Claims adjusters handling recreational cannabis claims will need to consider the value of the plant at any given time in the growing process to determine actual loss, an independent adjusting firm said Tuesday.

Potential cannabis greenhouse loss is much greater than a standard greenhouse loss. A major fire to one of these cannabis facilities could potentially see a loss in the $100 million range, said Stephen Agnew, vice president of the specialty risk division at ClaimsPro.

Following the legalization of recreational marijuana Oct. 17, there have been rapid expansion projects of very sophisticated cannabis production facilities to grow, harvest and package product. These new developments could potentially involve large commercial exposures, including the following claims:

Course of construction (builder’s risk)

Wrap-up liability (protects contractors and subcontractors working on a large project)

Commercial property

Complex equipment breakdown insurance

Business interruption and contingent business interruption

When dealing with a greenhouse loss, you’re dealing with a growing plant, so it’s important to know the value of that plant at any time, whether it’s a seedling or fully grown.

“Is it a seedling, is it worth nothing?” Agnew asked. “There’s no money into the plant. What are the grow cycles, and at what stage of the growth cycle has the loss occurred in any one area of the greenhouse? That drives the value of the actual loss of the product.”

For example, at the seedling stage, there is no hydro, watering, fertilizer and manpower costs. “If the product’s going out the door, you’ve incurred all of those expenses,” Agnew said. “Your expenses to the product are much greater at the end of the cycle than they are at the start.”

Exactly how much could a recreational marijuana claim cost? In the medical marijuana space, ClaimsPro has already seen losses primarily between $150,000 and $750,000. These losses, mostly on Vancouver Island, were for fire and water damage, as well as boiler machinery issues, physical damage to buildings and specialized greenhouse equipment, as well as extra expense and business interruption.

In the greenhouse space, ClaimsPro saw claims in excess of $20 million at one flower greenhouse. “You take the size of the cannabis greenhouses that are significantly larger, your losses get much larger,” Agnew said. “You take a $20 million loss from a certain size greenhouse… you take that and multiply it, because these new greenhouse operations are much larger.”