Weeding Thru EconomicWeeding Thru EconomicDamages Doesn’tHave to be a BuzzkillHave to be a Buzzkill
March 7, 2019
Presented by:Sheri GallantCPA CMA CFFCPA, CMA, CFF
Weeding Through Economic Damage
Personal Injury / Wrongful Death / Accident Benefits• Will there be an
increase in motorincrease in motor vehicle accidents?
• Children or unsuspecting adultsunsuspecting adults ingesting edibles
• Long-time user may i t i l timpact survival rates, ability to maintain employment, income l llevels
Weeding Through Economic Damage
Medical
Liability – Medical vs. Recreational
Producer Courier to Customer Customer
Medical
Customer
RecreationalTransit
to Retail Outlet
Retail Outlet
Producer Transit to Province Warehouse Customer
Courier to Customer
Weeding Through Economic Damage
Business Interruption/Property Damage• Cultivators vs Processers• Cultivators vs. Processers
Licensed – Standard or Micro (Craft) Doesn’t mean they sell what they grow Significant, rigorous testing/quality requirements
Same requirements as for medical This can result in entire crop being destroyed
• What does that mean for BI? Losses are only recoverable if
impact on salesimpact on sales Need to only consider what
would have been sold versus what was producedwhat was produced
Weeding Through Economic Damage
N b f Pl
Consider this example:
Number of PlantsSeed/Clip/ Veg State Cultivating Harvesting
% Harvested
Grams per Plant
Strain 1 1,100 1,000 900 82% 24Strain 2 1,100 800 500 45% 35Strain 3 1,100 1,150 1,000 91% 28Strain 4 1,100 900 700 64% 40
Throughout each stage, plants are discarded Between harvesting and packaging, tests may result in entire
b i d t dcrop being destroyed Note – Grams per Plant vary by strain
Weeding Through Economic Damage
Should Cannabis be treated as a commodity?• Prior to legalization, companies were able to
produce more than they could sell Customers who had medical prescription p p
would go elsewhere, permanent loss of this customer
Long tail impact!
• After legalization, significant shortage in product to sell If lose a medical customer, presumably will be
able to sell any cannabis produced once operations resumed to other customers
Short tail impact!
• As more producers enter into the arena, may revert back to long tail impact
Weeding Through Economic Damage
Stock Loss – dependent on li di hpolicy wording, we have seen
• Replacement Cost • Actual Cash ValueActual Cash Value• Up to $ per gram based on what
state plant is in at DOLD i d C bi Dried Cannabis
Plants in flowering Plants in Vegetative State Clones Mother plant
Weeding Through Economic Damage
Retail Operations –Provincial vs. Private• Theft
Li bili• Liability• Shortages of Product
What Next ??• What Next ??
ThankThank You!You!
MDD F i A t tMDD ForensicAccountants148 Fullarton Street, Suite 1704
London, Ontario N6A 5P3
T 519 432 1123 F 519 432 1503
Sheri [email protected]
T 519.432.1123 F 519.432.1503
> mdd.com
MDD ForensicAccountants @mdd1933 MDD Forensic Accountants
Presented By
Sheri GallantCPA, CMA, CFFJoined MDD: 1990
Overview of ExpertiseBusiness Interruption, Personal Injury &Business Interruption, Personal Injury & Wrongful Death, Products Liability & Recall, Physical Damages, Stock & Contents, Accident Benefits and Fidelity Claims.Claims.
IndustriesAgriculture, Retail & Wholesale, Manufacturing and Processing, PowerManufacturing and Processing, Power Generation, Transportation and Consulting Sectors.
Firm O iOverview & Areas of& Areas of Expertise
Who We Are
> Originally founded in 1933.
> 11 Offices in Canada.
> MDD’s forensic accountants specialize in a wideMDD s forensic accountants specialize in a wide range of insurance and litigation matters.
> We are routinely retained for evaluations that require our extensive knowledge of accounting, business, operational and manufacturing processes across many industries.
> MDD’s exceptional dedication, singularly qualified experts and demonstrated results in this highly
i li d f ti h l b thspecialized area of accounting have long been the hallmark of our firm.
Our Core Practice Areas
Builders Risk & Soft Costs Fraud & Investigations
Business & Shareholder
Franchise LitigationAccident Benefits
Business & Shareholder Disputes Intellectual Property
Business Interruption Liability Losses
Business Valuation Litigation Support Property Damage
BI, loss of income
Catastrophe Services Lost Profits
Contingency & Entertainment Claims
Personal Injury & Product Recall
Physical Damages
Damage
LiabilityProduct Recall
/ profit
Class Actions
Entertainment Claims
Cyber Risks
Disability InsuranceClaims
Physical Damages
Product Liability & Product Recall
Reports Insurance Values
Stock & Content Losses
FidelityLitigation
Divorce & MaritalDisputes
Environmental Damages
Stock & Content Losses
Expropriation
Subrogation
Surety Bonds & Funds Control Services
Extra Expenses Toxic Tort
Fidelity Claims Valuable Papers
Proprietary & Confidential
Proprietary and Confidential – This presentation contains information that is confidential andproprietary to MDD Forensic Accountants and may contain trade secrets It is intended to be strictlyproprietary to MDD Forensic Accountants and may contain trade secrets. It is intended to be strictlyconfidential and is to be used solely for discussion purposes. No part of this presentation may bedisclosed to any third party or reproduced by any means without the prior written consent of MDDForensic Accountants. This presentation does not constitute work product, opinion or a deliverable.
Thi t ti t i i f ti i f d i th f i t d d f l idThis presentation contains information in summary form and is therefore intended for general guidanceonly. It is not intended to be a substitute for detailed research or the exerciseof professional judgment. MDD Forensic Accountants does not accept any responsibility for lossoccasioned to any person acting or refraining from action as a result of any material in this presentation.On any specific matter, reference should be made to the appropriate advisor.y p , pp p
MDD Forensic Accountants refers to one or more of MDD International Limited, a UK private companylimited by guarantee (“MDD-International”), its network of member firms, and their related entities. MDDInternational and each of its member firms are legally separate and independent entities. MDDInternational does not itself engage in the provision of services to clientsInternational does not itself engage in the provision of services to clients.
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