Current report of foreign issuer pursuant to Rules 13a-16 and 15d-16 Amendments

BIOLOGICAL ASSETS

v3.22.2.2
BIOLOGICAL ASSETS
 6 Months Ended
Jun. 30, 2022
Disclosure of detailed information about biological assets [abstract]  
BIOLOGICAL ASSETS [Text Block]
NOTE 4:-
BIOLOGICAL ASSETS
 
The Company's biological assets consist of cannabis plants. The changes in the carrying value of biological assets are as follows:

 

       
Balance as of January 1, 2022
  
$
 1,687  
         
Production costs capitalized
     4,867  
Changes in fair value less cost to sell due to biological transformation
     1,200  
Transferred to inventory upon harvest
     (6,152
)

Restructuring write-off

     (108 )
Foreign exchange translation
     (3 )
         
Balance as of June 30, 2022 
   $ 1,491  
 

   As of June 30, 2022 and December 31, 2021, the weighted average fair value less cost to sell was $2.85 and $2.48 per gram, respectively. 

 

The fair value of biological assets is categorized within Level 3 of the fair value hierarchy.
 
The following inputs and assumptions were used in determining the fair value of biological assets:
 
  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:
 
   
 
    
10% change as of
  
   
June 30,
2022
    
December 31,
2021
    
June 30,
2022
    
December 31,
2021
  
   

In CAD

    

In Thousands of CAD

  
Average selling price per gram of dried cannabis
  
$
 3.61    
$
 3.64    
$
 186    
$
 296  
Average post-harvest costs per gram of dried cannabis
  
$
 0.76    
$
 1.16    
$
 41    
$
 140  
Attrition rate
     30
%
     27
%
     149       100  
Average yield per plant (in grams)
     40       47       144       228  
Average stage of growth
     48
%
     47
%
     139       212  
 
The Company'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.