XML 40 R19.htm IDEA: XBRL DOCUMENT
v3.20.2

Intangible Assets and Goodwill | 6 Months Ended
--- | ---
Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The ongoing restrictions and closures experienced by retail stores in the U.S. as a result of the COVID-19 pandemic have negatively impacted sales and demand which has resulted in slower than expected revenue growth in the U.S. reporting unit for the three months ended June 30, 2020. The Company expects the revenue growth and operating results in the U.S. reporting unit to continue to be negatively impacted as the decrease in customer demand and retail closures are expected to continue as a result of the pandemic. The Company performed an interim impairment test during the three months ended June 30, 2020 on the U.S. reporting unit, which holds the Redwood goodwill, as well as the indefinite-lived intangible asset (Lord Jones™ brand) to determine whether the carrying amount of the reporting unit and intangible asset exceeded their respective fair values. The Company reassessed its estimates and forecasts during the second quarter to determine the fair values of the reporting unit and intangible asset. The fair values were determined using a discounted cash flow method on the reporting unit and the relief-from-royalty method on the Lord Jones™ brand. Based on these valuations, the carrying value exceeded the fair value resulting in an impairment on both the reporting unit as well as the Lord Jones™ brand. The Company does not believe the declines in fair values are temporary. The Company recorded $35.0 million of impairment charges on the U.S. reporting unit and $5.0 million on the Lord Jones™ brand for the three and six months ended June 30, 2020. No impairment loss was recorded for either goodwill or intangible assets during the three and six months ended June 30, 2019. (a)Intangible Assets Intangible assets are comprised of the following items:
| Weighted Average Amortization Period (in years) |  | As of June 30, 2020 |  |  |  |  |  |
|  |  | Cost |  | Accumulated Amortization |  | Impairment charges |  | Net
Software (i) | N/A |  | $ | 612 |  |  | $ | (298) |  |  | $ | — |  |  | $ | 314 |
Enterprise Resource Planning (“ERP”) system (ii) | 5 |  | 2,570 |  |  | — |  |  | — |  |  | 2,570 |
Health Canada licenses | 17 |  | 8,255 |  |  | (1,167) |  |  | — |  |  | 7,088 |
Lord Jones™ brand | N/A |  | 64,000 |  |  | — |  |  | (5,000) |  |  | 59,000 |
Trademarks | N/A |  | 140 |  |  | — |  |  | — |  |  | 140 |
Israeli Codes (iii) | 25 |  | 297 |  |  | (10) |  |  | — |  |  | 287 |
|  |  | $ | 75,874 |  |  | $ | (1,475) |  |  | $ | (5,000) |  |  | $ | 69,399 |
(i)Software amortizes using a double declining method. (ii)During the six months ended June 30, 2020, the Company capitalized costs for the ERP system. As of June 30, 2020, the system is not yet available for use, resulting in no amortization being recorded against the asset. (iii)The preliminary licenses granted to Kibbutz Gan Shmuel (the Cronos Israel joint venture partner) by the Medical Cannabis Unit of the Israeli Ministry of Health in early 2017 (the “Israeli Codes”) were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above.
| Weighted Average Amortization Period (in years) |  | As of December 31, 2019 |  |  |  |
|  |  | Cost |  | Accumulated Amortization |  | Net
Software (i) | N/A |  | $ | 541 |  |  | $ | (202) |  |  | $ | 339 |
Health Canada licenses | 17 |  | 8,627 |  |  | (976) |  |  | 7,651 |
Lord Jones™ brand | N/A |  | 64,000 |  |  | — |  |  | 64,000 |
Trademarks | N/A |  | 36 |  |  | — |  |  | 36 |
Israeli Codes (ii) | 25 |  | 298 |  |  | (4) |  |  | 294 |
|  |  | $ | 73,502 |  |  | $ | (1,182) |  |  | $ | 72,320 |
(i)Software amortizes using a double declining method. (ii) The Israeli Codes were transferred by non-controlling interests to Cronos Israel in exchange for their equity interests in the Cronos Israel entities specified above. The aggregate amortization for the six months ended June 30, 2020 was $346 (June 30, 2019 – $301). Intangible asset additions in 2020 included the ERP system for $2,570. There was $37 related to disposals of software during the six months ended June 30, 2020. The amortization expense for the next five years on intangible assets in use is estimated to be as follows: 2021 – $565; 2022 – $553; 2023: $536; 2024 – $520; 2025 – $506. (b)Goodwill
| As of December 31, 2019 |  | Additions |  | Impairment charges |  | Effect of foreign exchange |  | As of June 30, 2020
OGBC | $ | 302 |  |  | $ | — |  |  | $ | — |  |  | $ | (13) |  |  | $ | 289 |
Peace Naturals | 1,078 |  |  | — |  |  | — |  |  | (45) |  |  | 1,033 |
Redwood | 213,414 |  |  | — |  |  | (35,000) |  |  | — |  |  | 178,414 |
| $ | 214,794 |  |  | $ | — |  |  | $ | (35,000) |  |  | $ | (58) |  |  | $ | 179,736 |

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration