DBL Surety is the largest writer of Florida Medical Marijuana Performance Bonds. Since 2015 we’ve successfully quoted and placed surety bonds for most of the authorized Florida Medical Marijuana Treatment Centers. Our approach is unique and here’s what separates us from the rest:
- We have direct access to all of the insurance companies who write the obligation.
- We’ve successfully represented both private and public entities in their initial bond placement, renewals, and license transfers.
- We know the process, timeline, and requirements whether you’re an initial license applicant or purchasing an existing license.
- We know surety bonds and our markets know that we know surety bonds. Especially when it comes to cannabis.
Ultimately, if you choose us, you’re choosing an experienced surety bond agency trusted by both our cannabis clients and our insurance companies who participate in the space. We’re not a new agency or agent who tosses “cannabis” behind their name and pretends to be an expert. We are, however, especially good at what we do from negotiating rate to complex indemnity structures to ensuring a smooth transaction when the time comes for bond issuance.
Want to learn more about our approach and how we can help you?
We do not accept applications for Florida Medical Marijuana Performance Bonds online. This is because each company, whether a privately-backed SPE or a publicly-traded MSO, is different. However, please complete the appointment form below if you’d like to schedule a call and hear about our unique approach to this particular bond.
What is a Florida Medical Marijuana Surety Bond?
A Florida Medical Marijuana Surety Bond is meant to guarantee a Medical Marijuana Treatment Center’s, also known as an MMTC, financial ability to maintain operations during the two year licensing approval cycle. The Florida Medical Marijuana Surety Bond is required by Compassionate Medical Cannabis Act of 2014 and, while the act is ever evolving, can provide reimbursement for non-performance and/or violations of the Act’s requirements. The State of Florida initially sought to license only five dispensaries who will provide Low-THC cannabis which contains 0.8% or less tetrahydrocannabinol and more than 10% of cannabidiol and full strength marijuana to the following five regions:
- Northwest Florida;
- Northeast Florida;
- Central Florida;
- Southwest Florida; and
- Southeast Florida.
However, the state has since licensed a total of 22 Medical Marijuana Treatment Centers. Most operate throughout the State of Florida without regard to a particular region. Additionally, MMTC’s aren’t required to distribute only Low-THC Cannabis. MMTC’s are now authorized to distribute full-strength, medical cannabis in forms such as flower, concentrates, edibles, and many others.
What is the current market for a Florida Medical Marijuana Surety Bond?
The market for Florida Medical Marijuana Surety Bonds is very limited given the nature of the industry and federal banking regulations. There are currently only a few surety companies who are writing the obligation as most other surety companies have backed out. Dispensaries will need to be very well funded to qualify for a $5,000,000 performance bond. Terms of approval and premium are largely determined by the financial condition of the MMTC’s corporate and/or personal net worth and their application package.
Florida Medical Marijuana Surety Bond Cost and Indemnity
Surety bond cost and indemnity is determined by several factors unique to each applicant. The limited number of surety companies who operate in the cannabis space (especially Florida) is one factor. However, we have direct access to each market currently operating in the space. This means we work directly with each insurance company and have established personal relationships with our various underwriters.
The second major factor is the financial component. Does the company have a balance sheet and income statement with existing assets or are we considering a proforma financial statement? Is the entity privately or publicly backed by shareholders? These are all questions which will help us obtain pricing based on your unique situation. We’re happy to discuss current industry pricing once we learn more about your business. Please use the contact form above to schedule a time to learn more about pricing and how it may apply to your particular business. However, if you’re looking for a general estimate, pricing for these bonds begins at 1% for the highest qualified applicants.
Indemnity is a principle which revolves around determining who or what is willing to reimburse the surety company for losses and costs that they incur. Many applicants confuse surety bonds with traditional insurance and, for the most part, they’re much different. For example: Let’s say your house burns down and it’s covered by your homeowner’s policy. You generally pay your policy deductible and the insurance company pays the rest up to the policy limits. Now let’s look at surety bonds. Let’s say the state decides to shut down your MMTC, revokes your license, etc. and a claim is made on your bond. The indemnitors, jointly and severally, are responsible for reimbursing the surety company for all losses, costs, etc. incurred on your behalf.
We realize indemnity can sometimes be a sensitive topic. In most cases, we’ve been able to limit or remove certain indemnitors such as minority owners and spouses. Again, each case is specific to your particular business and how it’s structured. We can certainly offer proven suggestions and solutions which may help limit the number of required indemnitors.
Finally, please beware of “administrative fees” charged by agencies who seek to place your bond. In some cases, we’ve heard this fee has reached as high as $70,000. These fees are charged in addition to the premium for your Florida MMTC Performance Bond. Please contact us if you have been charged or have an approval which includes an administrative fee and we will waive it for you.
Florida Medical Marijuana Surety Bond Updates
Here you’ll find information related to Florida’s medical marijuana industry and the required surety bonds. You can learn more about new state legislation, Amendment 2, and other changes taking place by checking back frequently.
2021 Florida Supreme Court Ruling
In May of 2021 the Florida Supreme Court rejected the challenge to state’s existing vertically-integrated model. In a rare move, the court heard a second set of arguments to the challenge in late 2020. The result of those arguments was a 6-1 decision to uphold the existing regulations. This decision paves the way for the Office of Medical Marijuana Use to begin issuing up to 15 additional MMTC licenses. Further, another 4 licenses become available for every 100,000 additional patients who register with the Medical Marijuana Use Registry.
Updated Rules for October 2017 License Awards
On September 19th, the Office of Medical Marijuana Use issued it proposed rules for the next round of Medical Marijuana Treatment Center licenses. These rules changed the application process in several ways. Listed below are a few highlights of the new application process. Please contact us for more information.
- A total of 9 licenses will be issued during this application process. 5 licenses will be awarded and 4 others will be awarded but contingent on the active patient base reaching 100,000.
- One license will go to the highest ranking applicant which is also a member of the BFAA.
- The highest two scoring applicants which currently operate or have in the past a citrus processing operation will be given an additional 35 point preference over the other applicants.
- The highest scoring applicants (after including the citrus preference) will receive the remaining 8 MMTC licenses.
- The applications can no longer be amended for deficiencies. Instead, those applicants considered deficient will not be scored and eliminated from consideration.
- 2 industry specialists for each application section will be designated to blindly score their respective section of each application.
- There is a total of 1150 points available to each applicant with an additional 35 points awarded to the highest two citrus applicants.
- The Low THC Performance Bond has been relabeled as the Florida Medical Marijuana Performance Bond.
Please keep in mind this is a brief summary of the new rules and is not all-inclusive. Again, please contact us for more information regarding the new rules and how you can qualify for the Florida Medical Marijuana Performance Surety Bond.
2017 Special Session
A special legislative session was called to iron out several issues in Florida but didn’t include medical marijuana initially. However, the Florida House and Senate came to an agreement on June 7 as to the legislation. The agreement includes 5 new licenses which are to be issued to the 2nd place finishers in the medical marijuana license selection process which took place in 2015. Additionally, 5 other licenses will be issued to new applicants. One of those licenses is reserved for an African American owned nursery. The legislation also opens the door for the citrus and molasses industry as existing producers and processors will be given special preference for two of the 4 remaining licenses.
The bill will limit the number of dispensaries per license to 25 which was a major sticking point between the Florida House and Senate. However, the number of dispensaries per license will increase by 4 for every 100,000 patients. Finally, challenges from some of the MMTC’s have resulted in additional dispensaries per each license. For example, Trulieve now has over 80+ dispensing locations.
Current Florida Medical Marijuana Licensees
The following companies have been awarded a Medical Marijuana Treatment Center License in the State of Florida. They’re currently dispensing, processing, or cultivating medical marijuana and low-THC cannabis.
Following the award, the nurseries listed above had 10 days to provide the $5 million Florida Medical Marijuana Surety Bond. All applicants successfully placed their bonds within the given time frame. Licensees have up to 75 days (30 days for some) to gain authorization from the state so they may begin growing marijuana. Additionally, they’re expected to have products available to patients within 210 days of the contract award. However, several legal challenges were filed in opposition to the license rewards which further delayed the ability for qualifying patients to receive their approved medication. The Office of Compassionate Use received a total of 28 initial applications in total which sought a total of 5 initial dispensary licenses located in different areas of Florida. You may view the list of applicants and the regions they applied for by clicking here. However, there are now a total of seven licenses with an eight license award awaiting a Florida Administrative Court ruling.
Senate Bills 614 and 406 – House Bill 1397
In 2017, a few different bills were filed in an attempt to implement the measures contained in amendment 2. Amendment 2 was passed by Floridians in November with a wide margin. However, with the amendments passage also comes uncertainty as to how it will be implemented. Enter Senate Bills 614 and 406 by Senators Brandes and Bradley respectively and House Bill 1397 sponsored by Representative Rodrigues.
Senate Bill 614 was introduced by Senator Jeff Brandes in early February 2017. His bill seeks to reform the existing FL medical marijuana industry by increasing competition in the marketplace. It would replace the state’s current cartel-like system made up of a handful of vertically integrated licensees. The current system would offer four different license types depending on the licensee’s operations as opposed to the current system of one license for all activities. These license types would be retail sales, production, processing, and transportation. Each license type would require a $1 million performance and compliance bond as opposed the $5 million performance bond now required. Additionally, this bill also allows for a smokable form of medical marijuana to be used. You can read the bill in its entirety here.
Senate Bill 406 was introduced by Senator Rob Bradley along with Senator Dana Young in January 2017. This bill mainly seeks to modify the current medical marijuana provisions rather than replace them. The current medical marijuana licensees would qualify as Medical Marijuana Treatment Centers. Additional Medical Marijuana Treatment Center licenses would be awarded as the the registered patient count increases in contrast to Senate Bill 614’s more free market approach. Additional licensees would be required to post the $5 million performance bond required of all current Florida growers. However, this bond can be reduced to $2 million once a certain patient count is reached. You can find the full text of Florida Senate Bill 406 here.
Ultimately, House Bill 1397 prevailed. This bill included much of the recommendations of the senate and sought to modify the existing regulations. However, the Florida Legislature could not come to an agreement before session ended. This means that its now up to the DOH to establish the rules required by Amendment 2. A special session could be called which would allow for the passage of the bill but must take place prior to July. Additionally, lawsuits are expected which could delay the implementation of any proposed bill. Prospective license applicants should start preparing now and should contact us with questions about qualifying for a medical marijuana bond in Florida.
Amendment 2 and how it relates to Dispensing Organizations
Citizens of Florida recently approved a constitutional amendment which expanded the definition of who qualifies for medical marijuana within the state. While the amendment is expected to increase the number of statewide patients, it may also change the number of licensed dispensing organizations.
The ballot measure also mandates that the state implement regulations for Medical Marijuana Treatment Centers or MMTCs. An MMTCs is effectively the same thing as a dispensing organization. MMTCs may operate within the rules and regulations already established for dispensing organizations along with emergency rules and updates incorporated by the Office of Medical Marijuana Use.
Update to Florida Medical Marijuana Bond Legal Challenges
As mentioned above, many of the applicants who were unsuccessful in winning a license filed legal challenges to the awards. The challenges were heard by a administrative court and resulted in an additional license being awarded to San Felasco Nursery also doing business as Grandiflora. San Felasco was denied a license because one of their directors had a previous drug conviction which was not disclosed in the initial application. This decision was overturned by the administrative court.
Several other unsuccessful applicants have also filed suit against the Department of Health in reference to the medical marijuana license evaluation process. The most compelling case has been brought by McCrory’s Sunny Hill Nursery who has partnered with GrowHealthy Holdings. McCrory’s alleges they should have received a higher score in one of the ranking components which would have given them the highest score in that particular region. The company was beaten by Knox Nursery by less than one-hundredth of a point in the Central Region. GrowHealthy was successful in winning their suit and was awarded a license in December of 2016.
As of 5/25/17 all FL Administrative court challenges have been closed. The last remaining petitioners were Plants of Ruskin, Inc. and Tornello Landscape Corp., d/b/a 3 Boys Farm. Administrative Law Judge John Van Laningham is expected to issue an order which grants either Tornello Landscape of Plants of Ruskin and additional dispensing organization license in the Southeast Region of Florida. On 12/6/16 a motion was filed in the FL Administrative court on behalf of Tornello Landscape Corp and Plants of Ruskin. This motion seeks to move jurisdiction of the current case to the Department of Health from the court. A settlement was believed to have been reached by both companies and the DOH. Details of the settlement were not available as of the most recent update to this article. However, this case returned to the administrative court on 1/6/17 as the settlement between the to companies and the DOH could not be completed. The case is now back in district court and assigned to Judge Van Laningham. The judge is expected to regrade the applications of each company and award an additional license.
In May of 2017, Judge Van Laningham recommended that the DOH award a license to both 3 Boys Farm and Plants of Ruskin. However, the decision to issue the licenses is up to the Department of Health. They have the option of issuing a license to each company. However, if only one license is issued, the judge recommended it be issued to 3 Boys Farm as they outranked Plants of Ruskin. Ultimately, both were granted an MMTC license.
Updates to Florida Medical Marijuana Bond Legislation and FL House Bill 307
FL House Bill 307 passed in March of 2016 which made substantial changes to the original Compassionate Use Act. A brief outline of those changes is listed below:
- Added “medical cannabis” in addition to the previously allowed low-THC cannabis. Medical cannabis is defined as all parts of the plant including seeds, resins, and extracts. This is important because the original Compassionate Use Act allowed for use of only non-euphoric low-THC cannabis. Medical cannabis allows for the use and sale of full-strenghth cannabis and its derivatives. Many say this is in preparation for the November 2016 Medical Marijuana Ballot Measure driven by United for Care.
- Authorizes three additional dispensary licenses when 250,000 active, qualified patients are registered in the Compassionate Use Registry. One of three licenses must be awarded to a member of the Black Farmers and Agriculturalists Association.
- Authorizes a dispensary to sell wholesale marijuana to another dispensary.
- Outlines additional security, cultivation, and packaging requirements for dispensaries.
- Allows for local municipalities to determine the criteria and permitting requirements for dispensaries who operate within the municipalities boundaries.
- Confirmed the award of medical marijuana licenses issued in December. However, it also allowed for challenges to be brought by those dispensaries who did not receive a license and were incorrectly disqualified.
- Allows for any college or university with a college of agriculture located in Florida to conduct cannabis research.
Where can I find the Florida Medical Marijuana Bond Form?
The original version of the Florida Medical Marijuana bond form can be found below. However, the bond form has been updated and is now known as the Florida Medical Marijuana Performance Bond.
STATE OF FLORIDA DEPARTMENT OF HEALTH Florida Low-THC Performance Bond
BY THIS BOND, ___________________________, having an address at _______________________________________________________________________________________, as PRINCIPAL (“PRINCIPAL”), and ____________________________________________________________, having an address at ________________________________________________________________________________________, as SURETY (“SURETY”), are firmly bound unto the FLORIDA DEPARTMENT OF HEALTH, OFFICE OF COMPASSIONATE USE (“DEPARTMENT”), as OBLIGEE, to pay the DEPARTMENT for covered damages defined herein to the Maximum Penal Sum of Five Million Dollars and Zero Cents ($5,000,000.00), for the payment of which we jointly and severally bind ourselves and our heirs, personal representatives, successors and assigns, this _____day of ______________, 20____.
WHEREAS, PRINCIPAL has been approved by the DEPARTMENT as a DISPENSING ORGANIZATION under § 381.986, Florida Statutes;
WHEREAS, PRINCIPAL is required under § 381.986, Florida Statutes, to post a $5,000,000.00 performance bond upon approval as a DISPENSING ORGANIZATION;
WHEREAS, PRINCIPAL’s license as a DISPENSING ORGANIZATION from the DEPARTMENT for the cultivation of low-THC cannabis for medical use, which is valid for a period of 2 years (the “effective period”), is incorporated by this reference as if fully set forth herein;
WHEREAS, PRINCIPAL is required to comply with § 381.986(6), Florida Statutes, and other applicable law, for the duration of the effective period,
WHEREAS, PRINCIPAL’s license as a DISPENSING ORGANIZATION is subject to revocation during the effective period for any of the reasons identified in 64-4.004, Florida Administrative Code, which section is incorporated by reference as if fully set forth herein;
WHEREAS, if PRINCIPAL fails to renew its approval to act as a DISPENSING ORGANIZATION after the effective period, PRINCIPAL shall abide by the requirements of 64-4.003, Florida Administrative Code, which requirements are incorporated by reference as if fully set forth herein;
NOW, THEREFORE, THE CONDITION OF THIS BOND is that if the PRINCIPAL maintains its license as a DISPENSING ORGANIZATION for the effective period without revocation, and, if its license is not renewed, then this BOND shall be NULL AND VOID; otherwise PRINCIPAL and SURETY will remain liable to the OBLIGEE for the coverage period for the following covered damages:
1. All damages resulting from the revocation of PRINCIPAL’s license as DISPENSING ORGANIZATION during the effective period, including: 2 Section 381.986, F.S. Rule 64‐4.002, F.A.C. Effective 02/2015 Form DH8008‐OCU‐2/2015
a. All costs and expenses incurred by the DEPARTMENT attributable to retaining the replacement DISPENSING ORGANIZATION necessitated by the revocation of PRINCIPAL’s license;
b. All costs and expenses incurred by patients that are attributable to locating and securing a new source of low-THC cannabis necessitated by the revocation of PRINCIPAL’S license including transportation costs, delivery costs, and increased cost of product, so long as the claims for such costs and expenses are assigned to the DEPARTMENT; and
c. All costs and expenses incurred by other DISPENSING ORGANIZATIONS attributable to adjusting cultivation, processing or dispensing operations to ensure patient access to low-THC cannabis necessitated by the revocation of PRINCIPAL’S license, so long as the claims for such costs and expenses are assigned to the DEPARTMENT.
2. All damages resulting from PRINCIPAL’s failure to comply with the requirements of Florida law applicable to its status as DISPENSING ORGANIZATION for the duration of the effective period, including, without limitation, damages from PRINCIPAL’s failure to comply with requirements of applicable Florida law if PRINCIPAL fails to renew its approval.
LIABILITY UNDER THE BOND IS GOVERNED BY THE FOLLOWING TERMS AND CONDITIONS:
1. The obligation of PRINCIPAL and SURETY under this BOND shall be limited to claims made during the coverage period, which is defined as beginning on ________________, and ending thirty (30) days after the expiration of the effective period, unless the PRINCIPAL’s license is revoked, in which case the coverage period ends one (1) year after the revocation date of the PRINCIPAL’s license.
2. At any time prior to initiation of an action by the DEPARTMENT to revoke PRINCIPAL’s license to operate as a DISPENSING ORGANIZATION, this BOND may be cancelled by SURETY on ninety (90) days written notice to PRINCIPAL and DEPARTMENT, and SURETY shall not be liable to PRINCIPAL nor DEPARTMENT for any alleged costs or damages resulting from the cancellation of the BOND by SURETY, the SURETY’s non-renewal of the BOND, and/or the failure or inability of PRINCIPAL to file a replacement bond in the event of cancellation or non-renewal of this BOND, and those are all expressly excluded from covered damages.
3. This BOND may be extended for additional two-year terms at the option of the SURETY, and with payment of additional premium by PRINCIPAL, SURETY shall issue continuation certificates evidencing the same to DEPARTMENT.
4. No claim, action, suit, or proceeding shall be had or maintained against the SURETY on this BOND unless it is brought or instituted in a court of competent jurisdiction within one (1) year from the expiration of the coverage period.
5. The DEPARTMENT is the only claimant with legal standing to make a claim on this BOND. The SURETY and PRINCIPAL acknowledge that the Department may assert claims from patients and other DISPENSING ORGANIZATIONS, as described above, so long as the Department has obtained an assignment of 3 Section 381.986, F.S. Rule 64‐4.002, F.A.C. Effective 02/2015 Form DH8008‐OCU‐2/2015 claim. This BOND shall not create or be construed to create a contractual relationship of any kind between SURETY and any other persons or entities other than DEPARTMENT.
6. In the event of a claim by DEPARTMENT, it shall deliver to SURETY at the address identified above, by certified mail, Attn. ___________________, a written statement of the facts supporting its claim along with a detailed itemization of all covered damages claimed with all supporting back-up documentation, within thirty (30) days of the event giving rise to the claim. Failure to strictly comply with this time requirement is a knowing, intentional, and voluntary waiver of DEPARTMENT’s right to recover those covered damages sought untimely.
7. The SURETY hereby waives notice of and agrees that any changes in applicable Florida law and compliance or noncompliance with any formalities required thereby or the changes made thereto do not affect SURETY’s obligation under this BOND. IN WITNESS WHEREOF, the said PRINCIPAL ____________________________________ has hereunto set his hand and the said SURETY has caused this instrument to be signed by its ________________________ and its corporate seal to be hereunto affixed, the day and year first written.
Additionally please click here to view the act in its entirety.