Illinois Medical Cannabis Cultivation Center Surety Bond

The Compassionate Use of Medical Cannabis Pilot Program Act was signed by the governor and went into effect on January 1, 2014. Licensing of a marijuana cultivation operation will require TWO surety bonds. The first requirement is the Illinois medical cannabis cultivation center CONSTRUCTION surety bond, which guarantees of completion of the facility. The second requirement is an Illinois medical cannabis cultivation center PRODUCTION bond, which guarantees that the center will actually produce medical marijuana for no less than ninety days from the completion of the center build-out. License application submissions are complex. The Department of Agriculture has issued specific instructions about the preparation and submission of applications. You may review the instructions here. The license requests are judged on a "point" system, and the applicant's(s') idenity(ies) remain anonymuous during the scoring period. The medical cultivation center application, $25,000 filing fee, surety bonds and supporting materials are submitted as follows:

September 8, 2014 - September 22, 2014 Monday - Friday 8:30 am - 5:00 pm.
***NOTE: The application period will end at 3:00 pm on Monday, September 22, 2014***

Illinois Department of Agriculture
Medical Cannabis Cultivation Center Surety Bonds
PO Box 19281
Springfield, Illinois 62794 or, . . .

Emmerson Building
Illinois State Fair Grounds - Gate 11
Corner of Main Street and Central Avenue
Springfield, Illinois 62707

The Illinois medical cannabis cultivation center CONSTRUCTION surety bond is a guarantee that by accepting the permit, the Principal is obligated to construct a cultivation center that is fully operational and commence production of medical cannabis as provided for in the permit application of the Principal within six (6) months after the date of issuance of the permit. The obligation is a "forfeiture bond". If after a hearing pursuant to Section 1000.700 of the rules of the Department (8 Ill. Adm. Code 1000.700), that the Principal has failed to timely and successfully construct a cultivation center that is fully operational and commence production of medical cannabis as provided for in the permit application then the Surety must make immediate payment of the $2 million penal sum to the State. The obligation is not cancelable.

The Illinois medical cannabis cultivation center PRODUCTION surety bond is a guarantee that following the timely and successful construction of a cultivation center and commencement of production of medical cannabis, the Principal is obligated to: (1) maintain uninterrupted production for not less than 90 consecutive days for any reason after it has completed construction of the facility: and, (2) continue to operate the cultivation center in a manner that provides an uninterrupted supply of medical cannabis to licensed dispensaries, sufficient enough to allow the licensed dispensaries to supply their registered qualifying patients with an adequate supply of medical cannabis. The provisions of this bond do not necessarily provide for forfeiture of the full penal sum of the bond. First, the bond does not have any effect until the medical cannabis cultivation center surety bond for CONSTRUCTION of the facility has been exonerated by compliance with its provisions. Thereafter, if the Principal has failed to: (1) maintain production for any reason for more than ninety (90) consecutive days after it has completed construction of the facility; or (2) provide an uninterrupted supply of medical cannabis to licensed dispensaries during the term of the license, then the Surety shall immediately make payment of $1.5 million to the State, which sum shall be reduced by $500,000 upon the successful achievement of each of the following milestones by the Principal:

1. A determination by the Department that the cultivation center remained operational without substantial interruption, was able to provide an uninterrupted supply of medical cannabis to licensed dispensaries, as required by Sections 1000.40(g) and 1000.240, and operated without any violation of the Act or the rules for a one year period;
2. A determination by the Department that the cultivation center remained operational without substantial interruption, was able to provide an uninterrupted supply of medical cannabis to licensed dispensaries, as required by Sections 1000.40(g) and 1000.240, and operated without any violation of the Act or the rules for two consecutive years; and
3. A determination by the Department that the cultivation center remained operational without substantial interruption, was able to provide an uninterrupted supply of medical cannabis to licensed dispensaries as required by Sections 1000.40(g) and 1000.240,

Exoneration (release) of surety from the medical cannabis cultivation center surety bond for PRODUCTION will expire on the five (5) year anniversary of the effective date upon the following conditions: (i) automatic and immediate payment of any remaining obligation due on the bond is made to the State the day prior to the instrument expiring; (ii) written notice is received from the Department that either a replacement account or instrument, acceptable to the Department, is in place; or (iii) the Principal is released by the Department of the obligation to carry a replacement account or instrument.

The final three provisions of the bond form also address exoneration of the surety's liability. The bond will be null and void if, . . .

1. The Department determines that the cultivation center remained operational without substantial interruption, was able to provide an uninterrupted supply of medical cannabis to licensed dispensaries as required by Sections 1000.40(g) and 1000.240, and operated without any violation of the Act or this Part for three consecutive years; or
2. The Principal voluntarily chooses not to renew the permit and provides notice of this decision to the Department in accordance with Section 1000.600 of the rules of the Department (8 Ill. Adm. Code 1000.600); or
3. Should the sunset provision of the Act, found in Section 220 of the Act (410 ILCS 130/220), take effect and no successor medical cannabis program be in place allowing for the continuation of cultivation centers as provided for in the Act and the rules, provided the cultivation center is not in violation of the Act or the rules.

Illinois surety leader, Surety One, Inc. is a specialist in the bonding needs agricultural operators and medical professionals. We offer both surety and fidelity bonds needed by these business classes in ALL fifty states, Puerto Rico and the U.S. Virgin Islands. Visit us at SuretyOne.com, call (787) 333-0222 or (800) 373-2804, or email us at Underwriting@SuretyOne.com for an Illinois Cannabis Cultivation Center Surety Bond application or information on ANY bonding need. También nuestra asesoría está disponible en SU idioma.

NATIONWIDE COVERAGE: ARE YOU A CANNABIS OPERATOR IN MULTIPLE STATES? WE OFFER MARIJUANA BUSINESS BONDS IN ALL STATES WHERE THEY ARE REQUIRED.

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