Conflicting laws between the federal and state governments create many unknowns for all aspects of the expanding marijuana industry—including construction and design. Although to date, there’s only one documented insurance claim in the Schinnerer program related to the design of a marijuana facility—that’s yet to be resolved—design and construction experts are assessing how the industry might be affected by the nationwide growth of growhouses.
Among them, Jeffrey Clay Ruebel—who wrote a paper on the topic for Schinnerer’s Annual Meeting of Invited Attorneys (access limited to current policyholders and brokers)—outlined design issues uniquely related to three primary facilities related to legalized marijuana businesses:
- Dispensaries: Being a mainly cash business increases concerns for security that must be balanced with codes for safe egress.
- Grow facilities: These facilities create high electric demands that can affect neighboring tenants, possible asphyxiation hazards related to the use of carbon dioxide (CO2), fungi growth due to high temperatures and humidity, “nuisance” problems like odors or environmental contamination, and fire danger.
- Manufacturing facilities for infused products or “concentrates:” This process often involves the use of butane. In 2014, there were 32 reported butane hash-oil explosions in Colorado alone—caused by using unapproved butane open-blast extraction. There are also special requirements for CO2 extraction and alcohol distillation processes. Many jurisdictions now require engineering analysis of the extraction process, signed and stamped by a professional engineer.
Further, Ruebel anticipates claims against design professionals (for damage to the property or the product) will rely on allegations of inadequate design involving four key areas:
- Vapor barriers: Walls and ceilings should include vapor barriers and corrosion-resistant materials. Walls should have sufficient insulation behind the vapor barrier to minimize the chances of moisture in the air condensing and forming water droplets on the wall.
- Fire walls: International Building Code (IBC) requires fire walls with a one-hour separation between the facilities and adjacent occupancy and wall and ceiling finishes, with a flame-spread index within the limits specified in the code.
- Plumbing systems: Grow rooms should have floor drains that are trapped and equipped with screens to catch any plant material or other debris from spills. There must also be proper protection of the domestic water supply from contamination.
- Electrical systems: The electrical system must be sized and installed in accordance with the National Electric Code, and if the facility is a remodel to an existing building, it may be necessary for the utility company to upgrade the conductors or transformers serving the building.
Not surprisingly, the single claim Schinnerer has received involves the remodel of an existing warehouse into a grow facility with a change in tenants that resulted in changes in the growing process and changes to the layout of the facility that were not relayed to the engineer. Problems with insufficient cooling capacity resulted in a $300,000 claim to redesign and repair the HVAC system. Although liability appears favorable, the engineer had no written professional services agreement for this project, which makes the defense of any claim more difficult.
As with any new project, sound risk management is essential. This includes always having a signed professional services agreement, constantly communicating with your client, and documenting the progress of the project, including any changes, in a systematic, contemporaneous, and objective manner.
Only recently has the industry developed a consensus on the design issues for the three different types of facilities used to grow, process, and sell marijuana. The grow facility must not only maximize plant growth, but must take care to avoid contamination and damage to the building. A design professional must also consider employee safety and minimize the impact of the facilities on the public.
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