Annual reports filed by certain Canadian issuers pursuant to Section 15(d) and Rule 15d-4

BIOLOGICAL ASSETS

v3.22.1
BIOLOGICAL ASSETS
12 Months Ended
Dec. 31, 2021
Disclosure of detailed information about biological assets [abstract]  
BIOLOGICAL ASSETS [Text Block]
NOTE 8:-
BIOLOGICAL ASSETS
 
The Group’s biological assets consist of cannabis plants. The changes in the carrying value of biological assets are as follows:
 
       
Balance at of January 1, 2020
 
$
52  
         
Production costs capitalized
    2,717  
Changes in fair value less cost to sell due to biological transformation
    11,782  
Transferred to inventory upon harvest
    (14,478
)
Foreign exchange translation
    5  
         
Balance at of December 31, 2020
    78  
         
Additions related to acquisitions of Trichome and MYM
    848  
Production costs capitalized
    10,454  
Changes in fair value less cost to sell due to biological transformation
    7,210  
Transferred to inventory upon harvest
    (16,977
)
Foreign exchange translation
    74  
         
Balance at of December 31, 2021
 
$
1,687  
 
As of December 31, 2021, the weighted average fair value less cost to sell was $2.48 per gram.
 
The fair value of biological assets is categorized within Level 3 of the fair value hierarchy.
 
The inputs and assumptions used in determining the fair value of biological assets include:
 
  1.
Selling price per gram - calculated as the weighted average historical selling price for all strains of cannabis sold by the Group, which is expected to approximate future selling prices.
 
  2.
Post-harvest costs - calculated as the cost per gram of harvested cannabis to complete the sale of cannabis plants post-harvest, consisting of the cost of direct and indirect materials, depreciation and labor as well as labelling and packaging costs.
 
  3.
Attrition rate - represents the weighted average percentage of biological assets which are expected to fail to mature into cannabis plants that can be harvested.
 
  4.
Average yield per plant - represents the expected number of grams of finished cannabis inventory which are expected to be obtained from each harvested cannabis plant.
 
  5.
Stage of growth - represents the weighted average number of weeks out of the average weeks growing cycle that biological assets have reached as of the measurement date. The growing cycle is approximately 12 weeks.
 
 
The following table quantifies each significant unobservable input, and also provides the impact a 10% increase/decrease in each input would have on the fair value of biological assets:
 
   
December 31,
   
10% change as at
December 31,
 
   
2021
   
2020
   
2021
   
2020
 
                         
Average selling price per gram of dried cannabis (in CAD)
 
$
3.64    
$
6.01    
$
296    
$
8.86  
Average post-harvest costs per gram of dried cannabis (in CAD)
 
$
1.16    
$
0.83    
$
140    
$
0.23  
Attrition rate
    27
%
    5
%
    100       0.43  
Average yield per plant (in grams)
    47       54       228       7.64  
Average stage of growth
    47
%
    4
%
    212       7.64  
 
These estimates are subject to volatility in market prices and a number of uncontrollable factors, which could significantly affect the fair value of biological assets in future periods.
 
The Group’s estimates are, by their nature, subject to change including differences in the anticipated yield. These changes will be reflected in the gain or loss on biological assets in future periods.