Ohio Medical Marijuana Dispensary Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain an Ohio Medical Marijuana Dispensary bond
At a Glance:
- Lowest Cost: $1,000 per year or $100 a month
- Bond Amount: $50,000
- Who Needs It: All medical marijuana dispensaries operating in Ohio
- Purpose: To protect the State of Ohio Board of Pharmacy from financial harm if the dispensary fails to pay all required taxes and fees or otherwise violates the terms of their license
- Who Regulates Medical Marijuana Dispensaries in Ohio: The State of Ohio Board of Pharmacy
Background
Ohio Statute 3796.20 and Administrative Code 3796:6-2-02 require all medical marijuana dispensaries operating in the state to obtain a provisional license and certificate of operation from the State of Ohio Board of Pharmacy. The Ohio legislature enacted the licensing and certificate of operation requirement to ensure that medical marijuana dispensaries do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, applicants must either purchase and maintain a $50,000 surety bond or establish an escrow account to be eligible for licensure.
Ohio Statute 3796.05 limits the number of dispensary licenses the state may issue and authorizes the State of Ohio Board of Pharmacy to determine what the appropriate number of licenses is.
What is the Purpose of the Ohio Medical Marijuana Dispensary Bond?
Ohio requires medical marijuana dispensaries to purchase a surety bond as part of the application process to obtain a provisional license and certificate of operation. The bond ensures that the State of Ohio Board of Pharmacy will receive compensation for financial harm if the dispensary fails to abide by the regulations outlined in Ohio Administrative Code 3796:6-2-11. Specifically, the bond protects the Board if the dispensary fails to pay all required taxes and fees, keep accurate records, and make all required reports. In short, the bond is a type of insurance that protects the public if the medical marijuana dispensary violates licensing law.
How Can an Insurance Agent Obtain an Ohio Medical Marijuana Dispensary Bond?
BondExchange makes obtaining an Ohio Medical Marijuana Dispensary bond easy. Simply log in to your account and use our keyword search to find the “medical marijuana” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How is the Bond Amount Determined?
935 CRM 500.105 dictates that the bond amount should be equal to the total amount of annual licensing fees they are required to pay. If the establishment’s licensing fees have been waived, then the bond amount should equal the amount of fees they would otherwise be required to pay without the waiver. The fee schedule is outlined in 935 CRM 500.005.
Is a Credit Check Required for the Ohio Medical Marijuana Dispensary Bond?
Surety companies will run a credit check on the owners of the dispensary to determine eligibility and pricing for the Ohio Medical Marijuana Dispensary bond. Owners with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Ohio Medical Marijuana Dispensary Bond Cost?
The Ohio Medical Marijuana Dispensary surety bond can cost anywhere between $1,000 to $5,000 per year or $100 to $500 per month. Insurance companies determine the rate based on a number of factors, including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $50,000 bond requirement.
$50,000 Medical Marijuana Dispensary Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 800+ | $1,000 | $100 |
| 680 – 799 | $1,875 | $188 |
| 650 – 679 | $2,500 | $250 |
| 600 – 649 | $3,750 | $375 |
| 550 – 599 | $5,000 | $500 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Who is Required to Purchase the Ohio Medical Marijuana Dispensary Bond?
Ohio requires medical marijuana dispensaries to purchase a surety bond as a prerequisite to obtaining a provisional license and certificate of operation. To paraphrase Administrative Code 3796:1-1-01, a dispensary is an entity that is authorized to sell medical marijuana to patients and caregivers that have been approved for purchase.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Medical Marijuana Dispensaries Obtain a License in Ohio?
Medical marijuana dispensaries in Ohio must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the state’s licensing page and administrative rules for details on the process.
License Period – The Ohio Medical Marijuana Dispensary License is valid for two years from the date of issuance and must be renewed before the expiration date
Step 1 – Wait for an Application Period
The State of Ohio Board of Pharmacy is tasked with ensuring that enough medical marijuana dispensaries exist the service Ohio residents’ needs. However, the state does not want to have more dispensaries than needed, and thus only accepts dispensary applications when the need for more arises.
Prospective dispensaries must wait to apply until the Board determines more dispensaries are necessary and can sign up to receive updates on future application periods here.
Step 2 – Complete the Application
When the Board starts excepting applications, they will provide a link to all application forms here and the online application portal here. The application must be completed in its entirety and be accompanied by a $5,000 fee.
All persons with at least a 10% ownership stake in the dispensary must submit fingerprints and pass a background check. In-state applicants can submit their fingerprints electronically through any WebCheck provider. Out-of-state applicants must call the Ohio Bureau of Criminal Identification and Investigation (BCI&I) at (877) 224-0043 and request two fingerprint cards. Applicants must then go to their local law enforcement agency, get ink impressions, and mail their cards to the following address:
Ohio Bureau of Criminal Identification and Investigation
PO Box 365
London, Ohio 43140
The mail should be addressed to the “Treasurer, State of Ohio” and contain one check for $22 for the BCI&I and one check for $24 for the Federal Bureau of Investigations (FBI).
All dispensary employees must be licensed and pass a criminal background check. More information on the licensing application process for employees can be found here.
Step 3 – Purchase a Surety Bond
If the applicant is awarded a provisional license, they will need to purchase a $50,000 surety bond before passing the final inspection.
Step 4 – Pass the Final Inspection
After receiving a provisional license, applicants must purchase a surety bond, name a designated resident that has passed a background check, and ensure they are in compliance with all representations made in their license application.
The Board will schedule an inspection of the dispensary within 30 days of receiving a request to do so. If the applicant passes, they must pay a fee of $70,000 before receiving their certificate of operation.
How do Medical Marijuana Dispensaries in Ohio Renew Their Licenses?
Medical marijuana dispensaries in Ohio and their employees can renew their licenses online through the state’s e-licensing system. Detailed instructions on how to complete the renewal process can be found here. The Ohio Medical Marijuana Dispensary License is valid for two years from the date of issuance and must be renewed before the expiration date.
What are the Insurance Requirements for the Ohio Medical Marijuana Dispensary License?
Ohio requires medical marijuana dispensaries with employees to purchase workers’ compensation insurance. Medical marijuana dispensaries must purchase and maintain a $50,000 surety bond.
How do Ohio Medical Marijuana Dispensaries File Their Bonds?
Medical marijuana dispensaries in Ohio should submit their completed bond forms, including the power of attorney, electronically here. Detailed instructions on how to file the bond can be found on the last page of the form. The surety bond requires signatures, including witness signatures, from the surety company and the licensee. The surety company should include the following information on the bond form:
- Legal name, state, county, and city of the entity/individual buying the bond
- Surety company’s name, state, county, and city
- Date the bond goes into effect
- Date the bond is signed
What Can Ohio Medical Marijuana Dispensaries Do to Avoid Claims Against Their Bonds?
To avoid claims on their bonds, medical marijuana dispensaries in Ohio must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Complete the construction of the dispensary on time
- Pay all required taxes and fees
- Keep accurate records
- Submit all required reports on time
What Other Insurance Products Can Agents Offer Marijuana Medical Dispensaries in Ohio?
Medical marijuana dispensaries with employees must purchase workers’ compensation insurance. Additionally, most reputable dispensaries will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Ohio Medical Marijuana Dispensaries?
Ohio conveniently provides a public database of active medical marijuana dispensaries in the state. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
