The purpose of the endorsement is to exclude smoke, vapor, gas or other substances released from production or processing operations of a tenant renting the insured's premises. The exclusion applies regardless of whether the operations are legal, permitted under the lease, or usual to the tenant's operations. The only exception is for loss by fire or explosion from the release of a by-product of the production or processing operation.

You are correct in that the recreational smoking of drugs is not a processing or production operation. While not defined, a production operation, taken at face value and based on dictionary definitions, would be something involving the output of a particular commodity or an industrial product. If a tenant was recreationally smoking drugs, that would not be considered a production operation as there is no end product being created for sale or use by others; smoke from drugs is not the same thing. However, if the insured was manufacturing methamphetamine in the premises and that damaged the premises that might be considered a production operation and would be excluded. We need more information on exactly what kind of drug smoke you're dealing with, was it a group of people using drugs recreationally, or did the tenant start manufacturing drugs for sale and the creation of the drugs damaged the property? It's completely 2 different things. Also note that a tenant's processing operation will not be considered to be vandalism, which could have come into play but for this part of the exclusion. If the insured was manufacturing methamphetamine or other drugs on the premises, there is no coverage.