Inventory/Unearned Revenue From Related Party
|6 Months Ended|
Jun. 30, 2019
|Inventory Disclosure [Abstract]|
|Inventory/Unearned Revenue From Related Party||
NOTE 8 – INVENTORY/UNEARNED REVENUE FROM RELATED PARTY
During the six months ended June 30, 2019, MariMed Hemp purchased $20 million of hemp seeds for its wholesale hemp distribution business and to develop hemp-derived CBD products. The seeds meet the U.S. government’s definition of federally legal industrial hemp, which was descheduled as a controlled substance and classified as an agricultural commodity upon the signing of the 2018 Farm Bill. As previously disclosed in Note 1 – Organization and Description of Business, As of June 30, 2019, MariMed Hemp sold approximately $15.7 million of seeds to GenCanna, a related party, at market value which generated approximately $25.2 million of receipts. The seeds are to be harvested by October 2019, and accordingly the Company provided GenCanna with extended payment terms, allowing full payments to be made by December 2019.
As required by the relevant accounting guidance, the Company classified the $25.2 million of billings to GenCanna as a receivable from a related party, with $22,0 million recognized as revenue from a related party for the six months ended June 30, 2019, and $3.2 million recorded under Unearned Revenue From Related Party on the balance sheet. When GenCanna makes its payments to the Company in December 2019, the amount in Unearned Revenue From Related Party will be recognized as revenue.
At June 30, 2019, inventory was comprised of approximately $4.3 million of hemp seeds, and approximately $520,000 of hemp oil extract and products acquired in the MediTaurus transaction disclosed in Note 3 – Acquisitions. At December 31, 2018, inventory was comprised of product packaging and other collateral.