Ohio Admin. Code 3796:2-1-05 - Cultivator financial responsibility
(A)
A provisional
licensee shall provide evidence of financial responsibility before a
certificate of operation can be issued, which may be payable to the department
for any of the following reasons:
(1)
A cultivator fails to adhere to the security plan
approved by the department or otherwise operates the facility in a manner that
allows for or results in theft, loss, or diversion of medical
marijuana;
(2)
A cultivator engages in activities prohibited under
rule
3796:2-2-07
of the Administrative Code; or
(3)
A cultivator has
its certification of operation fined, suspended or revoked resulting from
activities prohibited under rule
3796:5-6-02
of the Administrative Code.
(B)
Evidence of
financial responsibility shall be provided by the following:
(1)
Providing and
maintaining at its own expense any insurance coverage and terms of insurance
required and approved by the department, including, but not limited to,
products liability and general liability, prior to the issuance of a
certificate of operation, if such products are in existence at the time of
issuance or the time of renewal for the certificate of operation;
and
(2)
Establishing and maintaining an escrow account in a
chartered financial institution in Ohio in the amount of seven hundred fifty
thousand dollars for level I cultivators and seventy-five thousand dollars for
level II cultivators, with escrow terms, approved by the department, that it
shall be payable to the department in the event of circumstances outlined in
paragraph (A) of this rule. A financial institution may not return money in an
escrow or surety account to the cultivator that established the account or
representative of the cultivator unless the cultivator or representative
presents a statement issued by the department indicating that the account may
be released; or
(3)
Providing a surety bond naming the cultivator as
principal of the bond, upon terms approved by the department, in the amount of
seven hundred fifty thousand dollars for level I cultivators and seventy-five
thousand dollars for level II cultivators payable to the department in the
event of circumstances outlined in paragraph (A) of this rule. Bond terms
include the following:
(a)
The business name and registration number on the bond
must correspond exactly with the business name and registration number in the
department's records.
(b)
A copy of the bond must be received by the department
before a certificate of operation is issued.
(c)
The bond shall
not be canceled by a surety on less than thirty days' notice in writing to the
department. If a bond is canceled and the cultivator fails to file a new bond
with the department in the required amount on or before the effective date of
cancellation, the cultivator's license shall be revoked. The total and
aggregate liability of the surety on the bond is limited to the amount
specified on the bond.
(4)
The department
shall permit a cultivator to reduce the escrow or surety bond by two hundred
fifty thousand dollars for level I cultivators and twenty-five thousand dollars
for level II cultivators upon the successful achievement of each of the
following milestones, resulting in a potential elimination of the escrow
account or surety bond:
(a)
A determination by the department that the cultivator
remained fully operational without substantial interruption and was able to
provide and maintain an uninterrupted supply of medical marijuana, in
accordance with rule
3796:2-1-07
of the Administrative Code, and demonstrates an ability to comply with the
requirements of Chapter 3796. of the Revised Code and the rules promulgated in
accordance with Chapter 3796. of the Revised Code, as determined by the
department, for a period of one year;
(b)
A determination
by the department that the cultivator remained fully operational without
substantial interruption and was able to provide and maintain an uninterrupted
supply of medical marijuana, in accordance with rule
3796:2-1-07
of the Administrative Code, and demonstrates an ability to comply with the
requirements of Chapter 3796. of the Revised Code and the rules promulgated in
accordance with Chapter 3796. of the Revised Code, as determined by the
department, for two consecutive years; and
(c)
A determination
by the department that the cultivator remained fully operational without
substantial interruption and was able to provide and maintain an uninterrupted
supply of medical marijuana, in accordance with rule
3796:2-1-07
of the Administrative Code, and demonstrates an ability to comply with the
requirements of Chapter 3796. of the Revised Code and the rules promulgated in
accordance with Chapter 3796. of the Revised Code, as determined by the
department, for three consecutive years.
(5)
A cultivator will
not be held in default should the failure to comply be the direct result of an
event or effect that cannot be reasonably anticipated or controlled, such as an
act of God or nature and not the result of a lack of good faith
effort.
(C)
The required insurance policy and surety bond shall be
written by an insurance company formed, licensed or eligible, and authorized or
approved to write such insurance in the state of Ohio under Title XXXIX of the
Revised Code.
(D)
The department may waive any of the requirements of
this rule on a temporary or permanent basis, if it is determined by the
department that the financial responsibility instruments listed in this rule
are not in existence in the insurance market.
Notes
Promulgated Under: 119.03
Statutory Authority: R.C. 3796.03
Rule Amplifies: R.C. 3796.03, R.C. 3796.09
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