| Inventory |
Inventory | | | Accounting Policy
The Company defines inventory as all cannabis products after the point of harvest (“Cannabis Inventory”), hemp products, purchased finished goods for resale, consumable supplies and accessories. Cannabis Inventory includes harvested cannabis, trim, cannabis oils, capsules, edibles and vaporizers.
Inventories of harvested cannabis are transferred from biological assets at fair value less costs to sell at the point of harvest, which becomes the deemed cost. By-products, such as trim, are measured at their net realizable value (“NRV”) at point of harvest which is deducted from the total deemed cost to give a net cost for the primary product. Any subsequent post-harvest costs are capitalized to Cannabis Inventory to the extent that the cost is less than NRV. NRV for work-in-process (“WIP”) and finished Cannabis Inventory is determined by deducting estimated remaining conversion/completion costs and selling costs from the estimated sale price achievable in the ordinary course of business. Conversion and selling costs are determined using average cost. In the period that Cannabis Inventory is sold, the fair value portion of the deemed cost is recorded within changes in fair value of inventory sold line, and the cost of such Cannabis Inventory, including direct and indirect costs, are recorded within the cost of sales line on the consolidated statements of income (loss) and comprehensive income (loss).
Products for resale, consumable supplies and accessories are initially recognized at cost and subsequently valued at the lower of cost and NRV. The Company reviews these types of inventory for obsolescence, redundancy and slow turnover to ensure that they are written-down and reflected at NRV. Inventory purchased from third parties are measured at weighted-average cost. Medreleaf Australia measures inventory at first-in first-out.
The Company uses judgment in determining the NRV of inventory. When assessing NRV, the Company considers the impact of the average selling price per gram, inventory spoilage, inventory excess, age and damage. |
The following is a breakdown of inventory: | | | | | | | | | | | | | | | | | | | | | | March 31, 2025 | March 31, 2024 | | Capitalized
cost | Fair value
adjustment | Carrying
value | Capitalized
cost | Fair value
adjustment | Carrying
value | | $ | $ | $ | $ | $ | $ | Harvested cannabis | | | | | | | Work-in-process | 40,369 | | 52,740 | | 93,109 | | 25,977 | | 32,519 | | 58,496 | | Finished goods | 20,655 | | 30,267 | | 50,922 | | 34,871 | | 10,782 | | 45,653 | | | 61,024 | | 83,007 | | 144,031 | | 60,848 | | 43,301 | | 104,149 | | Extracted cannabis | | | | | | | Work-in-process | 10,980 | | 4,917 | | 15,897 | | 8,674 | | 4,428 | | 13,102 | | Finished goods | 12,998 | | 2,686 | | 15,684 | | 8,749 | | 590 | | 9,339 | | | 23,978 | | 7,603 | | 31,581 | | 17,423 | | 5,018 | | 22,441 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Supplies and consumables | 11,402 | | — | | 11,402 | | 14,987 | | — | | 14,987 | | | | | | | | | | Merchandise and accessories | 911 | | — | | 911 | | 2,025 | | — | | 2,025 | | | | | | | | | | | | | | | | | Ending balance | 97,315 | | 90,610 | | 187,925 | | 95,283 | | 48,319 | | 143,602 | |
During the year ended March 31, 2025, inventory expensed to cost of sales was $273.0 million (year ended March 31, 2024 – $233.3 million), which included $132.0 million (year ended March 31, 2024 – $72.5 million) related to the changes in fair value of inventory sold. During the year ended March 31, 2025, the Company recognized $65.5 million in inventory provisions (year ended March 31, 2024 – $73.4 million) consisting of cost of sales of $15.6 million (year ended March 31, 2024 – $28.5 million) and changes in fair value of inventory sold of $49.8 million (year ended March 31, 2024 – $44.9 million).
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