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Quick answer: A cannabis surety bond is a guarantee some states require before they issue or renew a cannabis license. It protects the state, not your business, and if the surety pays a claim, it can seek repayment from you. Whether you need one, and for how much, depends on your state and license type. California, Illinois, Massachusetts, Ohio and Oklahoma are examples of states with bond or escrow rules, summarized below with links to each source.
What is a cannabis surety bond?
A surety bond is a three-party agreement. Your cannabis business is the principal. The state agency that requires the bond is the obligee. The surety is the company that issues the bond and promises the obligee that your business will meet the obligations the bond covers.
State rules spell out what a cannabis bond is for. Depending on the state, that can include the cost of destroying cannabis after a violation, the cost of securing or winding down a licensed facility, unpaid fees or taxes, or land reclamation at a grow site. If your business does not meet those obligations, the state can make a claim on the bond.
Who requires a cannabis surety bond?
State cannabis regulators set bond requirements, usually as a condition of getting, renewing or operating under a license. Requirements differ by state and by license type. Some states require a bond for every license or premises, some only for certain license types, some accept an escrow account or another alternative, and some do not require a cannabis bond at all. Local permits and contracts can add their own requirements.
How a surety bond differs from insurance
- Who it protects. A bond protects the state that requires it. Insurance protects your business against covered losses and claims.
- Who pays in the end. If a surety pays a valid bond claim, it can seek repayment from your business. With insurance, the insurer pays covered claims under the policy terms.
- What it is for. A bond guarantees you will meet specific license obligations. Insurance, such as general liability and product liability, responds to injuries, property damage, lawsuits and other covered events.
- Both may be required. A bond does not replace insurance. Ohio, for example, requires general liability insurance covering products liability and a bond or escrow account.
Need a bond for a license application or renewal? Request a quote or call (916) 967-7715. Writing cannabis insurance since 2009, licensed in all 50 states.
State cannabis bond requirements: examples we verified
Reviewed October 26, 2026. Each summary links to the regulation, statute or regulator page it comes from. These are examples, not a complete list, and rules change.
California
An application for an annual cannabis license must include proof of a surety bond of at least $5,000 payable to the State of California for each licensed premises. The bond must be issued by a corporate surety licensed to transact surety business in California, and an aggregated bond may be used when the same commercial cannabis business holds multiple licenses. Sources: Cal. Code Regs. tit. 4, § 15002(c)(22) and the Department of Cannabis Control’s Form 8113: Commercial Cannabis Licensee Bond.
Illinois
Under the Cannabis Regulation and Tax Act, an adult-use dispensing organization must provide evidence of financial responsibility to get, keep or reactivate its license. It can do so with an escrow or surety account in a financial institution in the amount of $50,000, or with a surety bond in the amount of $50,000 naming the dispensing organization as principal, written on a form the Department approves. Source: 410 ILCS 705/15-55.
Massachusetts
Before commencing operations, a marijuana establishment must provide proof of a surety bond in an amount equal to its licensure fee, payable to the Marijuana Regulation Fund. The bond covers costs such as destroying cannabis goods after a violation and the costs of ceasing operations. If the establishment cannot secure a bond, it may place no less than $5,000, or another amount the Commission approves, in escrow. Source: 935 CMR 500.105(16) (Cannabis Control Commission regulations).
Ohio
Before a certificate of operation is issued or renewed, each licensee must carry commercial general liability insurance covering products liability and must also maintain either an escrow account or a surety bond. The escrow or bond amount is set by license type: $750,000 for level one cultivators, $75,000 for level two cultivators, $250,000 for processors, $75,000 for testing laboratories and $50,000 for dispensaries. Licensees may petition to reduce or end the requirement after a compliant operating history. Source: Ohio Adm. Code 1301:18-3-08.
Oklahoma
Commercial medical marijuana grower license applicants and licensees must submit either a surety bond covering the permit area where they grow, or an attestation showing they have owned that land for at least five years. The Oklahoma Medical Marijuana Authority (OMMA) states that the bond must be no less than $50,000 for each license, issued by a surety qualified in Oklahoma, and that OMMA may require a higher amount depending on reclamation requirements. Source: OMMA bond requirement, which cites Senate Bill 913 (2023) and OAC 442:10-5-3.3.
The dollar figures above are the bond or escrow amounts the regulators require. They are not the cost of a bond or a policy.
Other states: requirements vary
We only summarize rules we can check against the regulation, statute or regulator page, so not every state is listed. If your state is not shown here, tell us your state and license type. We will help you find out whether your license needs a bond, what amount and form the regulator requires, and what insurance your application and contracts ask for. For insurance minimums by state, see cannabis insurance requirements by state. For how we place cannabis bonds, see cannabis surety bonds.
What affects your bond or insurance quote
We do not publish prices, because every quote depends on the business behind it. These are the details a surety or insurance company typically looks at. Having them ready makes the quote faster.
For a cannabis surety bond
- The state, the agency named as obligee and the bond form it requires
- The bond amount the rule requires for your license type
- How many licenses and licensed premises the bond must cover, and whether your state allows one aggregated bond
- Your business’s ownership, financial information and licensing history, as the surety requests
- Any past bond claims or license violations
For cannabis insurance
- License type and operations: cultivation, manufacturing, distribution, retail, delivery or testing
- Products you make or sell, such as flower, edibles, vapes or concentrates
- Locations, buildings, equipment and inventory you need to insure
- Revenue, payroll and number of employees
- Vehicles and drivers used for transport or delivery
- Security, alarm, camera and cash-handling controls
- Past claims and losses
- Limits and certificate wording required by your state, landlord, lender or contracts
Request a quote with these details and we will tell you what your bond and coverage need to include.
Requirements change. This page summarizes regulation, statute and regulator text we reviewed on October 26, 2026. It is general information, not legal advice, and it does not change the terms of any bond or policy. Always confirm current requirements with your state licensing authority and local jurisdiction before you apply, renew or sign a contract.
Cannabis surety bond FAQ
What is a cannabis surety bond?
A cannabis surety bond is a guarantee that some states require before they issue or renew a cannabis license. It involves three parties: your business (the principal), the state agency that requires the bond (the obligee) and the surety company that issues it. If your business fails to meet the obligations the bond covers, such as paying the cost of destroying cannabis after a violation, the state can make a claim on the bond.
Which states require a cannabis surety bond?
Requirements vary by state and license type. California, Oklahoma, Ohio, Illinois and Massachusetts are examples of states whose rules call for a surety bond or an alternative such as an escrow account for certain licenses. This is not a complete list, and rules change, so confirm the current requirement with your state regulator.
How is a surety bond different from cannabis insurance?
A surety bond protects the state that requires it, and if the surety pays a valid claim, it can seek repayment from your business. Insurance protects your business against covered losses and claims, such as a customer injury or a product liability lawsuit. A bond does not replace insurance, and some states, such as Ohio, require both.
Can I use an escrow account instead of a bond?
In some states, yes. Ohio and Illinois allow certain licensees to use an escrow account instead of a surety bond, and Massachusetts allows an escrow deposit if a marijuana establishment cannot secure a bond. Oklahoma allows commercial growers to submit an attestation of land ownership instead of a bond if they meet the state’s ownership requirement. Check your own state’s rule for what it accepts.
Is the bond amount what I will pay for the bond?
No. The bond amounts on this page are the amounts regulators require the bond to cover. They are not the price of a bond. What you pay depends on the surety’s underwriting, so request a quote for your business.
Do I need a separate bond for each cannabis license?
It depends on the state. California requires a bond for each licensed premises but allows an aggregated bond when the same business holds multiple licenses. Oklahoma requires a grower bond for each license. Tell us your licenses and we will help you sort out what each one needs.
Request a cannabis bond or insurance quote
Tell us your state, license type, number of licenses and the bond form or coverage you need. The Cannabis Coverage Company has written cannabis insurance since 2009, is part of Lions & Coventry and is licensed in all 50 states (CA Lic. #0G22084).