Leases

3 Months Ended

Mar. 31, 2020

Leases [Abstract]

Leases

LEASES

Greenlane as a Lessee

As of March 31, 2020, we had 14 facilities financed under operating leases consisting of warehouses, regional offices, and retail stores, with lease term expirations between 2020 and 2026. Lease terms are generally three years to nine years for warehouses, office space and retail store locations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Beginning January 2020, we began taking steps to optimize our distribution network, transitioning to a more centralized model with fewer, larger, highly automated facilities in the U.S. See "Note 12—Subsequent Events" for additional developments regarding lease amendments and terminations.

During the three months ended March 31, 2020, we entered into new operating lease agreements for a new retail store location in Barcelona, Spain and for office space in Biarritz, France, and we permanently closed our Ponce City Market retail store. We recorded approximately $0.4 million in impairment charges related to the Ponce City Market retail store closure, including $0.3 million related to right-of-use asset impairments and $0.1 million related to impairments of leasehold improvements, offset by the derecognition of the associated operating lease liability of approximately $0.3 million, included within "general and administrative expenses" in our condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2020.

The following table provides details of our future minimum lease payments under finance lease liabilities and operating lease liabilities recorded in our condensed consolidated balance sheet as of March 31, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases		Total Finance and Operating Lease Obligations
	(in thousands)
Remainder of 2020	$	100	$	1,044	$	1,144
2021	121		1,130		1,251
2022	58		1,055		1,113
2023	18		1,020		1,038
2024	4		713		717
Thereafter	—		239		239
Total minimum lease payments	$	301	$	5,201	$	5,502
Less: imputed interest	21		529		550
Present value of minimum lease payments	$	280	$	4,672	$	4,952
Less: current portion	116		1,218		1,334
Long-term portion	$	164	$	3,454	$	3,618

Rent expense under operating leases was approximately $0.5 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

The majority of our finance lease obligations relate to leased warehouse equipment. Payments under our finance lease agreements are fixed for terms ranging from three to five years. We recorded approximately $0.3 million of finance lease assets, net within "property and equipment, net" as of March 31, 2020 and December 31, 2019, and the related liabilities within "current portion of finance leases" and "finance leases, less current portion" in our condensed consolidated balance sheets.

The following expenses related to our finance and operating leases were included in "general and administrative expenses" within our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020:

	March 31, 2020
	(in thousands)
Finance lease costs
Amortization of leased assets	$	29
Interest of lease liabilities	5
Operating lease costs
Operating lease cost	293
Variable lease cost	32
Total lease costs	$	359

The table below presents lease-related terms and discount rates as of March 31, 2020:

	March 31, 2020
Weighted average remaining lease terms
Operating leases	4.1 years
Finance leases	2.6 years
Weighted average discount rate
Operating leases	4.9	%
Finance leases	6.6	%

Greenlane as a Lessor

We have five operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. For the three months ended March 31, 2020 and 2019, rental income of approximately $0.2 million related to these operating leases was included within “other income, net” in our condensed consolidated statements of operations and comprehensive loss. The following table represents the maturity analysis of undiscounted cash flows related to lease payments which we expect to receive from our existing operating lease agreements with tenants:

Rental Income	(in thousands)
Remainder of 2020	$	471
2021	593
2022	126
2023	24
Thereafter	—
Total	$	1,214

Leases

LEASES

Greenlane as a Lessee

As of March 31, 2020, we had 14 facilities financed under operating leases consisting of warehouses, regional offices, and retail stores, with lease term expirations between 2020 and 2026. Lease terms are generally three years to nine years for warehouses, office space and retail store locations. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Beginning January 2020, we began taking steps to optimize our distribution network, transitioning to a more centralized model with fewer, larger, highly automated facilities in the U.S. See "Note 12—Subsequent Events" for additional developments regarding lease amendments and terminations.

During the three months ended March 31, 2020, we entered into new operating lease agreements for a new retail store location in Barcelona, Spain and for office space in Biarritz, France, and we permanently closed our Ponce City Market retail store. We recorded approximately $0.4 million in impairment charges related to the Ponce City Market retail store closure, including $0.3 million related to right-of-use asset impairments and $0.1 million related to impairments of leasehold improvements, offset by the derecognition of the associated operating lease liability of approximately $0.3 million, included within "general and administrative expenses" in our condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2020.

The following table provides details of our future minimum lease payments under finance lease liabilities and operating lease liabilities recorded in our condensed consolidated balance sheet as of March 31, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

	Finance Leases		Operating Leases		Total Finance and Operating Lease Obligations
	(in thousands)
Remainder of 2020	$	100	$	1,044	$	1,144
2021	121		1,130		1,251
2022	58		1,055		1,113
2023	18		1,020		1,038
2024	4		713		717
Thereafter	—		239		239
Total minimum lease payments	$	301	$	5,201	$	5,502
Less: imputed interest	21		529		550
Present value of minimum lease payments	$	280	$	4,672	$	4,952
Less: current portion	116		1,218		1,334
Long-term portion	$	164	$	3,454	$	3,618

Rent expense under operating leases was approximately $0.5 million and $0.1 million for the three months ended March 31, 2020 and 2019, respectively.

The majority of our finance lease obligations relate to leased warehouse equipment. Payments under our finance lease agreements are fixed for terms ranging from three to five years. We recorded approximately $0.3 million of finance lease assets, net within "property and equipment, net" as of March 31, 2020 and December 31, 2019, and the related liabilities within "current portion of finance leases" and "finance leases, less current portion" in our condensed consolidated balance sheets.

The following expenses related to our finance and operating leases were included in "general and administrative expenses" within our condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2020:

	March 31, 2020
	(in thousands)
Finance lease costs
Amortization of leased assets	$	29
Interest of lease liabilities	5
Operating lease costs
Operating lease cost	293
Variable lease cost	32
Total lease costs	$	359

The table below presents lease-related terms and discount rates as of March 31, 2020:

	March 31, 2020
Weighted average remaining lease terms
Operating leases	4.1 years
Finance leases	2.6 years
Weighted average discount rate
Operating leases	4.9	%
Finance leases	6.6	%

Greenlane as a Lessor

We have five operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. For the three months ended March 31, 2020 and 2019, rental income of approximately $0.2 million related to these operating leases was included within “other income, net” in our condensed consolidated statements of operations and comprehensive loss. The following table represents the maturity analysis of undiscounted cash flows related to lease payments which we expect to receive from our existing operating lease agreements with tenants:

Rental Income	(in thousands)
Remainder of 2020	$	471
2021	593
2022	126
2023	24
Thereafter	—
Total	$	1,214