Anchorage Marijuana Tax Liability Bond: A Comprehensive Guide
June 16, 2022
This guide provides information for insurance agents to help their customers obtain an Anchorage Marijuana Tax Liability bond
At a Glance:
- Average Cost: Between 2% to 7.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Minimum of $10,000 (more on this later)
- Who Needs it: All marijuana retailers operating in Anchorage, Alaska
- Purpose: To ensure the Municipality of Anchorage does not suffer financial harm if the retailer fails to pay all required taxes
- Who Regulates Marijuana Retailers in Anchorage: The Anchorage Department of Finance
Anchorage Municipal Code (AMC) 12.50.080 requires all marijuana retailers to obtain a license from the Department of Finance before engaging in any business activities. The Anchorage Assembly enacted the licensing laws and regulations to ensure that retailers engage in ethical business practices. To provide financial security for the enforcement of the licensing law, marijuana retailers must purchase and maintain a surety bond to be eligible for licensure.
What is the Purpose of the Anchorage Marijuana Tax Liability Bond?
Anchorage requires marijuana retailers to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the municipality will receive compensation for financial harm if the retailer fails to comply with the regulations outlined in AMC 12.50.160. Specifically, the bond protects the municipality if the retailer fails to pay all required fees. In short, the bond is a type of insurance that protects the Municipality of Anchorage if the retailer violates licensing law.
How Can an Insurance Agent Obtain an Anchorage Marijuana Tax Liability Surety Bond?
BondExchange makes obtaining an Anchorage Marijuana Tax Liability bond easy. Simply log in to your account and use our keyword search to find the “Anchorage” 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 at (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
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How is the Bond Amount Determined?
AMC 12.50.160 dictates that the bond amount must be equal to the average annual amount of sales tax collected by the retailer, comparable retailers, or industry averages as estimated by the municipality’s chief fiscal officer, or $10,000, whichever is greater.
Is a Credit Check Required for the Anchorage Marijuana Tax Liability Bond?
Surety companies will run a credit check on the retailer to determine eligibility and pricing for the Anchorage Marijuana Tax Liability bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants 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 applicant’s credit.
How Much Does the Anchorage Marijuana Tax Liability Surety Bond Cost?
The Anchorage Marijuana Tax Liability bond can cost anywhere between 2% to 7.5% of the bond amount per year. 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 cost of a $10,000 bond requirement.
$10,000 Marijuana Tax Liability Bond Cost
|Credit Score||Bond Cost (1 year)|
|650 – 799||$500|
|600 – 649||$750|
*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 Anchorage Marijuana Tax Liability Bond?
Anchorage requires marijuana retailers to purchase a surety bond as a prerequisite to obtaining a business license. To paraphrase AMC 12.50.010, a retailer is a person that is licensed by the State of Alaska to sell marijuana and marijuana products to the public.
How do Marijuana Retailers Apply for License in Anchorage?
Marijuana Retailers in Anchorage must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the application form as well as the municipality’s process flowchart for details on the process.
Step 1 – Obtain a State Business License
All businesses operating in Alaska must obtain a license from the Division of Corporations, Business and Professional Licensing. To obtain a license, retailers must submit an application online or mail a completed application form to the following address:
Business Licensing Section
PO Box 110806
Juneau, AK 99811-0806
Step 2 – Obtain a State Marijuana License
In addition to their state business license, marijuana retailers are also required to obtain a state license from the Alaska Alchohol & Marijuana Control Office (AMCO). Retailers can apply for a license by completing the online application and paying both a $1,000 application fee and a $5,000 licensing fee.
Retailers should refer to the application instructions and AMCO’s application flowchart for details on the licensing process.
Step 3 – Attend a Pre-Application Meeting
Anchorage recommends that license applicants meet with the municipality’s Planning and Development Services Department before submitting an application. In the meeting, the department will walk the retailer through the application process and answer any questions they may have. The meeting is not required, however, it is highly recommended. Retailers can schedule a meeting online here.
Step 4 – Hold a Community Meeting
Retailers are required to hold a community meeting informing the public of their intent to apply for a license. It is recommended that retailers satisfy this requirement via a local community council meeting. Additionally, retailers must issue a public notice announcing the meeting and can learn about the notice requirements here.
Step 5 – Complete the Application
Retailers are eligible to apply for licensure after completing their AMCO application and holding a community meeting. All Anchorage Marijuana Retailer License applications should be submitted to the planning department at 4700 Elmore Road. Retailers must also submit an additional 17 copies of their application to:
Municipality of Anchorage
Clerk’s Office/Planning Department
PO Box 196650
Anchorage, AK 99519-6650
Retailers are required to pay a $1,500 fee when submitting their applications.
Step 6 – Attend a Community & Economic Development Committee Hearing
After reviewing the retailer’s application, the Community & Economic Development Committee will request a meeting with the retailer to address any questions/concerns they have with the application. After the meeting, the committee will recommend either approving, approving with conditions, or denying the retailer’s application.
Step 7 – Obtain Approval and Pass the Inspection
The full Anchorage Assembly will review the retailer’s application and decide whether or not to approve it. If the retailer’s application is approved, they must pass an inspection of their place of business and receive a certificate of occupancy before beginning operations. Retailers can request an inspection here.
Step 8 – Purchase a Surety Bond
Retailers must purchase and maintain a surety bond in an amount equal to the average annual amount of sales tax collected by the retailer, comparable retailers, or industry averages as estimated by the municipality’s chief fiscal officer, or $10,000, whichever is higher.
How Do Anchorage Marijuana Retailers Renew Their State and Local Licenses?
Retailers can renew their state business license online here and their AMCO license online here. Retailers will be mailed instructions on how to renew their Anchorage Business Licenses one month before expiration. All licenses expire annually and must be renewed before the expiration date.
What Are the Insurance Requirements for Anchorage Marijuana Retailers?
Marijuana retailers in Anchorage are not required to obtain any form of liability insurance as a prerequisite to obtaining either their state or local licenses. Retailers must purchase a surety bond in an amount equal to the average annual amount of sales tax collected by the retailer, comparable retailers, or industry averages as estimated by the municipality’s chief fiscal officer, or $10,000, whichever is higher.
How do Anchorage Marijuana Retailers File Their Bonds?
Retailers should submit their completed bonds form, including the power of attorney, to the following address:
Department of Finance, Treasury Division
632 W. 6th Avenue, Suite 330
Anchorage, Alaska 99501
The bond requires signatures from both the surety company that issues the bond and from the retailer. The surety company should include the following information on the bond form:
- Legal name and license information of the entity/individual(s) buying the bond
- Surety company’s name, address, and phone number
- Date the bond is signed
- Date the bond goes into effect
What Can Anchorage Marijuana Retailers Do to Avoid Claims Against their Bonds?
To avoid claims made against their bonds, marijuana retailers in Anchorage must ensure that they pay all required taxes on time and in full.
What Other Insurance Products Can Agents Offer Marijuana Retailers in Anchorage?
Anchorage does not require marijuana retailers to purchase any form of liability insurance. However, most reputable retailers will purchase this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability 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 Anchorage Marijuana Retailer Customers?
Anchorage conveniently provides the public with an interactive map listing all active and proposed marijuana retailers in the municipality. Additionally, agents can find a list of all marijuana retailers in the state here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.