Your manager has asked you to review the significant transactions for the upcoming year- ended March 31, 2020 (Exhibit I) and provide advice as to the reporting on the consolidated financial statements of Canopy Growth. In addition, your manager has asked you to consider the effects of the COVID -19 pandemic on the reporting of the investments going forward.

A. BCT and Spectrum UK

BCT is a cannabis research and development organization in the United Kingdom, which was formed in fiscal 2018 through a collaboration agreement between CHI and Beckley Research and Innovations Limited. In the fourth quarter of fiscal 2019, the Company and BCT had formed another joint venture – Spectrum Biomedical UK (“Spectrum UK”). The purpose of Spectrum UK was to become the exclusive distributor of cannabis-based medicinal products made by the Company. Since their inception, the Company had been accounting for its 42% interest in BCT and its 67% interest in Spectrum UK using the equity method.

On October 11, 2019, the Company acquired all its unowned interest in BCT to increase its total ownership of BCT’s issued and outstanding shares to 100%.

Cash consideration for this transaction was $58,336,000 of which $45,098,000 was advanced on closing, and $14,427,000 million will be paid on October 1, 2021 and has a fair value of $13,238,000.

Consideration also included 155,565 replacement options. The fair value of the replacement options was determined using a Black-Scholes model and was $1,885,000.

At the day of acquisition its 42% interest in BCT and its 67% interest in Spectrum UK had a carrying value of $12,457,000 and the implied fair value $51,942,000.

The consideration paid for BCT included $250,000 cash and 16,430 replacement options that were issued to a member of key management of the Company that was a shareholder and option holder in BCT.

The Company has finalized the purchase price allocation to the individual assets acquired and liabilities assumed using the acquisition method. The measurement period adjustments include:

Useful life

Measurement period impact Adjustments (years)