety Bond Quarterly - Fall 2014 - cover1
Surety Bond Quarterly - Fall 2014 - cover2
Surety Bond Quarterly - Fall 2014 - 3
Surety Bond Quarterly - Fall 2014 - 4
Surety Bond Quarterly - Fall 2014 - 5
Surety Bond Quarterly - Fall 2014 - 6
Surety Bond Quarterly - Fall 2014 - NASBP Upcoming Meetings and Workshops
Surety Bond Quarterly - Fall 2014 - From the CEO: Successful construction relationships require the right relationship
Surety Bond Quarterly - Fall 2014 - 9
Surety Bond Quarterly - Fall 2014 - Practical Insights: What you need to know - bond and lien notice pitfalls
Surety Bond Quarterly - Fall 2014 - 11
Surety Bond Quarterly - Fall 2014 - SuretyLearn.org: An invaluable resource
Surety Bond Quarterly - Fall 2014 - 13
Surety Bond Quarterly - Fall 2014 - Advocacy update
Surety Bond Quarterly - Fall 2014 - 15
Surety Bond Quarterly - Fall 2014 - Nov. 12-3 Conference addresses the twists and turns of best value selection - and other timely topics
Surety Bond Quarterly - Fall 2014 - 17
Surety Bond Quarterly - Fall 2014 - Surety Bond Guarantee Program changes for the better
Surety Bond Quarterly - Fall 2014 - 19
Surety Bond Quarterly - Fall 2014 - 20
Surety Bond Quarterly - Fall 2014 - 21
Surety Bond Quarterly - Fall 2014 - Front Line Underwriting: Choosing a quality construction CPA
Surety Bond Quarterly - Fall 2014 - 23
Surety Bond Quarterly - Fall 2014 - 24
Surety Bond Quarterly - Fall 2014 - 25
Surety Bond Quarterly - Fall 2014 - Getting in the weeds: Requirements of marijuana surety bonds
Surety Bond Quarterly - Fall 2014 - 27
Surety Bond Quarterly - Fall 2014 - Encrypting email
Surety Bond Quarterly - Fall 2014 - 29
Surety Bond Quarterly - Fall 2014 - 30
Surety Bond Quarterly - Fall 2014 - 31
Surety Bond Quarterly - Fall 2014 - It’s Finally Here: The new revenue recognition standard
Surety Bond Quarterly - Fall 2014 - 33
Surety Bond Quarterly - Fall 2014 - CPAs standing in the GAAP
Surety Bond Quarterly - Fall 2014 - 35
Surety Bond Quarterly - Fall 2014 - 36
Surety Bond Quarterly - Fall 2014 - 37
Surety Bond Quarterly - Fall 2014 - 38
Surety Bond Quarterly - Fall 2014 - Resource Directory
Surety Bond Quarterly - Fall 2014 - 40
Surety Bond Quarterly - Fall 2014 - 41
Surety Bond Quarterly - Fall 2014 - 42
Surety Bond Quarterly - Fall 2014 - 43
Surety Bond Quarterly - Fall 2014 - 44
Surety Bond Quarterly - Fall 2014 - 45
Surety Bond Quarterly - Fall 2014 - 46
Surety Bond Quarterly - Fall 2014 - 47
Surety Bond Quarterly - Fall 2014 - 48
Surety Bond Quarterly - Fall 2014 - 49
Surety Bond Quarterly - Fall 2014 - 50
Surety Bond Quarterly - Fall 2014 - 51
Surety Bond Quarterly - Fall 2014 - 52
Surety Bond Quarterly - Fall 2014 - 53
Surety Bond Quarterly - Fall 2014 - 54
Surety Bond Quarterly - Fall 2014 - 55
Surety Bond Quarterly - Fall 2014 - 56
Surety Bond Quarterly - Fall 2014 - 57
Surety Bond Quarterly - Fall 2014 - Index to Advertisers
Surety Bond Quarterly - Fall 2014 - cover3
Surety Bond Quarterly - Fall 2014 - cover4
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