Intangible assets

3 Months Ended

Nov. 30, 2021

Intangible assets

6. Intangible assets

6.	Intangible assets
	At November 30, 2021, intangible assets consisted of:

	Cost $		Foreign exchange $			Accumulated amortization $			Accumulated impairment $			November 30, 2021 Net carrying value $		August 31, 2021 Net carrying value $
Cannabis licenses		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000
		5,435,334		(464,973	)		(1,122,694	)		(3,801,667	)		46,000		46,000

On February 17, 2020, the Company acquired $5,435,334 of licenses as part of the acquisition of Allied Colombia. The licenses acquired are issued by the Republic of Colombia and include the use of seeds for growing Cannabis, production of derivatives from Cannabis for medicinal and scientific use, cultivation of Cannabis plants, and producer of seeds. The Company recorded amortization of these licenses of $658,836 for the year ended August 31, 2021, of which $158,121 was included in cost of inventory.

Management acquired the licenses with a plan to operate in Colombia and believed the amounts paid for the licenses would be recovered from future operations. The Company has only recently started its operations in Colombia and has limited history on which to base future outcomes from operations including cash flows. Cannabis and hemp are considered to be an emerging industry and Colombia does not yet have a sufficiently established observable legal market in which the Company could sell its Cannabis or hemp flower and CBD or THC extracts. Laws and regulations in Colombia are evolving and there is uncertainty in what will be legally permissible in a future market and what prices and demand there would be in Colombia for the Company’s products. At the present, the Company’s export activities are regulated and restricted by Colombian law and it is uncertain whether future changes in law would favorably impact the Company’s operations. Due to the uncertainty in the timing and amount of future cash flows from operations the Company has written down its licenses to the estimated recoverable amount of $46,000. During the year ended August 31, 2021, the Company recorded impairment of intangible assets in the amount of $2,687,695.