Surety Bond for Cannabis L302
A Surety Bond for Cannabis L302, also known as a cannabis (marijuana) tax bond or cannabis security bond, is a financial instrument that exists to appease the Government of Canada excise duty requirements for licensed cannabis producers. Apply for yours online today.
Learn more about the Surety Bond for Cannabis L302
The L302 Bond is a three party surety agreement that posts security to the Obligee: Her Majesty in right of Canada for the production of cannabis. It can have a value between $5,000 and $5,000,000 depending on the cap that the licensed marijuana cultivator and / or manufacturer will be producing. In the past, this security could be provided with a letter of credit, but can now be supplemented with this excise bond. If you’d like to review an example of the Surety Bond for Cannabis L302 wordings on the Government of Canada website, you can do so here.
Effective May 14, 2018, the Government of Canada has implemented an excise duty requirement for licensed cannabis producers in the country. This bond is required to fulfill the legal requirements to operate your cultivation business in the marijuana industry. There are some benefits to utilizing a financial instrument such as the L302 Bond rather than a traditional security measure such as irrevocable letter of credit. For example, a posted security equivalent of up to $5,000,000 (the high-end of bond limits) can tie up the capital that you could be using to further your production operations. The L302 Surety Bond for Cannabis enables you to pay a much lower premium to have our third party Surety guarantee these funds to the government – saving you money as well as working capital.
In 2017 the Canadian Government affirmed its commitment to implementing a new taxation regime on marijuana and to ensure they are taking steps to have taxation levels remain effective in the future. The proposed Excise Duty Framework is designed to support the Government’s goals for the legalization and regulation of cannabis – this includes restricting access to youth, and preventing illegal activities.
The cost of this bond can vary depending on the amount of the bond, duration of the bond, and other applicant specific information. As your insurance and bond broker, we will always strive to get you the best deal on your requested product. How the government of Canada is determining the amount of duty owed which will translate to the value of the bond for the L302 is the higher of the following:
- A flat rate (eg. a specified amount per gram) to be applied to the quantity of cannabis contained in the final product available for sale.
- A percentage (eg. ad valorem rate) of the licensee’s sale price of the product to be packaged and distributed.
Once this duty is determined, we implement the bond rate based on your application details. Apply now to determine costs today. Completing our application for this bond does not cost anything or require you to proceed with the bond once a quote is provided – customer service is our first priority.
The cannabis industry in Canada is on the brink of nation-wide legalization – along with this comes Government intervention. If you’re a cultivator or manufacturer of marijuana products, it’s important to abide by the regulations imposed by the Canadian Government.
As of May 14th, 2018, there has been an excise duty requirement for licensed cannabis producers to present a security to the Government for tax purposes. To mitigate the costs of this duty, the Surety Bond for Cannabis L302 was created.
So, what does this mean to you, the producer? It means that rather than having to provide an irrevocable letter of credit to Government authorities, you can pay a much smaller premium to have a financial instrument guarantee the duty amount owed. This saves you money and frees up capital to allocate to other areas of your business.
In today’s digital age, Surety has fallen behind in the online space. Netsurance is here to fix that problem. Apply online today for a free quote for your L302 Surety Bond for Cannabis.