Your percentage ownership will be diluted in the future as a result of equity awards that we expect will be granted to our directors, officers and employees, as well as any shares of our Class A common stock, or securities convertible into shares of our Class A common stock, we issue in connection with future capital raising, strategic transactions or pursuant to our use of the ATM Program at prices that are dilutive to shareholders. Our Amended and Restated 2019 Equity Incentive Plan provides for the grant of equity-based awards to our directors, officers and employees. The issuance of any shares of Class A common stock will dilute the proportionate ownership and voting power of existing security holders.

Substantial sales and issuances of our Class A common stock have and may continue to occur, or may be anticipated, which have and could continue to cause our stock price to decline.

The market price of shares of our Class A common stock could decline further as a result of substantial sales of our Class A common stock, particularly sales by our directors, executive officers, and significant shareholders pursuant to plans of disposition adopted in accordance with Rule 10b5-1 of the Exchange Act, issuances of Class A common stock under the ATM Program at prices that are dilutive to stockholders, a large number of shares of our Class A common stock becoming available for sale or the perception in the market that holders of a large number of shares intend to sell their shares. For instance, subject to certain limitations and exceptions, the members of the Operating Company may redeem their Common Units for shares of Class A common stock (in which case, their shares of Class B common stock will be cancelled on a one-to-one basis upon any such issuance), and then sell those shares of Class A common stock. Additionally, we expect that we will seek to raise additional capital from time to time in the future, which may involve the issuance of additional shares of our Class A common stock, or securities convertible into shares of our Class A common stock in subsequent public or private offerings, or we may be forced to continue to seek equity capital at dilutive prices through our ATM Program or otherwise if debt is not available to us to fund our working capital needs.

We cannot predict the effect, if any, that these sales, or anticipation of such sales, will have on the market price of our common stock or the timing of any redemption of Common Units. Sales or issuances of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market price of our Class A common stock.

The requirements of being a public company may strain our resources and distract our management, which could make it difficult to manage our business, particularly after we are no longer an “emerging growth company.”

As a public company, we are required to comply with various regulatory and reporting requirements, including those required by the SEC. Complying with these reporting and other regulatory requirements is time-consuming and expensive and could have a negative effect on our business, results of operations and financial condition. As a public company, we are subject

to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the requirements of the Sarbanes-Oxley Act of 2002 (“SOX”). The cost of complying with these requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. SOX requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we must commit significant resources, may be required to hire additional staff and need to continue to provide effective management oversight. Sustaining our growth also will require us to commit additional management, operational and financial resources to identify new professionals to join our company and to maintain appropriate operational and financial systems to adequately support expansion. These activities may divert management’s attention from other business concerns, which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

In connection with becoming a public company, we obtained Side A directors’ and officers’ insurance coverage, which increased our annual insurance costs. In the future, it may be more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members to our ~~board of directors~~Board in the future, particularly to serve on our audit committee, and qualified executive officers.

As an “emerging growth company” as defined in the JOBS Act, we may take advantage of certain temporary exemptions from various reporting requirements, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of SOX and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

When these exemptions cease to apply, we expect to incur additional expenses and devote increased management effort toward ensuring compliance with them. We will remain an “emerging growth company” for up to five years, although we may cease to be an “emerging growth company” earlier under certain circumstances. We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

As a public reporting company, we are subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. In connection with our assessment of the effectiveness of our disclosure controls and procedures, we identified certain material weaknesses in our internal control over financial reporting, which caused our Chief Executive Officer and Chief Financial Officer to determine that our internal control over financial reporting, as well ~~well~~as our disclosure controls and procedures, were not effective as of December 31, ~~2020.~~2020 and these material weaknesses have not yet been fully remediated as of December 31, 2021.

As a public reporting company, we are subject to the rules and regulations established from time to time by the SEC. These rules and regulations require that, among other things, we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer ~~have~~ concluded that as of December 31, 2020, the Company ~~has~~had not maintained effective internal control over financial reporting as a result of the existence of material weaknesses. Consequently, management, with the participation of our Chief Executive Officer and Chief Financial Officer, also concluded that our disclosure controls and procedures were not effective as of December 31, 2020 to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it

under the Exchange Act iswere recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, and to provide reasonable assurance that information required to be disclosed by the Company in such reports iswas accumulated and communicated to the Company’s management, including, our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

A “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Although we are implementing measures to remediate the material weaknesses, we cannot give any assurances that the identified material weaknesses will be remediated on a timely basis or at all or that additional material weaknesses will not be identified in the future in connection with our compliance with the provisions of Section 404 of SOX. Our management may be required to devote significant time and expense to remediate these material weaknesses and any other material weaknesses that may be discovered in the future and may not be able to remediate such material weaknesses in a timely manner. The existence of any future material weakness in our internal control over financial reporting could also result in errors in our financial statements that could require us to restate our financial statements, cause us to fail to meet our reporting obligations, and cause investors to lose confidence in our reported financial information, any of which could lead to a decline in the per share trading price of our common stock.

Under the supervision and with the participation of management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. Based upon their evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of December 31, 2021, our disclosure controls and procedures were not effective because of the material weaknesses in our internal control over financial reporting described in Item 9A of Part II of our Annual Report on Form 10-K for the year ended December 31, 2020, which have not yet been fully remediated as of December 31, 2021.

As described in Item 9A of Part II of this Annual Report on Form 10-K, we are continuing to implement our remediation plan to address the identified material weaknesses, and our management continues to be actively engaged in the remediation efforts. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

As previously disclosed, in 2020, we began a multi-year implementation of a new ERP system, which will replace our existing core financial systems, and which we expect will be completed in 2022. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures, based upon which, management expects to focus its allocation of organizational resources to ensure the successful implementation of the new ERP system, including as it relates to designing and implementing effective control activities. Conversely, management expects that additional efforts related to re-designing user access roles and permissions in the existing ERP system, which is expected to be decommissioned in 2022, will be limited. Based on these considerations, and subject to management’s ongoing assessment, we do not expect that the previously reported material weaknesses related to ineffective user access controls will be considered remediated until we complete the implementation of our new ERP system.

Additionally, we are in process of integrating KushCo into our system of internal control over financial reporting following the closing of the merger on August 31, 2021. As a result of these integration activities, certain processes, controls and procedures will be evaluated and may be revised. Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company. In conducting our evaluation of the effectiveness of our internal control over financial reporting, we excluded KushCo from our evaluation as of December 31, 2021.

Because we are an "emerging growth company" under the JOBS Act, our independent registered public accounting firm ~~will~~is not be required to attest to the effectiveness of our internal control over financial reporting for so long as we are an emerging growth company. Our independent registered public accounting firm will be engaged to provide an attestation report on the effectiveness of our internal control over financial reporting at such time as we cease to be an ‘‘emerging growth company,’’ as defined in the JOBS Act.

We have not paid dividends in the past and have no current plans to pay dividends in the future, and any return on investment may be limited to the value of our common stock.

We do not anticipate paying cash dividends in the foreseeable future. The payment of dividends will depend on our earnings, capital requirements, financial condition, prospects and other factors our ~~board of directors~~Board may deem relevant. If we do not pay dividends, our stock may be less valuable because a return on your investment will only occur if you sell our Class A common stock after our stock price appreciates above the price at which you acquired such shares.

Future sales of our Class A common stock in the public market, or the perception that such sales may occur, could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

Subject to certain limitations and exceptions, the members of the Operating Company may redeem their Common Units for shares of Class A common stock (in which case, their shares of Class B common stock or Class C common stock, as the case may be, will be cancelled on a one-to-one basis in the case of Class B common stock or three-to-one basis in the case of Class C common stock upon any such issuance), and then sell those shares of Class A common stock. Additionally, we may issue additional shares of Class A common stock or convertible securities in subsequent public or private offerings.

We cannot predict the timing of any redemption of Common Units or the size of future issuances of our Class A common stock or securities convertible into Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock will have on the market price of our Class A common stock. Sales of substantial amounts of our Class A common stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market price of our Class A common stock.

If securities analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our stock depends in part on the research and reports that securities or industry analysts publish about us or our industry. While there are currently securities analysts covering us, we can provide no assurances that the analysts will continue to publish report or that other securities analysts will initiate coverage. If no securities analysts cover our company, the trading price for our stock could be negatively impacted. In addition, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price could decline as a result.

If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class A stock could decrease, which might cause the market price and trading volume of our Class A common stock to decline.

Anti-takeover provisions in our certificate of incorporation and amended and restated bylaws and Delaware law could discourage a takeover.

Our amended and restated certificate of incorporation and our amended and restated bylaws contain provisions that might enable our management to resist a takeover. These provisions include:

•authorizing the issuance of “blank check” preferred stock that could be issued by our ~~board of directors~~Board to increase the number of outstanding shares and thwart a takeover attempt;

•advance notice requirements applicable to stockholders for matters to be brought before a meeting of stockholders and requirements as to the form and content of a stockholder’s notice;

•restrictions on the transfer of our outstanding shares of Class B ~~common stock and Class C~~ common stock;

•a supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws;

•the inability of our stockholders to act by written consent;

•a requirement that the authorized number of directors may be changed only by resolution of the ~~board of directors;~~Board;

•allowing all vacancies, including newly created directorships, to be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, except as otherwise required by law;

•limiting the forum for certain litigation against us to Delaware; and

•limiting the persons that can call special meetings of our stockholders to our ~~board of directors~~Board or the chairperson of our ~~board of directors.~~Board.

These provisions might discourage, delay or prevent a change in control of our company or a change in our ~~board of directors or management.~~Board. The existence of these provisions could adversely affect the voting power of holders of Class A common stock and limit the price that investors might be willing to pay in the future for shares of our Class A common stock. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.

We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the market price of our Class A common stock.

Our amended and restated certificate of incorporation authorizes us to issue one or more series of preferred stock. Our ~~board of directors~~Board has the authority to determine the preferences, limitations and relative rights of the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our stockholders. Our preferred stock can be issued with voting, liquidation, dividend and other rights superior to the rights of our Class A common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discourage bids for our Class A common stock at a premium to the market price, and materially and adversely affect the market price and the voting and other rights of the holders of our Class A common stock.

Our amended and restated certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation and our amended and restated bylaws provide that, unless we consent to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, other than any action or proceeding that, under applicable law, may only be commenced or prosecuted in another forum, (ii) any action asserting a claim of breach of fiduciary duty owed by any of our directors, officers or other employees to us or to our stockholders, (iii) any action asserting a claim arising pursuant to the Delaware General Corporation Law or our amended and restated certificate of incorporation or bylaws (iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We own our headquarters in Boca Raton, Florida with approximately 50,000 square feet of office space, which includes office space leased to third-party tenants. We have also entered into leases for distribution centers in the United States and Europe, administrative office locations in the United States and Europe, and retail stores in the United States and Europe. We believe that our facilities are adequate for our current global operational needs and we are capable of acquiring or leasing additional space as necessary.

ITEM 3. LEGAL PROCEEDINGS

For information regarding legal proceedings as of December 31, ~~2020,~~2021, see "Note 7—Commitments and Contingencies" of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Class A common stock has been listed on the Nasdaq Global Select Market under the symbol "GNLN" since April 18, 2019. Prior to that time, there was no public market for our stock.

Our Class B common stock ~~and Class C common stock are~~is neither listed nor ~~traded.~~traded on any stock exchange.

Holders

As of December 31, ~~2020,~~2021, there were approximately 2198 stockholders of record of our Class A common stock. Since certain of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders. As of December 31, ~~2020,~~2021, there were approximately ~~17 and 3~~14 stockholders of record of our Class B common ~~stock and Class C common stock, respectively.~~stock.

Dividends

We have never declared or paid any cash ~~dividend~~dividends on our Class A common stock. Holders of our Class B common stock ~~and our Class C common stock~~ are not entitled to ~~participate in any dividends declared by our board of directors.~~receive dividends. We intend to retain any future earnings and do not expect to pay cash dividends in the foreseeable future.

Unregistered Sales of Equity Securities

~~In August 2020,~~On October 21, 2021, we issued an aggregate of 15,000 shares of Class A common stock as compensation for certain executive officers. These shares were issued in reliance of an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

~~During the fourth quarter of 2020, we issued an aggregate of 100,000~~50,000 shares of Class A common stock in exchange for an equivalent number of shares of Class B common stock and Common Units of the Operating Company pursuant to the terms of our Amended and Restated Certificate of Incorporation and the Operating Company's Third Amended and Restated Operating Agreement. These shares were issued in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

During the fourth quarter of 2020, we issued an aggregate of 150,000 shares of Class A common stock in exchange for 450,000 shares of Class C common stock and 150,000 Common Units of the Operating Company pursuant to the terms of our Amended and Restated Certificate of Incorporation and the Operating Company's Third Amended and Restated Operating Agreement. These shares were issued in reliance on an exemption from registration pursuant to Section 4(a)(2) of the Securities Act of 1933.

~~Use of Proceeds from Registered Securities~~

On April 23, 2019, we completed our IPO of 6,000,000 shares of Class A common stock, which was comprised of 5,250,000 shares of Class A common stock sold by Greenlane and 750,000 shares sold by certain selling stockholders, in each case at a public offering price of $17.00 per share. On April 29, 2019, the underwriters purchased an additional 450,000 shares of Class A common stock from selling stockholders pursuant to the partial exercise of their option to purchase additional shares in the IPO. We received aggregate net proceeds of approximately $79.5 million, after deducting the underwriting discounts and commissions and offering expenses. We used approximately $3.1 million of the proceeds from the IPO to fund a portion of the purchase price of the Conscious Wholesale business acquisition. Effective March 2, 2021, we acquired the assets of Eyce LLC, for which we used approximately $2.5 million of the proceeds from the IPO to fund a portion of the purchase price. We have used and intend to continue using the remainder of the net proceeds for working capital and general corporate purposes, including to fund seller financing and potential contingent payments due under the asset purchase agreement with Eyce LLC, possible investments in, and acquisitions of, complementary companies or their assets, businesses, partnerships, minority

investments, products or technologies. Other than as described above, we currently have no other commitments or agreements regarding any such acquisitions or investments. All shares were sold pursuant to a registration statement on Form S-1, as amended (File No. 333-230405), which was declared effective by the SEC on April 17, 2019. Cowen and Company, LLC and Canaccord Genuity LLC served as representatives of the several underwriters in the offering.

ITEM 6. ~~SELECTED FINANCIAL DATA~~

~~Not required.~~[Reserved]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

~~We are one of~~Founded in 2005, Greenlane is the ~~largest~~premier global ~~sellers~~platform for the development and distribution of premium cannabis accessories, child-resistant packaging, vape solutions, and ~~liquid nicotine products in~~lifestyle products. In August 2021, we completed our transformational merger with KushCo, creating the ~~world. We operate as a powerful~~leading ancillary cannabis company and house of ~~brands, third party brand accelerator~~brands. The combined company serves a diverse and ~~distribution platform for consumption devices and lifestyle brands. We have expanded our global reach, serving the global cannabis, hemp-derived CBD, and liquid nicotine markets with an~~ expansive customer base ~~generating~~with more than 8,500 retail locations, which includes many of the leading multi-state-operators and licensed producers, the top smoke shops in the United States, and millions of consumers globally. In addition to enhancing our financial size and scale, along with creating an ~~average 6 orders per minute from~~optimized platform with significant potential revenue and cost saving synergies, the merger strengthened our best-in-class proprietary owned brands and exclusive third-party brand offerings.

We have been developing a world-class portfolio of our own proprietary brands (the "Greenlane Brands") that we believe will, over ~~1,100 licensed cannabis dispensaries,~~time, deliver higher margins and ~~4,100 smoke~~create long-term value for our customers and ~~vape shops around~~shareholders. Our Greenlane Brands are comprised of child-resistant packaging innovator Pollen Gear; VIBES rolling papers; the ~~world.~~

Over the course of 2020, we shifted away from a high-volume and low-margin sales mix to a lower-volume and higher-margin mix, with a focus on our Greenlane Brands. As evidence of this shift, sales from nicotine products decreased to 9.5% of total net sales from 39.9%, while Greenlane Brand sales increased to 16.5% of total net sales as for the year ended December 31, 2020, from 8.3% of total net sales for the year ended December 31, 2019. When including 2020 Eyce product sales, which were integrated into our Greenlane Brand products effective March 2, 2021, our Greenlane Brand sales would have represented 19.7% of total net sales for the year ended December 31, 2020. The increased focus on Greenlane Brand sales resulted in a year-over-year growth rate of approximately 49.2% for brands including Vibes Rolling Papers, Marley Natural accessory line; the K. Haring Glass Collection accessory line; Aerospaced & Groove grinders; Cookies lifestyle line; and Higher Standards, which is both an upscale product line and ~~resulted~~an innovative retail experience with flagship stores at New York City’s famed Chelsea Market and the iconic Malibu Village in ~~an increase in total Greenlane Brand sales~~California. During 2021, we have taken significant strides to grow our brand portfolio including with the March acquisition of ~~approximately $7.5 million. The significant growth rate was especially evident in~~substantially all of the ~~fourth quarter of 2020, wherein:~~

•Greenlane Brand sales reached a record $6.3 million for the fourth quarter of 2020, or approximately 17.5% of total net sales for the fourth quarter of 2020; when including Eyce product sales, Greenlane Brands reached a record $7.8 million, or approximately 21.4% of total net sales for the fourth quarter of 2020, and

•~~Vibes Rolling Papers, Marley Natural, K. Haring Glass Collection, and Aerospaced posted record quarterly sales figures with quarter-over-quarter growth of 53.6%, 68.3%, 73.1% and 24.5%, respectively.~~

~~Given the emphasis on increased international market penetration, including the marketing of Vibes Rolling Papers in Europe, our recent acquisition~~assets of Eyce LLC and ~~an increasingly diverse product mix including~~more recently, the ~~introduction~~November acquisition of ~~new house brands and product lines~~substantially all of the assets of Organicix LLC dba DaVinci Tech. Furthermore, as a pioneer in the ~~coming years, we believe our~~ancillary cannabis space, Greenlane is the partner of choice for many of the industry's leading MSOs, LPs, and brands, ~~have the ability to reach customers across multiple markets~~including PAX Labs, Grenco Science, Storz & Bickel, Firefly, Santa Cruz Shredder, Cookies, and demographics. Coupled with recent strategic business arrangements, such as the launch of Canada.Vapor.com and the expansion of Vibes Rolling papers, we expect the growth trend to continue over the coming years.CCELL.

We ~~have~~ also ~~restructured our commercial departments~~own and operate several industry-leading e-commerce platforms, including Vapor.com, Higherstandards.com, Harringglass.com, Eycemolds.com, Vapor.ca, Vaposhop.com, and recently-acquired websites Puffitup.com and Davincivaporizer.com. These e-commerce platforms offer convenient, flexible shopping solutions directly to ~~allow us to have a more structured~~consumers.

We merchandise vaporizers, packaging, and focused approach as we prepare for category maturation. We have made significant investments into our management team by adding seasoned additions to the Sales, Marketing and E-Commerce departments at the Vice President level. Additionally, we have added a field sales departmentother products in ~~both~~ the United States, Canada, and ~~Canada.~~Europe and we distribute to retailers through wholesale operations and to consumers through e-commerce activities and our retail stores. We ~~feel~~operate distribution centers in the United States, Canada, and Europe. With the completion of the distribution center consolidation and the merger with KushCo, we have established a lean and scalable distribution network that ~~this approach~~leverages a mix of leased warehoused spaces in California and Massachusetts along with third-party logistics ("3PL") locations in the U.S., Canada, and Europe.

2022 Plan

On March 10, 2022, the Company announced via press release its 2022 Plan to reduced its cost structure, increase liquidity, and accelerate its path to profitability. The 2022 Plan includes a recently completed reduction in force, reduction of facility footprints worldwide, a sale leaseback of the Company's headquarter building, disposition of non-core assets, discontinuation of lower-margin third-party brands, increase of prices on select products, and the securing of an asset based loan that will ~~ensure~~support working capital needs.

Management believes that the 2022 Plan will significantly reduce costs, help accelerate the Company's path to profitability, support the growth of the business in a ~~stronger relationship~~non-dilutive manner, and ~~insights with our growing brick~~allow the Company to reinvest capital into its highest margin and ~~mortar account base,~~highest growth potential product lines, such as ~~well the ability to develop merchandising solutions and final consumer engagement.~~its Greenlane Brands.

COVID-19

In December 2019, a novel strain of coronavirus known as COVID-19 was reported in Wuhan, China. In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic. Since the outbreak of COVID-19, we have closely monitored developments and operated with the health and safety of our employees as the Company's top priority. As of the current date listed on this filing, all of our retail locations are open (although they were closed for portions of 2020), and our B2B revenues have not seen any additional setbacks since the quarter ended June 30, 2020, with the third and fourth quarters reporting sales increases of 29.8% and 27.1% over the second quarter, respectively. Our corporate headquarters in Boca Raton, FL remains open; we implemented social distancing guidelines and continue to adhere to CDC guidelines and recommendations.

Although the impact of the COVID-19 pandemic has not had a significant adverse impact on our operations, we cannot reasonably estimate the length or severity of this pandemic on the macroeconomic environment which we operate in. Accordingly, the extent to which the COVID-19 pandemic will impact our financial condition or results of operations will depend on future developments, ~~that of the date of this Form 10-K, include but not limited to the following:~~

•such as the duration and intensity of the pandemic, ~~as well as~~ the ~~timing and~~ effectiveness of COVID-19 vaccines and ~~treatments;~~

•and booster shots, and the overall impact on our customers, ~~including their ability to remain in business~~employees, vendors, and ~~make payments to us in the ordinary course;~~

•~~the impact on end-user demand for our products, including whether any scientific findings demonstrate smoking or vaping negatively impact health outcomes of individuals who contract COVID-19;~~

•~~our ability to hold and attend employee and industry events;~~

•~~our ability to operate our retail stores;~~

•~~our employees' ability to work effectively in a remote work environment;~~

•~~our ability to continue operating our distribution centers;~~

•~~our ability to capitalize on any new consumer trends resulting from the pandemic; and~~

•~~the pandemic's effect on our vendors.~~operations.

~~Merger with KushCo~~Discontinuation of Nicotine Sales

~~On March 31, 2020,~~Over the course of 2021, we ~~announced~~reduced our reliance on lower-margin third-party nicotine brands and increased our focus on our Greenlane Brands, as part of our strategy to scale our portfolio of proprietary brands to build the ~~entry into an Agreement and Plan~~leading house of ~~Merger with KushCo with respect to~~brands in the ~~KushCo Transaction. For more information, see "Note 13—Subsequent Events" of the Notes to Consolidated Financial Statements included in Part II, Item 8~~ancillary cannabis industry. As evidence of this, ~~Form 10-K.~~

sales from nicotine products decreased to $2.1 million, or 1.3% of total net sales, from $13.0 million, or 9.4% of total net sales. Meanwhile, Greenlane Brand sales increased 52.3% to $34.8 million for the year ended December 31, 2021, driven by strong growth in sales from Eyce and VIBES products. We intend to eliminate lower-margin third-party nicotine brands entirely over the course of 2022.

Critical Accounting Policies and Estimates

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. We evaluate our estimates and assumptions on an ongoing basis. We base our estimates on historical experience, outside advice from parties believed to be experts in such matters, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that

are not readily apparent from other sources. Judgments and uncertainties affecting the application of those policies may result in materially different amounts being reported under different conditions or using different assumptions. See "Note 2—Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for a description the significant accounting policies and methods used in the preparation of our consolidated financial statements.

Inventories

Inventories, consisting of finished products, are primarily accounted for using the weighted-average method, and are valued at the lower of cost and net realizable value. This valuation requires us to make judgments, based on currently available information, about the likely method of disposition, such as through sales to customers or liquidations. Assumptions about the future disposition of inventory are inherently uncertain and changes in our estimates and assumptions may cause us to realize material write-downs in the future.

Valuation of Goodwill and Indefinite-Lived Intangible Assets

~~Assets~~We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination. Such valuations require management to make significant estimates and assumptions. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, ~~in business combinations are generally recognized at~~with the ~~date of acquisition at their respective fair values. Any excess~~corresponding offset to goodwill. Upon the conclusion of the ~~purchase price over the estimated fair values of the net assets acquired is recognized as goodwill. Subsequent~~measurement period, any subsequent adjustments are recorded to acquisition, goodwill is tested at least annually for impairment, or when events or changes in circumstances indicate it is more likely than not that the carrying amount of goodwill may not be recoverable. During the first quarter of 2020, we determined that the estimated fair value of the United States reporting unit was below its carrying value, and we recorded a goodwill impairment charge of approximately $9.0 million, which is included in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2020.earnings.

~~Our annual assessment may consist~~We evaluate goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter of each year and at interim dates if indicators of impairment exist. Goodwill is assessed for impairment at the reporting unit level.

We are required to apply judgment when determining whether or not indications of impairment exist. The determination of the occurrence of a ~~qualitative or quantitative analysis to determine whether it~~triggering event is ~~more likely than not that fair value exceeds~~based on various considerations, including on our knowledge of the ~~carrying value. When performing a qualitative analysis, the factors we consider include our share price, our projected financial performance, long-term financial plans, macroeconomic,~~ industry, ~~and~~historical experience, market conditions, ~~as well as~~and specific information available at the time of the assessment. The results of our ~~most recently completed annual impairment test.~~

~~When performing a quantitative~~ analysis ~~we use a combination~~could vary from period to period depending on how our judgment is applied and the facts and circumstances available at the time of ~~an income approach, using discounted cash flow techniques,~~the analysis. Judgment is also required in determining the assumptions and ~~market valuation methods, using the guideline public company method, and may weigh the outcomes of valuation approaches~~estimates used when estimating the fair value of each reporting unit. We then compare the fair value to its carrying amount to determine the amount of impairment, if any. If a reporting unit’s fair value is less than its carrying amount, we record

an impairment charge based on that difference, up to the amount of goodwill allocated to that reporting unit. Inputs and assumptions used to determine fair value are determined from a market participant view, which might be different than our specific views. The valuation process is complex and requires significant input and judgment. Market approaches depend on the availability of guideline companies and representative transactions. When using the income approach, complex and judgmental matters applicable to the valuation process include projections of future revenues, which are estimated after considering many factors such as historical results, market opportunity, pricing, and sales trajectories.

The estimated fair value of a reporting unit is highly sensitive to changes in projections and assumptions; therefore, in some instances, changes in these assumptions could potentially lead to impairment. Ultimately, future potential changes in these assumptions may impact the estimated fair value of a reporting unit and causecalculating the fair value of the reporting unit or the indefinite-lived intangible asset.

For additional information about goodwill and intangible assets, see "Note 3—Business Acquisitions" and "Note 8—Supplemental Financial Statement Information" of the Notes to ~~be below its carrying value. We believe that our estimates are consistent with the assumptions that market participants would use~~Consolidated Financial Statements included in ~~their fair value determination.~~

Part II, Item 8 of this Form 10-K.

Income Taxes and TRA Liability

We are subject to U.S. federal, state and foreign income taxes with respect to our allocable share of any taxable income or loss of Greenlane Holdings, LLC and will be taxed at the prevailing corporate tax rates on such income. Significant judgment is required in determining our provision or benefit for income taxes and in evaluating uncertain tax positions. We account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets or deferred tax liabilities for the expected future tax consequences of events included in our financial statements.

Greenlane Holdings, LLC is a limited liability company and is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a result, we are not liable for U.S. federal or state and local income taxes in most jurisdictions in which we operate, and the income, expenses, gains and losses are reported on the returns of our members. Greenlane Holdings, LLC is subject to Canadian, Dutch, and U.S. state and local income tax in certain jurisdictions in which it is not treated as a partnership for income tax purposes, and in which jurisdictions it pays an immaterial amount of taxes.

During the years ended December 31, 2021 and December 31, 2020, management performed an assessment of the realizability of our deferred tax assets based upon which management determined that it is not more likely than not that the results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits. Consequently, we established a full valuation allowance against our deferred tax assets, and reflected a carrying balance of $0 as of December 31, 2021 and 2020, respectively. In the event that management determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance will be made, which would reduce the provision for income taxes.

We do not record U.S. income taxes on the undistributed earnings of our foreign subsidiaries, except for the Canadian subsidiary, based upon our intention to permanently reinvest undistributed earnings to ensure sufficient working capital and

further expansion of existing operations outside the United States. In the event we are required to repatriate funds from outside of the United States, such repatriation would be subject to local laws, customs, and tax consequences.

In addition to tax expenses, we may incur expenses related to our operations and may be required to make payments under the Tax Receivable Agreement (the "TRA"), which could be significant. Pursuant to the Greenlane Operating Agreement, Greenlane Holdings, LLC will generally make pro rata tax distributions to its members in an amount sufficient to fund all or part of their tax obligations with respect to the taxable income of Greenlane Holdings, LLC that is allocated to them and possibly in excess of such amount.

Legal Contingencies

In the ordinary course of business, we are involved in legal proceedings involving a variety of matters. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We evaluate the associated developments on a regular basis and accrue a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine there is a reasonable possibility that we may incur a loss and the loss or range of loss can be estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements to the extent material.

We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability of loss and the estimated amount of loss.

The outcome of these matters is inherently uncertain. Therefore, if one or more ~~of these matters~~legal proceedings were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. See "Note 7—Commitments and Contingencies" of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K for additional information regarding these contingencies.

Recent Accounting Pronouncements

See "Note 2—Summary of Significant Accounting Policies" of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K.

4950

Results of Operations

The following table presents operating results ~~as a percentage of total net sales:~~

Year Ended December 31,
% of Net sales Change
2020 2019 2020 2019 $ %
Net sales:
United States $ 112,543 $ 160,243 81.3 % 86.6 % $ (47,700) (29.8) %
Canada 15,457 22,120 11.2 % 12.0 % (6,663) (30.1) %
Europe 10,304 2,643 7.5 % 1.4 % 7,661 289.9 %
Total net sales 138,304 185,006 100.0 % 100.0 % (46,702) (25.2) %
Cost of sales 115,539 153,916 83.5 % 83.2 % (38,377) (24.9) %
Gross profit 22,765 31,090 16.5 % 16.8 % (8,325) (26.8) %
Operating expenses:
Salaries, benefits and payroll taxes 24,909 29,716 18.0 % 16.1 % (4,807) (16.2) %
General and administrative 35,315 23,593 25.5 % 12.8 % 11,722 49.7 %
Goodwill impairment charge 8,996 — 6.5 % — % 8,996 100.0 %
Depreciation and amortization 2,520 2,705 1.9 % 1.5 % (185) (6.8) %
Total operating expenses 71,740 56,014 51.9 % 30.4 % 15,726 28.1 %
Loss from operations (48,975) (24,924) (35.4) % (13.6) % (24,051) 96.5 %
Other income (expense), net:
Change in fair value of convertible notes — (12,063) — % (6.5) % 12,063 (100.0) %
Interest expense (437) (975) (0.3) % (0.5) % 538 (55.2) %
Other income, net 1,902 9,073 1.4 % 4.9 % (7,171) (79.0) %
Total other expense, net 1,465 (3,965) 1.1 % (2.1) % 5,430 *
Loss before income taxes (47,510) (28,889) (34.3) % (15.7) % (18,621) 64.5 %
Provision for income taxes 194 10,935 0.1 % 5.9 % (10,741) (98.2) %
Net loss (47,704) (39,824) (34.4) % (21.6) % (7,880) 19.8 %
Net loss attributable to non-controlling interest (33,187) (11,008) (24.0) % (6.0) % (22,179) 201.5 %
Net loss attributable to Greenlane Holdings, Inc. $ (14,517) $ (28,816) (10.4) % (15.6) % $ 14,299 (49.6) %
for the years ended December 31, 2021 and 2020:


	Year Ended December 31,
					% of Net sales				Change
	2021		2020		2021		2020		$		%




Net sales	$	166,060	$	138,304	100.0	%	100.0	%	$	27,756	20.1	%
Cost of sales	138,381		115,539		83.3	%	83.5	%	22,842		19.8	%
Gross profit	27,679		22,765		16.7	%	16.5	%	4,914		21.6	%

Operating expenses:
Salaries, benefits and payroll taxes	34,012		24,909		20.5	%	18.0	%	9,103		36.5	%
General and administrative	41,700		35,315		25.1	%	25.5	%	6,385		18.1	%
Goodwill impairment charge	—		8,996		—	%	6.5	%	(8,996)		(100.0)	%
Depreciation and amortization	4,689		2,520		2.8	%	1.8	%	2,169		86.1	%
Total operating expenses	80,401		71,740		48.4	%	51.8	%	8,661		12.1	%
Loss from operations	(52,722)		(48,975)		(31.7)	%	(35.4)	%	(3,747)		7.7	%

Other income (expense), net:
Interest expense	(574)		(437)		(0.3)	%	(0.3)	%	(137)		31.4	%
Other income (expense), net	(117)		1,902		(0.1)	%	1.4	%	(2,019)		(106.2)	%
Total other expense, net	(691)		1,465		(0.4)	%	1.1	%	(2,156)		*
Loss before income taxes	(53,413)		(47,510)		(32.1)	%	(34.5)	%	(5,903)		12.4	%
Provision for income taxes	10		194		—	%	0.1	%	(184)		(94.8)	%
Net loss	(53,423)		(47,704)		(32.1)	%	(34.6)	%	(5,719)		12.0	%
Net loss attributable to non-controlling interest	(22,840)		(33,187)		(13.8)	%	(24.0)	%	10,347		(31.2)	%
Net loss attributable to Greenlane Holdings, Inc.	$	(30,583)	$	(14,517)	(18.3)	%	(10.5)	%	$	(16,066)	110.7	%

*Not meaningful

Consolidated Results of Operations

Net Sales

~~United States~~

For the year ended December 31, ~~2020, our United States operating segment reported~~2021, total net sales ofwere approximately ~~$112.5~~$166.1 million, compared to approximately ~~$160.2~~$138.3 million for the year ended December 31, ~~2019,~~2020, representing ~~a decrease~~an increase of ~~$47.7~~$27.8 million, or ~~29.8%~~20.1%. The year-over-year ~~decrease~~increase was primarily due to ~~a $54.3~~the merger with KushCo, which was completed on August 31, 2021, and which contributed $43.5 million ~~dollar decrease~~ in nicotine product revenue as a result of the January 2, 2020 U.S. Food and Drug Administration's ban on flavored vape pods, which adversely impacted our B2B wholesale revenue channel, coupled with our shift away from a high-volume, low-margin sales mix. This decrease in B2B wholesale revenuetotal net sales. The increase was partially offset by ~~an increase~~a $10.9 million decrease in ~~the United States e-commerce net~~ sales of ~~$6.5~~lower-margin third-party nicotine brands and a $7.2 million ~~or an 86.7% year-over-year growth. This $6.5 million increase was primarily driven by an increase~~decrease in ~~Vapor.com's net~~ sales of ~~approximately $2.6 million, or 87.9%, compared to the prior year, and an aggregate increase in net sales our~~ other ~~websites, such as Higherstandards.com, Marleynatural.com and Gpen.com, of approximately $3.9 million, or 84.6%.~~

~~Canada~~

For the year ended December 31, 2020, our Canadian operating segment reported net sales of approximately $15.5 million, compared to approximately $22.1 million for the year ended December 31, 2019, representing a decrease of $6.7 million, or 30.1%, primarily due to regulatory restrictions on the sale of flavored vape pods. Similar to the results in our United States operating segment, the decrease in net sales in our Canadian operating segment was entirely observed in our B2B

wholesale operations, which reported a net sales decrease of approximately $6.7 million, or 34.8%. These impacts were the result of the aforementioned regulatory restrictions, paired with temporary customer store closures resulting from the onset of COVID-19, and the revocation of our PAX exclusivity agreement. On October 27, 2020, we launched Canada.Vapor.com, with the expectation of expanding the results seen from Vapor.com in the United States. We believe that expanding our E-commerce business will provide our Canadian operating segment with higher-margin sales, as we are able to sell products at full retail pricing. We expect to see long-term sustained growth in the customer base; juxtaposing the explosive growth of its United States counterpart, Vapor.com, we expect gradual but healthy and organic growth in Canada.Vapor.com.

~~Europe~~

For the year ended December 31, 2020, after completing the first full year of operations since our acquisition of Conscious Wholesale on September 30, 2019, our European operations reported net sales of approximately $10.3 million. Although our European operations endured significant challenges over the course of the year, including a change in leadership personnel in Europe and significant COVID-19 restrictions that adversely impacted retail and supply chain operations, our European operating segment still produced promising results, with record fourth quarter revenue and growth rates. Specifically, net sales for the quarter ended December 31, 2020 were approximately $3.1 million, representing growth of approximately $0.8 million, or 32.4%, over the third quarter of 2020. Additionally, total net sales for our European segment for the last two quarters of 2020 increased by approximately $0.5 million, or 10.9%, compared to the first two quarters of 2020.lower-margin third-party brands.

Cost of Sales and Gross Margin

For the year ended December 31, ~~2020,~~2021, cost of sales ~~decreased~~increased by ~~$38.4~~$22.8 million, or ~~24.9%~~19.8%, as compared to the year ended December 31, ~~2019.~~2020. The ~~decrease~~increase in cost of sales was primarily due to ~~an overall sales volume decrease~~the impact of ~~$47.7 million. Refer to Item 7 - "Net Sales" above for additional information on sales volume. This decrease was partially~~the KushCo merger of $36.7 million, offset by ~~an approximated $11.3 million, or 176.1%, increase~~a decrease in ~~non-merchandise cost~~revenue of ~~sales for~~11.4% excluding the ~~year ended December 31, 2020, compared to~~impact of the same period in 2019, primarily due to an increase in damaged and obsolete inventory of approximately $3.2 million in the third quarter of 2020. These charges were related to write-offs and lower of cost or net realizable value adjustments, which were made by management as part of a strategic initiative to free-up warehouse space for products with higher margins and higher marketability, and to increase inventory turnover for certain slow-moving products.KushCo merger.

~~United States~~

~~For the year ended December 31, 2020, gross~~Gross margin was materially impacted by significant damaged and obsolete inventory adjustments during the third quarter of 2020 driven by management's strategic initiatives, mitigating margin improvements from our shift to a lower-volume but higher-margin sales mix. Accordingly, year-over-year gross margin for our United States operating segment decreased to 15.7% for the year ended December 31, 2020, down from approximatelyremained relatively flat at 16.7% for the year ended December 31, ~~2019, representing a $9.1 million decrease in~~2021, compared to gross ~~profit. Excluding the aforementioned strategic inventory adjustments~~margin of ~~$3.2 million during the year ended December 31, 2020, gross profit margin would have increased to 18.5%~~16.5% for the ~~year ended December 31,~~same period in 2020. ~~There were no equivalent adjustments during the year ended December 31, 2019.~~

~~Canada~~

For the year ended December 31, 2020, gross margin decreased to 15.2% in 2020 from 15.9% for the year ended December 31, 2019, representing a $1.2 million decrease in gross profit. Unlike our United States operating segment, our Canadian operating segment's gross profit margin was not significantly impacted byExcluding inventory write-offs of damaged and obsolete inventory ~~adjustments. However,~~in 2021 and 2020 of $10.5 million and $6.7 million, respectively, associated with post-merger and ongoing product rationalization initiatives, gross margins increased 1.7% to 23.0% in 2021, compared to 21.3% for the same period in 2020. The increase in margin is related to an increase in Greenlane Brands sales of 52.3% with a higher margin profile than 3rd-party brand sales with a lower margin profile for the comparable period.

Gross margin, or gross ~~margin for our Canadian operating segment was hindered~~profit as a percentage of net sales, has been and will continue to be affected by a ~~reduction sales from regulatory restrictions~~variety of ~~sales of nicotine products, which accounted for 42.0%~~factors, including the average mark-up over the cost of our ~~Canadian operating segment's total revenue for~~products; the ~~year ended December 31, 2020 compared to 52.2%~~mix of ~~total revenue for~~products sold; purchasing efficiencies; the year ended December 31, 2019. The market for these nicotine products has changed drastically, with competitive pricing and discounts driven by the fear of both adverse market conditions resulting from COVID-19 and increased regulation. We expect future shifts in Canadian market away from nicotine products similar to the shifts observed in the United States market during 2020, which will lead to substitution of these low-margin, high-velocity products to high-margin, low-velocity products.

~~Europe~~

Through the acquisition of Conscious Wholesale during the third-quarter of 2019, we began operations in the Netherlands and expanded our reach to other European countries. For the year ended December 31, 2020, our European operating segment's gross margin of 26.8% contributed to approximately $2.8 million in gross profit, representing approximately 12.1% of consolidated gross profit. For the quarter ended December 31, 2020, our European operating segment's gross margin of 31.4% was relatively consistent with the prior quarter ended December 31, 2019, in which we reported a gross margin of approximately 31.6%. Our European operating segment's 2020 gross margin was driven by its B2C sales, specifically e-commerce, which accounted for approximately $4.4 million, or 42.4%, of our European operating segment's net sales, compared to B2B revenues, which represented $4.2 million, or 41.0%, of net sales. This shift was primarily influenced by thelevel

of sales for certain third-party brands, which carry contractual profit sharing obligations; and the potential impact on freight costs arising from passing of the ~~COVID-19 pandemic; however,~~PACT Act amendment noted under Regulatory Developments. Many of our products are sourced from suppliers who may use their own third-party manufacturers, and our product costs and gross margins may be impacted by the product mix we ~~expect~~sell in any given period. Furthermore, legacy Greenlane and legacy KushCo margins are significantly different, due to ~~continue capitalizing on the increase~~their respective customer bases, product mix and types of transactions. Legacy KushCo revenue is comprised of a stable customer base of wholesale and business to business customers, resulting in ~~our E-commerce~~a lower-volume of transactions with a higher average transaction price and lower margin sales. Conversely, legacy Greenlane sales ~~as these offer our~~are comprised of business ~~access~~ to business, retail ~~pricing~~ and ~~the ability to double margins compared to those~~e-commerce sales that consist of ~~B2B wholesale transactions.~~

~~Operating Expenses~~a higher volume of transactions with lower average prices and higher margins.

Salaries, Benefits and Payroll Taxes

Salaries, benefits and payroll taxes expenses ~~decreased~~increased by approximately ~~$4.8~~$9.1 million, or ~~16.2%~~36.5%, ~~for the year ended December 31, 2020, compared~~ to the same period in 2019, primarily due to a decrease in stock compensation expense of approximately $7.1 million. Specifically, we recognized $0.9 million in stock compensation expense during the year ended December 31, 2020, which was significantly reduced due to actual forfeitures of unvested equity awards held by former officers, as compared to approximately $8.0 million of stock compensation expense during the same period for 2019. This decrease in stock compensation expense was offset by increases of approximately $1.4 million in employee wages, primarily due to securing talent in several senior and executive level roles during the year ended December 31, 2020.

As part of our transformation initiative, we reduced our workforce by an aggregate of 93 employees during the year ended December 31, 2020, primarily in Q1 2020 and Q3 2020. The impact of these reductions in force resulted in a reduction in our salaries, benefits and payroll tax expenses of approximately $3.5$34.0 million for the year ended December 31, ~~2020. These personnel reduction efforts will eliminate approximately $5.8~~2021, compared to $24.9 million for the same period in 2020, primarily due to an increase related to the KushCo merger of ~~recurring~~$5.9 million and $5.7 million in stock compensation expense, the majority of which is related to post-merger acceleration of vesting periods triggered by the KushCo merger, offset by a salaries and ~~benefits charges annually.~~payroll taxes decrease of $1.7 million related to a transformation initiative to reduce salary operating expense.

As we continue to closely monitor the evolving business landscape, including the impacts of COVID-19 on our customers, vendors, and overall business performance, we remain focused on identifying cost-saving opportunities while delivering on our strategy to recruit, train, promote and retain the most talented and success-driven personnel in the industry. ~~Management~~In light of the merger, management is continuing to explore opportunities in ~~2021~~2022 to further reduce salary expenses and other operating expenses.

As part of our aforementioned 2022 Plan to reduce our cost structure, increase liquidity and accelerate our path to profitability, we completed a reduction in force in March 2022, which we expect to result in approximately $8.0 million in annualized cash compensation cost savings.

General and Administrative Expenses

General and administrative expenses increased by approximately ~~$11.7~~$6.4 million, or ~~49.7%~~18.1%, for the year ended December 31, ~~2020,~~2021, compared to the same period in ~~2019.~~2020. This increase was primarily due to an increase of approximately ~~$2.0~~$3.8 million in ~~subcontractor~~professional fees related to our ~~enterprise resource planning ("ERP")~~ERP system implementation and ~~additional labor associated with the closing and consolidation of our distribution centers;~~M&A; an increase of ~~$2.5~~$3.3 million in insurance expense primarily driven by directors and officers insurance premiums incurred with respect to the completed KushCo merger, an increase of $2.4 million in legal fees driven by M&A activity, an increase of $1.2 million third party logistics full year costs ~~directly incurred as part of the transition of our distribution centers~~versus partial year cost related to ~~our new~~ 3PL facilities in Kentucky and ~~Canada;~~Canada first implemented in 2020 and the addition of KushCo 3PL Canada facility; an increase in write-offs of $1.1 million principally related to vendor inventory deposits identified during a post-merger inventory rationalization initiative; offset by a decrease of $6.6 million bad debt expense with the majority of the decrease related to gain of 1.7 million due indemnification asset recovery related to VAT liability versus a loss of approximately $4.5 million related to an the same indemnification asset which was not probable of ~~recovery; approximately $1.3 million in additional accounting fees, driven by a combination of incremental fees from~~recovery for the change in auditors in the third quarter of 2019, whose fees were substantially higher than the predecessor, and due diligence related to acquisition targets in late 2019 and early 2020; an increase of approximately $1.2 million in severance related costs associated with our restructuring plan during the period; and impairment charges of approximately $0.4 million recorded during the year ended December 31, 2020, related to assets classified as held-for-sale during the year. These increases were offset by a decrease in marketing expenses of approximately $1.0 million, primarily driven by the decrease in trade show activity in fiscal 2020 in direct response to COVID-19 lockdown and social distancing protocols during thesame comparable period.

Impairment Charge

Due to market conditions and estimated adverse impacts from the COVID-19 pandemic, management concluded that a triggering event occurred in the first quarter of 2020, requiring a quantitative impairment test of our goodwill for our United States and Europe reporting units. Based on this assessment, we concluded that the fair value of our Europe reporting unit exceeded its carrying value and no impairment charge was required. However, the estimated fair value of the United States reporting unit was determined to be below its carrying value, which resulted in a ~~$9.0~~$9.0 million goodwill impairment charge, recorded in the first quarter of 2020. We did not recognize incremental impairment charges to goodwill as a result of our annual impairment assessment as of December 31, ~~2020.~~2021 and 2020, respectively.

Depreciation and Amortization Expenses

Depreciation and amortization expense ~~remained relatively consistent~~increased $2.2 million, or 86.1%, for the year ended December 31, ~~2020,~~2021, compared to the same period in ~~2019, only slightly decreasing due~~2020. The increase of $2.2 million is primarily related to the ~~disposition of fixed assets in connection with our distribution center consolidation initiative in 2020.~~additional depreciation and amortization expense related to the KushCo merger.

Other Income (Expense), Net

~~Change in fair value of convertible notes.~~

We accounted for the convertible notes issued in December 2018 and January 2019 at fair value with changes in the fair value recognized in the consolidated statement of operations and comprehensive loss as a component of other income

(expense), net for the year ended December 31, 2019. The convertible notes were converted to shares of Class A common stock in conjunction with the completion of the IPO in April 2019. There were no changes in fair value of convertible notes recognized during the year ended December 31, 2020.

Interest expense.

Interest expense consists of interest incurred on our Real Estate Note, ~~line of credit and other debt obligations, as well as debt issuance costs~~promissory notes related to the ~~convertible~~Eyce and DaVinci acquisitions and Bridge loan. We also experienced an increase of interest expense of approximately $0.1 million

during the year ended December 31, 2021, due to the addition of promissory notes ~~issued in December 2018~~related to the Eyce and ~~January 2019.~~DaVinci acquisitions and the Secured Promissory Note (the "Bridge Loan") with Aaron LoCascio during 2021.

Other ~~income,~~expense, net.

Other income (expense), net, ~~increased~~decreased by approximately ~~$5.4~~$2.0 million for the year ended December 31, ~~2020~~2021, compared to the same period in ~~2019,~~2020. The change is primarily due a ~~change~~loss related to the revaluation of contingent consideration of $0.2 million in ~~the fair value of our convertible notes payable during the year ended December 31, 2019,~~2021, which ~~resulted in an expense of approximately $12.1 million, with no corresponding expense in 2020. This increase in 2019~~ was offset by a gain of approximately $7.2 million recognized in the year ended December 31, 2019, resulting from the reversal of the TRA liability, as well as an unrealized gain of $1.5 million recognized on our equity securities investment in Airgraft Inc., in the same period. Additionally, we recognized a gain from the fair value adjustment of contingent consideration of approximately $0.7 million ~~during the year ended December 31,~~in 2020, which was largely attributed to changes in forecasted revenues and gross profits ~~for~~in our European ~~operating segment~~operations over the remainder of ~~2020,~~2021, driven primarily by the impacts of the COVID-19 ~~pandemic. We also experienced~~pandemic, and a ~~reduction~~decrease in interest income in 2021 of ~~interest expense of approximately $0.5~~$0.2 million, ~~during the year ended December 31, 2020, due to the absence of debt issuance costs that were reflected~~as well as general other expenses incurred in ~~the year ended December 31, 2019.~~2021.

Provision for Income Taxes

As a result of the IPO and the related transactions (defined in "Note 1—Business Operations and Organizations" of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K), we own a portion of the Common Units of the Operating Company, which is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, the Operating Company is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by the Operating Company is passed through to, and included in the taxable income or loss of, its members, including us, in accordance with the terms of the Operating Agreement. We are subject to federal income taxes, in addition to state and local income taxes with respect to our allocable share of the Operating Company’s taxable income or loss.

As discussed above, prior to the consummation of the IPO, the provision for income taxes included only income taxes on income from the Operating Company’s Canadian subsidiary, based upon an estimated annual effective tax rate of approximately ~~15.0%~~26.5%. After the consummation of the IPO, Greenlane became subject to U.S. federal, state and local income taxes with respect to Greenlane’s allocable share of the Operating Company’s taxable income or loss. Furthermore, after completing the Conscious Wholesale acquisition in September 2019, the Operating Company became subject to Dutch income taxes on income from its Netherlands-based subsidiary, based upon an estimated effective tax rate of approximately 25.0%.

During the third quarter of 2019, management performed an assessment of our ability to realize our deferred tax assets based upon which management determined that it is not more likely than not that our results of operations will generate sufficient taxable income to realize portions of the net operating loss benefits. Consequently, we established a full valuation allowance against our deferred tax assets, thus reducing the carrying balance to $0. In the event that management determines that we would be able to realize our deferred tax assets in the future in excess of their net recorded amount, an adjustment to the valuation allowance will be made which would reduce the provision for income taxes.

Segment Operating Performance

~~Key Metrics~~Following the completion of the KushCo merger in late August 2021, we reassessed our operating segments based on our new organizational structure. Based on this assessment, we determined we had two operating segments as of December 31, 2021, which are the same as our reportable segments: (1) Consumer Goods, which largely comprises Greenlane's legacy operations across the United States, Canada, and ~~Non-GAAP Financial Measures~~ Europe, and (2) Industrial Goods, which largely comprises KushCo's legacy operations. These changes in operating segments align with how we manage our business as of the fourth quarter of 2021.

~~We monitor the following key metrics to help us measure~~The Consumer Goods segment focuses on serving consumers across wholesale, retail and ~~evaluate the effectiveness~~e-commerce operations—through both our proprietary brands, including Eyce, DaVinci, VIBES, Marley Natural, Keith Haring, and Higher Standards, as well as lifestyle products and accessories from leading brands, like PAX, Storz and Bickel, Grenco Science, and many more. The Consumer Goods segment forms a central part of our growth strategy, especially as it relates to scaling our own portfolio of higher-margin proprietary owned brands.

The Industrial Goods segment focuses on serving the premier cannabis brands, operators, and retailers through our wholesale operations ~~develop financial forecasts,~~by providing ancillary products essential to their growth, such as customizable packaging and ~~make strategic decisions:~~supply products, which includes our Greenlane Brand Pollen Gear and vaporization solutions offering which includes CCELL branded products.

For the year ended December 31,
($ in thousands) 2020 2019
Net sales $ 138,304 $ 185,006
Period-over-period change (25.2) % 3.4 %
Net cash used in operations $ (12,302) $ (36,903)
Adjusted net loss (1)
$ (25,863) $ (18,544)
Adjusted EBITDA (1)
$ (24,352) $ (13,424)
Our CODM allocates resources to and assesses the performance of our two operating segments based on the operating segments' net sales and gross profit. The following table sets forth information by reportable segment for the years ended December 31, 2021 and 2020:

(1) Adjusted Net Loss and Adjusted EBITDA are non-GAAP financial measures. For the definitions and reconciliation of Adjusted Net Loss and Adjusted EBITDA to net loss, see “ Non-GAAP Financial Measures.”

~~Non-GAAP Financial Measures~~


					% of Total Net sales				Change
	2021		2020		2021		2020		$		%
Net sales:
Consumer Goods	$	110,105	$	122,186	66.3	%	88.3	%	$	(12,081)	(9.9)	%
Industrial Goods	55,955		16,118		33.7	%	11.7	%	39,837		247.2	%
Total net sales	$	166,060	$	138,304

					% of Segment Net sales				Change
Cost of sales:	2021		2020		2021		2020		$		%
Consumer Goods	$	92,804	$	101,981	84.3	%	83.5	%	$	(9,177)	(9.0)	%
Industrial Goods	45,577		13,558		81.5	%	84.1	%	32,019		236.2	%
Total cost of sales	$	138,381	$	115,539

Gross profit:
Consumer Goods	$	17,301	$	20,205	15.7	%	16.5	%	$	(2,904)	(14.4)	%
Industrial Goods	10,378		2,560		18.5	%	15.9	%	7,818		305.4	%
Total gross profit	$	27,679	$	22,765

~~Adjusted Net Income (Loss) is defined as net loss before equity-based compensation expense, changes in~~Consumer Goods

For the fair value of our convertible notes, debt placement costs for the convertible notes, and non-recurring expenses primarily related to our transition to being a public company. The debt placement costs related to the convertible notes issued in January 2019 are reported within the "interest expense" line item in our consolidated statement of operations and comprehensive loss for the yearsyear ended December 31, 2021, our Consumer Goods operating segment reported net sales of approximately $110.1 million compared to approximately $122.2 million for the same period in 2020, ~~and 2019. Non-recurring expenses related~~representing a decrease of $12.1 million or 9.9%. The year-over-year decrease was primarily due to ~~our transition~~a $10.9 million decrease in sales of lower-margin third-party nicotine brands. The decrease was also due, to ~~being~~ a ~~public company,~~lesser extent, to a $7.2 million decrease in sales of other lower-margin third-party brands. The decrease was offset by a $11.9 million increase in the sales of Greenlane Brands, which ~~are reported within "general and administrative expenses"~~increased 52.3% to $34.8 million.

For the year ended December 31, 2021, cost of sales decreased by $9.2 million, or 9.0%, as compared to the same period in ~~our consolidated statements~~2020. The decrease in cost of ~~operations and comprehensive loss, represent fees and expenses~~sales was primarily ~~attributable to consulting fees and incremental audit and legal fees.~~

Adjusted EBITDA is defined as net loss before interest expense, income tax expense, depreciation and amortization expense, equity-based compensation expense, other income, net (which includes a gain recognized on an equity investment and a gain due to the ~~adjustment of our TRA liability), changes~~9.9% decrease in fair value of our convertible notes, and non-recurring expenses primarily related to our transition to being a public company. These non-recurring expenses, which are reported within general and administrative expenses in our consolidated statements of operations and comprehensive loss, represent fees and expenses primarily attributable to consulting fees and incremental audit and legal fees.

We disclose Adjusted Net Income (Loss) and Adjusted EBITDA, which are non-GAAP performance measures, because management believes these metrics assist investors and analysts in assessing our overall operating performance and evaluating how well we are executing our business strategies. You should not consider Adjusted Net Income (Loss) or Adjusted EBITDA as alternatives toConsumer Goods net loss, as determined in accordance with U.S. GAAP, as indicators of our operating performance. Adjusted Net Income (Loss) and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:sales.

•Gross margin remained relatively flat at ~~Although depreciation~~approximately 15.7% for the year ended December 31, 2021, compared to gross margin of approximately 16.5% for the same period in 2020. Excluding post-merger strategic product rationalization initiative charges of $5.1 million, gross margin was approximately 20.6% for year ended December 31, 2021, compared to gross margin of approximately 22.0%, excluding damaged and ~~amortization are non-cash~~obsolete charges of $6.7 million, for the ~~assets being depreciated and amortized may have to be replaced~~same period in ~~the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;~~2020.

•~~Adjusted EBITDA does not include interest expense,~~Industrial Goods

For the year ended December 31, 2021, our Industrial Goods operating segment reported net sales of approximately $56.0 million compared to approximately $16.1 million for the same period in 2020, representing an increase of $39.8 million or 247.2%. The increase is directly related to net sales of approximately $43.5 million contributed by our merger with KushCo, which ~~has~~have been ~~a necessary element of our costs;~~

•~~Adjusted EBITDA does not reflect income tax payments we may be required to make;~~

•~~Adjusted EBITDA and Adjusted Net Loss do not reflect equity-based compensation;~~

•~~Adjusted EBITDA and Adjusted Net Loss do not reflect transaction and other costs which are generally incremental costs that result from an actual or planned transaction;~~

•~~Other companies, including companies~~included in our ~~industry, may calculate adjusted EBITDA differently,~~results of operations beginning with August 31, 2021, which ~~reduces its usefulness~~is the merger completion date.

For the year ended December 31, 2021, cost of sales increased by $32.0 million, or 236.2%, as ~~a comparative measure.~~compared to the same period in 2020. The increase is directly related to cost of sales of approximately $36.7 million contributed by our merger with KushCo, which have been included in our results of operations beginning with August 31, 2021, which is the merger completion date.

~~Because Adjusted Net Income (Loss) and Adjusted EBITDA do not account~~Gross margin was approximately 18.5% for ~~these items, these measures have material limitations as indicators~~the year ended December 31, 2021, compared to gross margin of ~~operating performance. Accordingly, management does not view Adjusted Net Income (Loss) or Adjusted EBITDA~~approximately 15.9% for the same period in ~~isolation or as substitutes~~2020, representing 2.6% year over year increase. Excluding post-merger strategic product rationalization initiative charges of $5.0 million, gross margin was approximately 25.8% for ~~measures calculated~~year ended December 31, 2021, compared to gross margin of approximately 15.9% for the same period in ~~accordance with U.S. GAAP.~~

2020. The ~~reconciliation~~year over year increase in gross margin of ~~our net loss to Adjusted Net Income (Loss)~~approximately 9.9% is ~~as follows:~~

Year ended December 31,
(in thousands) 2020 2019
Net loss $ (47,704) $ (39,824)
Debt placement costs for convertible notes (1)
— 422
Transition to being a public company (2)
— 775
Equity-based compensation expense 853 8,020
Initial consulting costs related to ERP system implementation (3)
215 —
Restructuring expenses (4)
1,229 —
Due diligence costs related to acquisition target 903 —
Goodwill impairment charge 8,996 —
Adjustments related to the product rationalization to increase inventory turnover of slow-selling products 3,222 —
Obsolete inventory charges related to management's strategic initiative (5)
1,137 —
Allowances for uncollectible vendor deposits incurred in connection with management's strategic initiative (5)
822 —
Loss related to indemnification asset not probable of recovery 4,464 —
Change in fair value of convertible notes — 12,063
Adjusted net loss $ (25,863) $ (18,544)

~~(1)Debt placement costs~~ related to improved supply and packaging margins and a freight recovery surcharge introduced in the ~~issuance~~fourth quarter of ~~convertible notes in January 2019.~~2021 to offset increased freight-in costs.

Net Sales by Geographic Regions


	Year Ended December 31,
					% of Net sales				Change
	2021		2020		2021		2020		$		%
Net sales:
United States	$	146,006	$	112,543	87.9	%	81.4	%	$	33,463	29.7	%
Canada	9,717		15,457		5.9	%	11.2	%	(5,740)		(37.1)	%
Europe	10,337		10,304		6.2	%	7.4	%	33		0.3	%
Total net sales	$	166,060	$	138,304	100.0	%	100.0	%	$	27,756	20.1	%

United States

~~(2)~~
~~Includes certain non-recurring fees~~

For the year ended December 31, 2021, our United States net sales were approximately $146.0 million, compared to approximately $112.5 million for the same period in 2020, representing an increase of $33.5 million, or 29.7%. The year-over-year increase was primarily due to the merger with KushCo, which contributed $40.0 million in total net sales. Excluding net sales contributed by KushCo, total net sales decreased by approximately $6.5 million, or 5.8%, to approximately $106.0 million for the year ended December 31, 2021, compared to the same period in 2020. The year-over-year decrease was primarily due to a decrease in wholesale revenue of $3.0 million, and ~~expenses~~a decrease in consumer retail revenue of $1.6 million.

Canada

For the year ended December 31, 2021, our Canadian net sales were approximately $9.7 million, compared to approximately $15.5 million for the same period in 2020, representing a decrease of $5.7 million, or 37.1%. The year-over-year decrease was primarily ~~attributable~~due to ~~consulting fees and incremental audit and legal fees incurred~~a $7.0 million decrease in ~~connection with our IPO.~~

~~(3)Includes non-recurring expenses~~sales related to ~~the initial project design for~~ our ~~planned ERP system implementation.~~shift away from lower-margin third-party nicotine brands, and was partially offset by $3.5 million in net sales contributed by KushCo.

~~(4)Includes primarily severance payments for employees terminated as part of our transformation plan.~~Europe

~~(5)~~Includes certain non-recurring charges related to management's strategic initiative. These adjustments were incurred liquidate inventory on hand and on order, rationalize product offerings, improve inventory turnover of slow-selling products and vacate warehouse space for products with higher margin and marketability.

~~The reconciliation~~For the year ended December 31, 2021, our European net sales were approximately $10.3 million, which were roughly flat on a year-over-year basis. Our European operations continued to endure challenges over the course of ~~our net loss to Adjusted EBITDA is as follows:~~

Year ended December 31,
(in thousands) 2020 2019
Net loss $ (47,704) $ (39,824)
Other income, net (1)
(1,902) (9,073)
Transition to being a public company (2)
— 775
Interest expense 437 975
Provision for (benefit from) income taxes 194 10,935
Depreciation and amortization 2,520 2,705
Equity-based compensation expense 853 8,020
Initial consulting costs related to ERP system implementation (3)
215 —
Restructuring expenses (4)
1,229 —
Due diligence costs related to acquisition target 903 —
Adjustments related to product rationalization to increase inventory turnover of slow-selling products (5)
3,222 —
One-time early termination fee on operating lease in connection with moving to a centralized distribution center model 262 —
Goodwill impairment charge 8,996 —
Inventory charges related to management's strategic initiative(5)
1,137 —
Allowances for uncollectible vendor deposits incurred in connection with management's strategic initiative (5)
822 —
Loss related to indemnification asset not probable of recovery 4,464 —
Change in fair value of convertible notes — 12,063
Adjusted EBITDA $ (24,352) $ (13,424)

~~(1)Includes rental~~the year, including significant COVID-19 restrictions that adversely impacted retail and ~~interest income, changes in the fair value of contingent consideration, and other miscellaneous income.~~

~~(2)Includes certain non-recurring fees and expenses primarily attributable to consulting fees and incremental audit and legal fees incurred in connection with our IPO.~~

~~(3)Includes non-recurring expenses related to the initial project design for our planned ERP system implementation.~~

~~(4)Includes primarily severance payments for employees terminated as part of our transformation plan.~~

Liquidity and Capital Resources

Our primary requirements for liquidity and capital are working capital, debt service related to recent acquisitions and potential future acquisitions and general corporate needs. ~~Historically, these~~Our primary sources of liquidity are our cash ~~requirements have been met through~~on hand and the cash ~~provided by operating activities and borrowings under~~flow that we generate from our ~~revolving line of credit.~~

operations. As of December 31, ~~2020,~~2021, we had approximately ~~$30.4~~$12.9 million of cash, of which ~~$2.3~~$0.7 million was held in foreign bank accounts, and ~~approximately $58.2~~approximately $53.8 million of working capital, which is calculated as total current assets minus total current liabilities, as compared ~~with~~to approximately ~~$47.8~~$30.4 million of cash, ofof which ~~$0.9~~$2.3 million was held in foreign bank accounts, and approximately ~~$88.7~~$54.2 million of working capital as of December 31, ~~2019.~~2020. The repatriation of cash balances from our foreign subsidiaries could have adverse tax impacts or be subject to capital controls; however, these balances are generally available to fund the ordinary business operations of our foreign subsidiaries without legal or other restrictions.

On October 1, 2018, one of the Operating Company’s wholly-owned subsidiaries closed on the purchase of a building for $10.0 million, which serves as our corporate headquarters. The purchase was financed through a real estate term note (the “Real Estate Note”) in the principal amount of $8.5 million, with one of the Operating Company’s wholly-owned subsidiaries as the borrower and Fifth Third Bank as the lender. Principal amounts plus any accrued interest at a rate of LIBOR plus 2.39% are due monthly. Our obligations under the Real Estate Note are secured by a mortgage on the property. We are seeking to enter into a sale lease-back transaction with respect to our corporate headquarters, at which point we would repay the Real Estate Note, and use the net proceeds from the sale for working capital purposes.

Our future liquidity needs may also include payments in respect of the redemption rights of the Common Units held by its members that may be exercised from time to time ~~(in the event~~(should we elect to exchange such Common Units for a cash ~~payment in lieu of shares of Class A common stock)~~payment), payments under the TRA and state and federal taxes to the extent not sheltered by our tax assets, including those arising as a result of purchases, redemptions or exchanges of Common Units for Class A common stock. Although the actual timing and amount of any payments that may be made under the TRA will vary, the payments that we will be required to make to the members may be significant. Any payments made by us to the members under the TRA will generally reduce the amount of overall cash flow that might have otherwise been available to us or to the Operating Company and, to the extent that we are unable to make payments under the TRA for any reason, the unpaid amounts

generally will be deferred and will accrue interest until paid by us; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore may accelerate payments due under the TRA.

~~Despite decreases in gross profit for the year ended December 31, 2020 and the uncertainty around the ongoing COVID-19 pandemic, we~~

We believe that our cash on hand, combined with our ability to access the capital markets, will be sufficient to fund our working capital and capital expenditure requirements, as well as our debt repayments and other liquidity requirements

associated with our existing operations, for at least the ~~the~~ next 12 months. We have an effective shelf registration statement on Form S-3 (the "2021 Shelf Registration Statement") and may opportunistically conduct securities offerings from time to time in order to meet our liquidity needs. However, we may be unable to access the capital markets because of current market volatility and the performance of our stock price.

The 2021 Shelf Registration Statement registers shares of our Class A common stock, preferred stock, $0.0001 par value per share (the "preferred stock"), depository shares representing our preferred stock, warrants to purchase shares of our Class A common stock, preferred stock or depository shares, and rights to purchase shares of our Class A common stock or preferred stock that may be issued by us in a maximum aggregate amount of up to $200,000,000. As described below, on August 2, 2021 we filed a prospectus supplement (the "2021 ATM Program Prospectus Supplement") for the sale of up to $50,000,000 of shares of our Class A common stock pursuant to the ATM Program (as defined below). On March 31, 2022, the date on which this Annual Report on Form 10-K for the fiscal year ended December 31, 2021 is filed with the SEC, the 2021 Shelf Registration Statement became subject to the offering limits set forth in General Instruction I.B.6 of Form S-3 ("Instruction I.B.6") because our public float is less than $75 million. For so long as our public float is less than $75 million, the aggregate market value of securities sold by us under the 2021 Shelf Registration Statement pursuant to Instruction I.B.6 during any twelve consecutive months may not exceed one-third of our public float. We have not offered any securities pursuant to Instruction I.B.6 in the twelve calendar months preceding the date of filing of this Annual Report on Form 10-K.

In August 2021, we established an "at-the-market" equity offering program (the "ATM Program") that provides for the sale of shares of our Class A common stock having an aggregate offering price of up to $50 million, from time to time. Net proceeds from sales of our shares of Class A common stock under the ATM Program are expected to be used to fund potential business acquisitions and for working capital and general corporate purposes. Since the launch of the ATM program and through March 28, 2022, we sold 11,685,970 shares of our Class A common stock under the ATM Program, which generated gross proceeds of approximately $9.4 million. In light of our low cash position, we have been forced to sell stock under our ATM program at prices that may not otherwise be attractive and are dilutive.

In addition, on August 11, 2021, we ~~may choose~~completed a public offering of 4,200,000 shares of Class A common stock, 5,926,583 pre-funded warrants to ~~raise additional funds~~purchase shares of Class A common stock and 6,075,950 standard warrants to purchase shares of Class A common stock (the “Common Stock and Warrant Offering”) for net proceeds of approximately $29.9 million.

In December 2021, we entered into the Bridge Loan with Aaron LoCascio, our co-founder, former Chief Executive Officer and President, and a current director of the Company, in which Mr. LoCascio provided us with a loan in the principal amount of $8.0 million. Accrued interest at ~~any time through equity~~a rate of 15.0% is due monthly, and principal amount is due in full in June 2022. The Bridge Loan is secured by a continuing security interest in all of our assets and properties whether then or ~~debt financing arrangements, which may~~thereafter existing or ~~may not be needed for additional~~required, including our inventory and receivables (as defined under the Universal Commercial Code) and includes negative covenants restricting our ability to incur further indebtedness and engage in certain asset dispositions until the earlier of June 30, 2022 or the Bridge Loan has been fully repaid.

We are in the process of securing an asset backed loan to assist us with working capital ~~capital expenditures~~needs. We can provide no assurances as to the timing of our entry into this loan or ~~other strategic investments.~~ that we will enter into it at all.

Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in Item 1A of ~~this~~our Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Cash Flows

The following summary of cash flows for the periods indicated has been derived from our consolidated financial statements included in Part II, Item 8 of this Form 10-K:


		Year Ended December 31,					Year Ended December 31,
(in thousands)	(in thousands)	2020		2019		(in thousands)	2021		2020
Net cash used in operating activities	Net cash used in operating activities	$	(12,302)	$	(36,903)	Net cash used in operating activities	$	(37,330)	$	(12,302)
Net cash used in investing activities	Net cash used in investing activities	(4,144)		(3,732)		Net cash used in investing activities	(19,691)		(4,144)
Net cash (used in) provided by financing activities		(1,063)		80,979
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	38,963		(1,063)


Delaware						83-0806637
State or other jurisdiction of incorporation or organization						(I.R.S. Employer Identification No.)


1095 Broken Sound Parkway,	Suite 300
Boca Raton,	FL	33487
(Address of principal executive offices)		(Zip Code)


Large accelerated filer	£	Accelerated filer	£
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


		Page
Note About Forward-Looking Statements		1

PART I
Item 1.	Business	3
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	4546
Item 2.	Properties	4546
Item 3.	Legal Proceedings	4647
Item 4.	Mine Safety Disclosures	4647

PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	4647
Item 6.	~~Selected Financial Data~~[Reserved]	47
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	47
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	5857
Item 8.	Financial Statements and Supplementary Data	5857
Item 9.	Changes in Disagreements with Accountants on Accounting and Financial Disclosure	9596
Item 9A.	Controls and Procedures	96
Item 9B.	Other Information	9899
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	99

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	9899
Item 11.	Executive Compensation	9899
Item 12.	Security Ownership of Certain Beneficial Owners and Related Stockholder Matters	98100
Item 13.	Certain Relationships and Related Transactions, and Director Independence	98100
Item 14.	Principal Accounting Fees and Services	99100

PART IV
Item 15.	Exhibits, Financial Statement Schedules	~~100~~101
Item 16.	Form 10-K Summary	~~102~~104
Signatures		~~102~~104


Index to Consolidated Financial Statements						Page
Report of Independent Registered Public Accounting Fir m Marcum LLP PC AOB ID: 688						58
Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP PCAOB ID: 34						59
Consolidated Balance Sheets						6160
Consolidated Statements of Operations and Comprehensive Loss						6261
Consolidated Statements of Stockholders' Equity						6362
Consolidated Statements of Cash Flows						6463
Notes to Consolidated Financial Statements						6564


	For the year ended December 31,
($ in thousands)	2020			2019
Net sales	$	138,304		$	185,006
Period-over-period change	(25.2)		%	3.4		%
Net cash used in operations	$	(12,302)		$	(36,903)
Adjusted net loss (1)	$	(25,863)		$	(18,544)
Adjusted EBITDA (1)	$	(24,352)		$	(13,424)


	December 31, 2021		December 31, 2020
ASSETS
Current assets
Cash	$	12,857	$	30,435
Accounts receivable, net of allowance of $1,285 and $1,084 at December 31, 2021 and 2020, respectively	14,690		6,330
Inventories, net	66,982		36,064
Vendor deposits	18,475		11,289
Assets held for sale	75		1,073
Other current assets (Note 8)	11,658		10,892
Total current assets	124,737		96,083

Property and equipment, net	20,851		12,201
Intangible assets, net	84,710		5,945
Goodwill	41,860		3,280
Operating lease right-of-use assets	9,128		3,104
Other assets	4,541		2,037
Total assets	$	285,827	$	122,650

LIABILITIES
Current liabilities
Accounts payable	$	23,041	$	18,405
Accrued expenses and other current liabilities (Note 8)	25,128		19,390
Customer deposits	7,924		2,729
Current portion of notes payable, including $8,000 owed to related party	11,615		182
Current portion of operating leases	3,091		966
Current portion of finance leases	169		184
Total current liabilities	70,968		41,856

Notes payable, less current portion and debt issuance costs, net	10,607		7,844
Operating leases, less current portion	6,142		2,524
Finance leases, less current portion	72		205
Other liabilities	1,674		964
Total long-term liabilities	18,495		11,537
Total liabilities	89,463		53,393

Commitments and contingencies (Note 7)	0		0

STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 10,000 shares authorized, none issued and outstanding	—		—
Class A common stock, $0.01 par value per share, 600,000 shares authorized, and 85,210 shares issued and outstanding as of December 31, 2021; 125,000 shares authorized, 13,322 shares issued and outstanding as of December 31, 2020	852		133
Class B common stock, $0.0001 par value per share, 30,000 shares authorized, and 21,745 shares issued and outstanding as of December 31, 2021; 10,000 shares authorized, and 3,491 shares issued and outstanding as of December 31, 2020	2		1
Class C Common stock, $0.0001 par value per share, no shares authorized as of December 31, 2021; 100,000 shares authorized, and 76,039 shares issued and outstanding as of December 31, 2020	—		8
Additional paid-in capital	228,894		39,742
Accumulated deficit	(55,544)		(24,848)
Accumulated other comprehensive income (loss)	324		29
Total stockholders’ equity attributable to Greenlane Holdings, Inc.	174,528		15,065
Non-controlling interest	21,836		54,192
Total stockholders’ equity	196,364		69,257
Total liabilities and stockholders’ equity	$	285,827	$	122,650


	December 31, 2020		December 31, 2019
ASSETS
Current assets
Cash	$	30,435	$	47,773
Accounts receivable, net of allowance of $1,084 and $936 at December 31, 2020 and 2019, respectively	6,330		8,091
Inventories, net	36,064		43,060
Vendor deposits	11,289		11,120
Assets held for sale	1,073		0
Other current assets (Note 8)	10,892		4,924
Total current assets	96,083		114,968

Property and equipment, net	12,201		13,165
Intangible assets, net	5,945		6,301
Goodwill	3,280		11,982
Operating lease right-of-use assets	3,104		4,695
Other assets	2,037		2,091
Total assets	$	122,650	$	153,202

LIABILITIES
Current liabilities
Accounts payable	$	18,405	$	11,310
Accrued expenses and other current liabilities (Note 8)	19,390		10,422
Customer deposits	2,729		3,152
Current portion of notes payable	182		178
Current portion of operating leases	966		1,084
Current portion of finance leases	184		116
Total current liabilities	41,856		26,262

Notes payable, less current portion and debt issuance costs, net	7,844		8,018
Operating leases, less current portion	2,524		3,844
Finance leases, less current portion	205		194
Other liabilities	964		620
Total long-term liabilities	11,537		12,676
Total liabilities	53,393		38,938

Commitments and contingencies (Note 7)	0		0

STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 10,000 shares authorized, NaN issued and outstanding	0		0
Class A common stock, $0.01 par value per share, 125,000 shares authorized; 13,322 shares issued and outstanding as of December 31, 2020; 9,999 shares issued and 9,812 shares outstanding as of December 31, 2019	133		98
Class B common stock, $0.0001 par value per share, 10,000 shares authorized; 3,491 shares issued and outstanding as of December 31, 2020; 5,975 shares issued and outstanding as of December 31, 2019	1		1
Class C Common stock, $0.0001 par value per share, 100,000 shares authorized; 76,039 shares issued and outstanding as of December 31, 2020; 77,791 shares issued and outstanding as of December 31, 2019	8		8
Additional paid-in capital	39,742		32,108
Accumulated deficit	(24,848)		(9,727)
Accumulated other comprehensive income (loss)	29		(72)
Total stockholders’ equity attributable to Greenlane Holdings, Inc.	15,065		22,416
Non-controlling interest	54,192		91,848
Total stockholders’ equity	69,257		114,264
Total liabilities and stockholders’ equity	$	122,650	$	153,202


	Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interest		Total Stockholders’ Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance December 31, 2019	9,812	$	98	5,975	$	1	77,791	$	8	$	32,108	$	(9,727)	$	(72)	$	91,848	$	114,264
Net loss	—	—		—	—		—	—		—		(14,517)		—		(33,187)		(47,704)
Equity-based compensation	—	—		—	—		—	—		192		—		—		661		853
Other comprehensive income	—	—		—	—		—	—		—		—		101		95		196
Member distribution	—	—		—	—		—	—		—		(604)		—		—		(604)
Joint venture consolidation	—	—		—	—		—	—		—		—		—		189		189
Issuance of Class A common stock	686	7		—	—		—	—		2,056		—		—		—		2,063
Exchanges of noncontrolling interest for Class A common stock	2,824	28		(2,240)	—		(1,752)	—		4,934		—		—		(4,962)		—
Cancellation of Class B common stock due to forfeitures	—	—		(244)	—		—	—		452		—		—		(452)		—
Balance December 31, 2020	13,322	133		3,491	1		76,039	8		39,742		(24,848)		29		54,192		69,257
Net loss	—	—		—	—		—	—		—		(30,583)		—		(22,840)		(53,423)
Equity-based compensation	187	2		—	—		—	—		3,129		—		—		2,543		5,674
Exchanges of noncontrolling interest for Class A common stock	7,088	71		(5,175)	(1)		(5,738)	(1)		12,178		—		—		(12,247)		—
Exercise of Class A common stock options and warrants	6,028	60		—	—		—	—		247		—		—		—		307
Conversion of Class C common stock	—	—		23,434	2		(70,301)	(7)		5		—		—		—		—
Issuance of Class A common stock and pre-funded warrants, net of costs	58,789	588		—	—		—	—		174,015		—		—		—		174,603
Member distribution	—	—		—	—		—	—		—		(200)		—		—		(200)
Cancellation of Class B common stock due to forfeitures	—	—		(5)	—		—	—		8		—		—		(8)		—
Other comprehensive income	—	—		—	—		—	—		—		—		295		196		491
Other	(204)	(2)		—	—		—	—		(430)		87		—		—		(345)
Balance December 31, 2021	85,210	$	852	21,745	$	2	—	$	—	$	228,894	$	(55,544)	$	324	$	21,836	$	196,364


	Redeemable Class B Units		Members’ Deficit		Class A Common Stock			Class B Common Stock			Class C Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Non- Controlling Interest		Total Stockholders’ Equity / Members’ Deficit
					Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2018	$	10,033	$	(10,773)	0	$	0	0	$	0	0	$	0	$	0	$	0	$	(286)	$	0	$	(11,059)
Activity prior to IPO and related organizational transactions:
Issuance of redeemable Class B units, net of issuance costs	6,514		—		—	—		—	—		—	—		—		—		—		—		—
Member distributions	(76)		(822)		—	—		—	—		—	—		—		—		—		—		(822)
Redemption of Class A and redeemable Class B units	(416)		(2,602)		—	—		—	—		—	—		—		—		—		—		(2,602)
Equity-based compensation	2,417		328		—	—		—	—		—	—		—		—		—		—		328
Net loss recognized prior to the organizational transactions	(3,291)		(15,798)		—	—		—	—		—	—		—		—		—		—		(15,798)
Other comprehensive income	—		—		—	—		—	—		—	—		—		—		20		—		20
Effects of IPO and related organizational transactions:
Effects of the organizational transactions	(15,181)		29,667		—	—		—	—		—	—		(114,094)		—		203		99,404		15,180
Issuance of Class A common stock in the IPO, net of underwriting discount	—		—		5,250	53		—	—		—	—		82,950		—		—		—		83,003
Issuance of Class A common stock to convertible notes holders	—		—		3,548	35		—	—		—	—		60,277		—		—		—		60,312
Issuance of Class A common to stock selling stockholders	—		—		750	8		(106)	—		(1,935)	—		(7)		—		—		—		1
Issuance of Class A common stock to underwriter upon exercise of overallotment option	—		—		450	4		(63)	—		(1,161)	—		(4)		—		—		—		0
Issuance of Class B common stock	—		—		—	—		6,157	1		—	—		(1)		—		—		—		—
Issuance of Class C common stock	—		—		—	—		—	—		80,887	8		(8)		—		—		—		—
Issuance costs charged against the gross proceeds of the IPO	—		—		—	—		—	—		—	—		(3,523)		—		—		—		(3,523)
Establishment of liabilities under tax receivable agreement and related changes to deferred tax assets associated with increases in tax basis	—		—		—	—		—	—		—	—		5,173		—		—		—		5,173
Joint venture consolidation	—		—		—	—		—	—		—	—		—		—		—		60		60
Activity subsequent to IPO and related organizational transactions:
Net loss	—		—		—	—		—	—		—	—		—		(9,727)		—		(11,008)		(20,735)
Equity-based compensation	—		—		—	—		—	—		—	—		1,532		—		—		3,743		5,275
Other comprehensive loss	—		—		—	—		—	—		—	—		—		—		(9)		(25)		(34)
Reclassification of effects of the organizational transactions	—		—		—	—		—	—		—	—		297		—		—		(297)		—
Repurchases of Class A common stock, constructively retired	—		—		(187)	(2)		—	—		—	—		(513)		—		—		—		(515)
Exchanges of noncontrolling interest for Class A common stock	—		—		1	—		(1)	—		—	—		2		—		—		(2)		—
Cancellation of Class B common stock due to forfeitures (Note 10)	—		—		—	—		(12)	—		—	—		27		—		—		(27)		—
Balance December 31, 2019	0		0		9,812	98		5,975	1		77,791	8		32,108		(9,727)		(72)		91,848		114,264
Net loss	—		—		—	—		—	—		—	—		—		(14,517)		—		(33,187)		(47,704)
Equity-based compensation	—		—		—	—		—	—		—	—		192		—		—		661		853
Other comprehensive income (loss)	—		—		—	—		—	—		—	—		—		—		101		95		196
Member distribution	—		—		—	—		—	—		—	—		—		(604)		—		—		(604)
Joint venture consolidation	—		—		—	—		—	—		—	—		—		—		—		189		189
Issuance of Class A common stock	—		—		686	7		—	—		—	—		2,056		—		—		—		2,063
Exchanges of noncontrolling interest for Class A common stock	—		—		2,824	28		(2,240)	—		(1,752)	—		4,934		—		—		(4,962)		—
Cancellation of Class B common stock due to forfeitures (Note 10)	—		—		—	—		(244)	—		—	—		452		—		—		(452)		—
Balance December 31, 2020	$	0	$	0	13,322	$	133	3,491	$	1	76,039	$	8	$	39,742	$	(24,848)	$	29	$	54,192	$	69,257


	For the year ended December 31
	2020		2019
Cash flows from operating activities:
Net loss (including amounts attributable to non-controlling interest)	$	(47,704)	$	(39,824)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,520		2,705
Reversal of tax receivable agreement liability	0		(5,721)
Change in deferred tax asset, net	0		10,894
Equity-based compensation expense	853		8,020
Unrealized gain on equity investment	0		(1,537)
Goodwill impairment charge	8,996		0
Change in fair value of contingent consideration	(719)		0
Change in fair value of convertible notes	0		12,063
Change in provision for doubtful accounts	576		352
Loss on disposal of assets	579		0
Loss related to indemnification asset not probable of recovery	4,464		0
Impairment of held-for-sale assets	376		0
Other	75		32
Changes in operating assets and liabilities, net of the effects of acquisitions:
Decrease in accounts receivable	1,186		635
Decrease (increase) in inventories	6,996		(11,739)
Decrease (increase) in vendor deposits	29		(1,503)
Decrease (increase) in deferred offering costs	0		(1,238)
(Increase) in other current assets	(10,194)		(1,993)
Increase (decrease) in accounts payable	7,095		(11,261)
Increase in accrued expenses	13,104		3,132
(Decrease) increase in customer deposits	(534)		80
Net cash used in operating activities	(12,302)		(36,903)
Cash flows from investing activities:
Purchase consideration paid for acquisitions, net of cash acquired	(1,841)		(1,159)
Purchases of property and equipment, net	(1,788)		(2,020)
Purchase of intangible assets	(515)		(53)
Investment in equity securities	0		(500)

Net cash used in investing activities	(4,144)		(3,732)
Cash flows from financing activities:
Proceeds from issuance of convertible notes	0		8,050
Proceeds from issuance of Class A common stock sold in initial public offering, net of underwriting costs	0		83,003
Payment of debt issuance costs - convertible notes	0		(1,734)
Deferred offering costs paid	0		(3,523)



Redemption of Class A and Class B units of Greenlane Holdings, LLC	0		(3,018)
Member distributions	(604)		(898)
Other	(459)		(901)
Net cash (used in) provided by financing activities	(1,063)		80,979
Effects of exchange rate changes on cash	171		88
Net (decrease) increase in cash	(17,338)		40,432
Cash, as of beginning of the period	47,773		7,341
Cash, as of end of the period	$	30,435	$	47,773

Supplemental disclosures of cash flow information
Cash paid during the period for interest	$	437	$	975
Cash paid during the period for income taxes	$	192	$	498
Cash paid for amounts included in the measurement of lease liabilities	$	1,252	$	1,119
Lease liabilities arising from obtaining finance lease assets	$	272	$	86
Lease liabilities arising from obtaining operating lease right-of-use assets	$	793	$	5,573

Non-cash investing and financing activities:
Conversion of convertible debt to Class A common stock	$	0	$	60,313
Redeemable Class B Units issued for acquisition of a subsidiary, net of issuance costs	$	0	$	6,514
Shares of Class A common stock issued for acquisition of Conscious Wholesale	$	1,988	$	0
Contingent consideration for the Conscious Wholesale acquisition included in "Accrued expenses and other current liabilities"	$	0	$	1,609
Purchase consideration for the Conscious Wholesale acquisition included in "Accrued expenses and other current liabilities"	$	0	$	3,029
Purchases of property, plant, and equipment with unpaid costs accrued in "Other liabilities"	$	98	$	414
Exchanges of non-controlling interest for Class A common stock	$	(4,962)	$	0


Class of Common Stock (ownership)	Class of Common Stock (ownership)	Total Shares Outstanding (1)	Class A Shares (as converted) (2)	Economic Interest in the Operating Company (3)		Voting Interest in Greenlane (4)		Economic Interest in Greenlane (5)		Class of Common Stock (ownership)	Total Shares (1)	Class A Shares (as converted) (2)	Economic Ownership in the Operating Company (3)		Voting Interest in Greenlane (4)		Economic Interest in Greenlane (5)
Class A	Class A	13,322,416	13,322,416	31.6	%	14.3	%	100.0	%	Class A	85,209,651	85,209,651	79.7	%	79.7	%	100.0	%
Class B (non-founder members)		3,490,909	3,490,909	8.3	%	3.8	%	0	%
Class C (founder members)		76,039,218	25,346,406	60.1	%	81.9	%	0	%
Class B										Class B	21,744,500	21,744,500	20.3	%	20.3	%	—	%
Total	Total	92,852,543	42,159,731	100.0	%	100.0	%	100.0	%	Total	106,954,151	106,954,151	100.0	%	100.0	%	100.0	%


(1) Represents the total number of outstanding shares for each class of common stock as of December 31, ~~2020.~~2021.
(2) Represents the number of shares of Class A common stock that would be outstanding assuming the exchange of all outstanding shares of Class B common stock ~~and Class C common stock~~ upon redemption of all related Common Units. Shares of Class B common stock ~~and Class C common stock, as the case may be,~~ would be canceled, without consideration, on a one-to-one basis ~~in the case of Class B common stock and a three-to-one basis in the case of Class C common stock,~~ pursuant to the terms and subject to the conditions of the Operating Agreement.
(3) Represents the indirect economic interest in the Operating Company through the holders' ownership of common stock.
(4) Represents the aggregate voting interest in us through the holders' ownership of Common Stock. Each share of Class A common stock ~~Class B common stock~~ and Class CB common stock entitles its holder to one vote per share on all matters submitted to a vote of our stockholders.
(5) Represents the aggregate economic interest in us through the holders' ownership of Class A common stock.


(in thousands)	Purchase Consideration
Cash	$	2,403
Class A common stock	2,005
Promissory note	2,503
Contingent consideration - payable in cash	914
Contingent consideration - payable in Class A common stock	914
Total purchase consideration	$	8,739


~~Pollen Gear LLC (in thousands)~~	~~January 14, 2019~~
~~Cash~~	$	91
~~Accounts receivable~~	~~546~~
~~Vendor deposits~~	~~1,700~~
~~Other deposits~~	18
~~Property and equipment, net~~	~~342~~
~~Trade name~~	~~918~~
~~Design libraries~~	~~1,677~~
~~Goodwill~~	~~3,550~~
~~Net liabilities~~	~~(2,178)~~
~~Total purchase price~~	$	~~6,664~~


(in thousands)	Estimated Fair Value as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Estimated Fair Value as of Acquisition Date (as adjusted)
Inventory	$	92	$	—	$	92
Developed technology	1,738		—		1,738
Trade name	1,294		—		1,294
Customer relationships	165		—		165
Goodwill	4,840		610		5,450
Total purchase consideration	$	8,129	$	610	$	8,739


Conscious Wholesale	Estimated Fair Value as of Acquisition Date (as Previously Reported)		Measurement Period Adjustments		Estimated Fair Value as of Acquisition Date (as Adjusted)
Cash	$	812	$	0	$	812
Accounts receivable	313		0		313
Inventory, net	1,820		0		1,820
Other assets	955		184		1,139
Trade names	153		0		153
Customer relationships	1,044		175		1,219
Goodwill	2,264		657		2,921
Net liabilities	(1,494)		(184)		(1,678)
Total purchase price	$	5,867	$	832	$	6,699


	~~Year Ended December 31,~~
	~~2019~~
	~~(Unaudited)~~
~~Net Sales~~	$	~~193,351~~
~~Cost of Goods Sold~~	~~159,252~~
~~Gross Profit~~	~~34,099~~
~~Net Loss~~	$	~~(39,621)~~


(in thousands)	Purchase Consideration
Class A common stock (1)	$	123,491
Estimated fair value of assumed warrants	8,423
Estimated fair value of replaced equity awards	4,759
Greenlane cash payments on behalf of KushCo (2)	12,183
Total purchase consideration	$	148,856


(in thousands)	Estimated Fair Value as of Acquisition Date
Assets acquired
Accounts receivable	$	94
Inventories	1,444
Vendor deposits	132
Property and equipment	112
Intangible assets - customer relationships	1,362
Intangible assets - tradenames	2,316
Intangible assets - developed technology	2,195
Goodwill	9,052
Total estimated assets acquired	16,707
Liabilities assumed
Accounts payable	59
Accrued expenses and other current liabilities	123
Customer deposits	40
Total estimated liabilities assumed	222
Total estimated purchase price and consideration transferred	$	16,485


	For the year ended December 31,
	2021		2020
	(unaudited)
Net sales	$	248,691	$	258,891
Cost of sales	221,710		223,582
Gross profit	26,981		35,309
Net loss	$	(102,685)	$	(116,444)


	Consolidated Balance Sheet Caption	Fair Value at December 31, 2020
(in thousands)		Level 1		Level 2		Level 3		Total
Liabilities:
Interest rate swap contract	Other long-term liabilities	$	0	$	665	$	0	$	665
Total Liabilities		$	0	$	665	$	0	$	665


	Consolidated Balance Sheet Caption	Fair Value at December 31, 2019
(in thousands)		Level 1		Level 2		Level 3		Total
Liabilities:
Interest rate swap contract	Other long-term liabilities	$	0	$	206	$	0	$	206
Contingent consideration	Accrued expenses and other current liabilities	0		0		1,568		1,568
Total Liabilities		$	0	$	206	$	1,568	$	1,774


	Consolidated Balance Sheet Caption	Fair Value at December 31, 2021
(in thousands)		Level 1		Level 2		Level 3		Total
Assets:
Equity securities	Other assets	$	1,919	$	—	$	—	$	1,919
Total Assets		$	1,919	$	—	$	—	$	1,919
Liabilities:
Interest rate swap contract	Other liabilities	$	—	$	288	$	—	$	288
Contingent consideration - current	Accrued expenses and other current liabilities	—		—		5,641		5,641
Contingent consideration - long-term	Other long-term liabilities	—		—		1,216		1,216
Total Liabilities		$	—	$	288	$	6,857	$	7,145


(in thousands)	Contingent Consideration
Balance at December 31, 2019	$	1,568
Foreign currency translation adjustments	(14)
Payment of contingent consideration	(835)
Gain from fair value adjustments included in results of operations	(719)
Balance at December 31, 2020	—
Contingent consideration issued for Eyce acquisition	1,828
Contingent consideration issued for DaVinci acquisition	4,840
Loss from fair value adjustments included in results of operations	189
Balance at December 31, 2021	$	6,857


(in thousands)	Conscious Wholesale Contingent Consideration		Convertible Notes
Balance at December 31, 2018	$	0	$	40,200
Convertible notes issued in January 2019	—		8,050
Contingent consideration issued in September 2019	1,609		—
Total (gains) losses in fair value included in results of operations	(41)		12,063
Conversion of convertible debt to Class A common stock	—		(60,313)
Balance at December 31, 2019	1,568		0
Foreign currency translation adjustments	(14)		—
Payment for contingent consideration	(835)		—
Total gains in fair value included in results of operations	(719)		—
Balance at December 31, 2020	$	0	$	0


(in thousands)	(in thousands)	Finance Leases		Operating Leases		Total		(in thousands)	Finance Leases		Operating Leases		Total
2021		$	195	$	1,102	$	1,297
2022	2022	134		949		1,083		2022	$	127	$	3,330	$	3,457
2023	2023	69		922		991		2023	107		2,816		2,923
2024	2024	0		611		611		2024	19		1,994		2,013
2025	2025	0		124		124		2025	—		1,382		1,382
2026								2026	—		155		155
Thereafter	Thereafter	0		126		126		Thereafter	—		4		4
Total minimum lease payments	Total minimum lease payments	398		3,834		4,232		Total minimum lease payments	253		9,681		9,934
Less: imputed interest	Less: imputed interest	9		344		353		Less: imputed interest	12		448		460
Present value of minimum lease payments	Present value of minimum lease payments	389		3,490		3,879		Present value of minimum lease payments	241		9,233		9,474
Less: current portion	Less: current portion	184		966		1,150		Less: current portion	169		3,091		3,260
Long-term portion	Long-term portion	$	205	$	2,524	$	2,728	Long-term portion	$	72	$	6,142	$	6,214


(in thousands)	December 31, 2020		December 31, 2019
Finance lease cost
Amortization of leased assets	$	142	$	130
Interest of lease liabilities	18		24
Operating lease costs
Operating lease cost	1,383		919
Variable lease cost	255		378
Total lease cost	$	1,798	$	1,451


(in thousands)	December 31, 2021		December 31, 2020
Finance lease cost
Amortization of leased assets	$	74	$	142
Interest of lease liabilities	12		18
Operating lease costs
Operating lease cost	1,593		1,383
Variable lease cost	385		255
Total lease cost	$	2,064	$	1,798


	December 31, ~~2020~~2021
Weighted average remaining lease terms
Operating leases	~~3.6~~3.3 years
Finance leases	~~2.0~~1.9 years
Weighted average discount rate
Operating leases	~~4.8~~2.6	%
Finance leases	~~6.6~~3.9	%


Rental Income	Rental Income	(in thousands)		Rental Income	(in thousands)
2021		$	711
2022	2022	199		2022	$	728
2023	2023	99		2023	461
2024	2024	77		2024	77
2025	2025	53		2025	53
Thereafter				Thereafter	—
Total	Total	$	1,139	Total	$	1,319


(in thousands)	December 31, 2021		December 31, 2020
Real Estate Note	$	7,958	$	8,125
Bridge Loan	8,000		—
DaVinci Promissory Note	5,000		—
Eyce Promissory Note	1,592		—
	22,550		8,125
Less unamortized debt issuance costs	(328)		(99)
Less current portion of debt	(11,615)		(182)
Debt, net, excluding operating leases and finance leases	$	10,607	$	7,844


	Year Ending December 31,
(in thousands)	2022		2023		2024		2025		2026		Total
Real Estate Note	$	208	$	203	$	215	$	7,332	$	—	$	7,958
Bridge Loan	8,000		—		—		—		—		8,000
DaVinci Promissory Note	2,462		2,538		—		—		—		5,000
Eyce Promissory Note	945		647		—		—		—		1,592
Total	$	11,615	$	3,388	$	215	$	7,332	$	—	$	22,550


	As of December 31,				Estimated useful life
(in thousands)	2020		2019
Furniture, equipment and software (includes $0.6 million and $0.5 million under finance leases as of December 31, 2020 and 2019, respectively)	$	2,978	$	3,130	3 - 7 years
Personal property	1,130		1,105		5 years
Leasehold improvements	844		1,077		Lesser of lease term or 5 years
Land improvements	601		601		15 years
Building	8,088		8,064		39 years
Land	691		691
Work in process	633		712
	14,965		15,380
Less: accumulated depreciation (includes $0.2 million under finance leases as of December 31, 2020 and 2019)	2,764		2,215
Property and equipment, net	$	12,201	$	13,165


Amortization Expense	(in thousands)
2021	$	1,004
2022	$	1,003
2023	$	505
2024	$	410
2025	$	394


(in thousands)	(in thousands)	U.S.		Canada		Europe		Total		(in thousands)	Industrial Goods		Consumer Goods		Total
Balance at December 31, 2019		$	8,996	$	0	$	2,986	$	11,982
Impairment expense		(8,996)		0		0		(8,996)
Balance at December 31, 2020										Balance at December 31, 2020	$	—	$	3,280	$	3,280
Eyce acquisition (Note 3)										Eyce acquisition (Note 3)	0		5,450		5,450
KushCo merger (Note 3)										KushCo merger (Note 3)	24,332		—		24,332
DaVinci acquisition (Note 3)										DaVinci acquisition (Note 3)	0		9,052		9,052
Foreign currency translation adjustment	Foreign currency translation adjustment	0		0		294		294		Foreign currency translation adjustment	—		(254)		(254)
Balance at December 31, 2020		$	0	$	0	$	3,280	$	3,280
Balance at December 31, 2021										Balance at December 31, 2021	$	24,332	$	17,528	$	41,860


(in thousands)	Customer Deposits
Balance as of December 31, ~~2019~~2020	$	~~3,152~~2,729
Customer deposits assumed as part of the KushCo and DaVinci acquisitions (Note 3 - Business Acquisitions)	3,974
Increases due to deposits received, net of other adjustments	~~9,164~~20,066
Revenue recognized	~~(9,587)~~(18,845)
Balance as of December 31, ~~2020~~2021	$	~~2,729~~7,924


(in thousands)	Foreign Currency Translation		Unrealized Loss on Derivative Instrument		Total
Balance at December 31, 2018	$	(286)	$	0	$	(286)
Other comprehensive income (loss)	193		(206)		(13)
Effects of the reorganization transactions	203		0		203
Less: Other comprehensive (income) loss attributable to non-controlling interest	(132)		156		24
Balance at December 31, 2019	(22)		(50)		(72)
Other comprehensive income (loss)	654		(459)		195
Less: Other comprehensive (income) loss attributable to non-controlling interest	(449)		355		(94)
Balance at December 31, 2020	$	183	$	(154)	$	29