Medical marijuana growers are now legally required to purchase a surety bond, called a reclamation bond, to operate as a licensed grower in Oklahoma. This requirement is not only for new licensed growers, but previously licensed grower operations.
This short article will explain:
- The specifics of this medical marijuana reclamation bond
- How get the bond requirement waived by the state
- How to purchase a medical marijuana bond for as little as possible
- How to provide proof of being bonded
The Oklahoma Medical Marijuana Surety Bond Bond
What is a Surety Bond?
At a high level, a surety bond is a document holding a business owner or individual legally liable for their licensed and/or service based performance.
A surety bond is not insurance, but it's easier to understand when you think of it like insurance. There's one big difference though. A surety bond is not purchased for the business' protection, rather it's purchased to protect the customers and the state licensing authority in cases of purposeful:
- Defrauding of customers
- Mismanaging of assets
- Neglecting to follow state laws
- Failure to pay appropriate state fees and taxes
Current growers are required to purchase the bond during their license renewal. New grower licensees will need to provide the bond before the initial submission of the application.
The Medical Marijuana Reclamation Bond Requirements
The Oklahoma Medical Marijuana Authority Requirements
The Oklahoma Medical Marijuana Authority (referred to as the Authority in official documentation) requires all new applicants and current commercial grower licensees to file a surety bond with an amount of no less than $50,000 for each license sought or held.
For the Authority (OMMA), this bond ensures commercial grower licensees follow:
- State building codes
- Administrative rules
- Other relevant marijuana laws
- All rules and regulations to this act
- And pay all monies (fees and taxes) that may be due to the state during the time the bond is in effect
The Oklahoma Department of Environmental Quality
The Department of Environmental Quality may require a higher bond amount depending upon the reclamation requirements of the approved application.
Reclamation is the process of restoring the land used for growing marijuana to a usable state if a licensee:
- Goes out of business
- Abandons the land
- Has their license revoked
The Department of Environmental Quality will assess the difficulty of reclamation based on the license tier obtained by the grow operation.
Oklahoma medical marijuana commercial grower license has seven tiers. The different tiers are based on the square footage of the canopy used for harvesting marijuana.
These canopy sizes range from 10,000 square feet to over 100,000 square feet. And this is where the Department of Environmental Quality will assess the bonding amount. The more square footage the greater the reclamation requirements.
The "difficulty" of reclamation is based on:
- Topography of the canopy
- Hydrology (chemical characteristics of water)
- Revegetation potential
- Cost of removing equipment
- Destruction of waste products
- Remediation of environmental hazards
- Cost of prohibiting public access to the land
- Addressing improperly coded buildings
- Determining the the final disposition of any seized property
How to Waive the Commercial Medical Marijuana Grower Bond
The Authority (OMMA) can waive the bond requirement based upon verification that the permitted land used for the canopy has been owned by the licensee for at least 5 years prior to the submission of the application.
For existing commercial grower licensees, the same verification process is available to waive the bonding requirement.
The verification process can be proven using:
- A recorded property deed
- A court order
- Or other documents proving land ownership
The Authority (OMMA) will help you with any specific questions regarding the verification process.
How To Purchase The Oklahoma Medical Marijuana Reclamation Bond
Because this is a new law and bonding requirement, the number of sureties available to write the bond are limited. A surety is an insurance company who assesses surety bond risk and writes surety bonds.
Using a specialized surety agency like Surety Bonds Direct provides the best opportunity to purchase the reclamation bond for the lowest possible price.
Here's how the the process works:
Step 1: Get a Bond Quote
Commercial medical marijuana reclamation bonds require a quoted rate to determine the cost of the bond.
This rate is based on:
- Primarily the personal credit of business owners
- Past growing experience in Oklahoma
- Business financials
Surety Bonds Direct will work with multiple, A rated, sureties who have decided to write these reclamation bonds to provide you the lowest possible quoted rate. Surety Bonds Direct also guarantees the bond will be accepted by the Authority (OMMA) to satisfy this requirement.
The rate multiplied by the bond amount will be the cost to purchase the bond.
Here is a table outlining the possible costs of purchasing the minimum $50,000 bond amount.
|Bond Amount||Premium Rate||Total Cost|
It will typically take one business day or less to obtain rates from multiple sureties.
Step 2: Purchase The Bond
Once you purchase the bond, the bond issuing department of Surety Bonds Direct will prepare the bond with the appropriate signatures and seals. This makes the bond legally binding.
As of now the bond terms are for one year. This means each year you will have to renew the bond. However, the bond amount may change based on:
- The business's financial standing
- The owner's personal credit standing
- Changes to the canopy size
The renewal process will be straightforward as the business information is already on file. And the Authority (OMMA) will continue to update licensees on appropriate procedures. Surety Bonds Direct will stay up to date on these new procedures as they are released.
Step 3: File The Bond
Currently the Authority (OMMA) is still working to publish a bond form and determine the bond submission process. There is an online licensee portal which may accept electronic filing of the bond.
Fulfill Oklahoma's New Commercial Medical Marijuana Grower Bond Requirement
According to Section 427.14 of Title 63, unless a commercial medical marijuana grow operation has owned the land for at least 5 years, they may not operate legally without purchasing this new reclamation bond.
Surety Bonds Direct will make the process easy so you can get your quote and final pricing. Once the bond is purchased, Surety Bonds Direct will email and mail you the official bond so you can file it with the Authority (OMMA).
Use our free online quote form to start the quote process. If you would prefer to speak with a bond specialist, call Surety Bonds Direct today at 1-800-608-9950. All quotes are free and require zero obligation to purchase. Let us find you the lowest price to satisfy this new bonding requirement.