Current through all regulations passed and filed through December 16, 2024
(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 processor 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 processor engages in activities prohibited under rule
3796:3-2-07
of the Administrative Code; or
(3)
A processor 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 two hundred fifty
thousand dollars, 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 processor that established the account or a
representative of the processor unless the processor or representative presents
a statement issued by the department indicating that the account may be
released; or
(3)
Providing a surety bond naming the processor as
principal of the bond, upon terms approved by the department, in the amount of
two hundred fifty thousand dollars, 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 processor fails to file a new bond
with the department in the required amount on or before the effective date of
cancellation, the processor'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 processor to reduce the
escrow or surety bond by seventy-five thousand dollars 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 processor remained fully operational without
substantial interruption and was able to provide and maintain an uninterrupted
supply of medical marijuana, in accordance with rule
3796:3-1-07
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 processor remained fully operational without
substantial interruption and was able to provide and maintain an uninterrupted
supply of medical marijuana, in accordance with rule
3796:3-1-07
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 processor remained fully operational without
substantial interruption and was able to provide and maintain an uninterrupted
supply of medical marijuana, in accordance with rule
3796:3-1-07
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. A processor that achieves three
consecutive years of compliance, pursuant to this rule, shall have the escrow
or surety bond requirement waived.
(5)
A processor 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.