Looking at some Canopy Inventory Related Metrics re FVI

I was looking at CGC's Fair Value Increment and other inventory charges (FVI) from their income statement, and trying to determine if there was some correlation between when [what I see as inventory writedowns being flushed through the income statement] FVI were flushed and inventory deltas. This is what I came up with. It would appear in Q ended Sept/18 when they made their largest FVI of $51 million that it corresponded with a drop in Inv$/KGs inventory from $5.28/gram to $4.15/gram. In their MDA last Q they indicated rec revenue per gram was $6.96 in Q3. If you add $2.78 FVI/gram sold last…

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Value of Patents

Some companies in the cannabis industry have large patent portfolios of 60 patent families representing hundreds of patents and applications in different regions or 40 filed patents. Do these numbers mean anything in terms of value? Not alone, the value of any patent is in the contents, where the contents are desirable to others in certain circumstances.  A patent only has value if it’s actively preventing someone from infringing on it. Meaning, someone else must see value in the process/thing you’ve patented. If I own a company operating as a monopoly, patent protection meaningless. If I own a company operating in an active open market…

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Making sense of IFRS items in Cost of Goods Sold – With an example: CannTrust Q3 to Q4F18

Just in case there are some new readers with us that want to understand Gain On Biologicals, I thought I would use a live example from CannTrust last Q. Cost of Goods Sold is an Expense item. Therefore, any positive figures are “Expenses” and negative figures are “Income”. The two items in COGS that I’ll explain Fair Value Increment on Goods Sold (FVI)NOTE: Canopy has a quirk in that in Q2F18 [last year] and subsequently they added to this line “…and other inventory charges”Unrealized Gain on Biological Assets (GoB) Under US GAAP you will not see these items. Tilray uses US GAAP. US GAAP…

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Charlotte’s Web Holdings – Structure and Current State – 12/19

Charlotte’s Web Holdings focuses only on CBD/hemp exposure - they don’t offer psychoactive cannabinoids. They claim though that flavonoids and terpenes and their proprietary mixtures of them offer an advantage over straight CBD. The CBD market is already competitive, and product differentiation would appear to be a competitive advantage. Probably no other company has benefitted as much from the US Farm Bill more than CWEB has. Their share price has been a straight out bull run, and is an outfit that hasn’t struggled to maintain IPO price. At all. To the financials: Relatively cash deepUsing all the product they can get. Inventory low to…

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Inventory in the first Q of Rec- Booking Costs and IFRS VooDoo!! Chickens have come home to roost.

I started paying attention and writing about this industry because of my surprise of how you could sell $1 worth of cannabis and show a gross margin greater than the selling price. In my world, that was very new! Yes... IFRS voodoo! The practice of carrying inventory above the lesser of its actual cost or net realizable value. This is done by running an entry through the income statement that GROSSES UP Inventory to a management determined value of no greater than the Selling price less Selling Costs less the costs already incurred. The latter item is on the balance sheet. Then when you…

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