Leases

6 Months Ended

Jun. 30, 2020

Leases [Abstract]

Leases

LEASES

Greenlane as a Lessee

As of June 30, 2020, we had 12 facilities financed under operating leases consisting of warehouses, 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 streamlined distribution center network with fewer, centrally-located, highly automated facilities. In May 2020, we closed our Delta, B.C, Canada distribution center, and in June 2020 we terminated the lease agreements for our Torrance, California distribution center and Toronto, Canada office location. In March 2020, we entered into a new operating lease agreement for a new retail store location in Barcelona, Spain and we permanently closed our Ponce City Market retail store. During the second quarter of 2020, we entered into service agreements with two third-party logistics facilities located in Hebron, Kentucky and Delta, B.C., Canada, both of which will serve as improved replacement facilities to the distribution centers we have closed.

During the six months ended June 30, 2020, we recorded approximately $1.7 million in charges related to these closures, including $1.3 million related to right-of-use asset impairments, $0.1 million related to impairments of leasehold improvements, and a lease cancellation fee of approximately $0.3 million. These charges were offset by the derecognition of the associated operating lease liabilities of approximately $1.4 million, recorded within "general and administrative expenses" in our condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2020.

Additionally, we plan to close our Jacksonville, Florida and Visalia, California distribution centers in the third quarter of 2020. The aggregate right-of-use asset and operating lease liability balances for these distribution centers were approximately $0.5 million as of June 30, 2020.

The following table provides details of our future minimum lease payments under finance and operating lease liabilities recorded in our condensed consolidated balance sheet as of June 30, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

(in thousands)	Finance Leases		Operating Leases		Total
Remainder of 2020	$	62	$	466	$	528
2021	114		958		1,072
2022	52		1,060		1,112
2023	18		1,023		1,041
2024	4		714		718
Thereafter	—		241		241
Total minimum lease payments	250		4,462		4,712
Less: imputed interest	14		464		478
Present value of minimum lease payments	236		3,998		4,234
Less: current portion	110		792		902
Long-term portion	$	126	$	3,206	$	3,332

Rent expense under operating leases was approximately $0.4 million and $0.9 million for the three and six months ended June 30, 2020. Rent expense under operating leases was approximately $0.2 million and $0.4 million for the three and six months ended June 30, 2019.

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 $0.2 million and $0.3 million of finance lease assets, net within "property and equipment, net" as of June 30, 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 six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	58	$	62
Interest of lease liabilities	10		12
Operating lease costs
Operating lease cost	571		245
Variable lease cost	63		101
Total lease costs	$	702	$	420

The table below presents lease-related terms and discount rates as of June 30, 2020:

	June 30, 2020
Weighted average remaining lease terms
Operating leases	4.3 years
Finance leases	2.4 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 and six months ended June 30, 2020 and 2019, rental income of approximately $0.2 million, and $0.3 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	$	335
2021	665
2022	198
2023	96
Thereafter	120
Total	$	1,414

Leases

LEASES

Greenlane as a Lessee

As of June 30, 2020, we had 12 facilities financed under operating leases consisting of warehouses, 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 streamlined distribution center network with fewer, centrally-located, highly automated facilities. In May 2020, we closed our Delta, B.C, Canada distribution center, and in June 2020 we terminated the lease agreements for our Torrance, California distribution center and Toronto, Canada office location. In March 2020, we entered into a new operating lease agreement for a new retail store location in Barcelona, Spain and we permanently closed our Ponce City Market retail store. During the second quarter of 2020, we entered into service agreements with two third-party logistics facilities located in Hebron, Kentucky and Delta, B.C., Canada, both of which will serve as improved replacement facilities to the distribution centers we have closed.

During the six months ended June 30, 2020, we recorded approximately $1.7 million in charges related to these closures, including $1.3 million related to right-of-use asset impairments, $0.1 million related to impairments of leasehold improvements, and a lease cancellation fee of approximately $0.3 million. These charges were offset by the derecognition of the associated operating lease liabilities of approximately $1.4 million, recorded within "general and administrative expenses" in our condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2020.

Additionally, we plan to close our Jacksonville, Florida and Visalia, California distribution centers in the third quarter of 2020. The aggregate right-of-use asset and operating lease liability balances for these distribution centers were approximately $0.5 million as of June 30, 2020.

The following table provides details of our future minimum lease payments under finance and operating lease liabilities recorded in our condensed consolidated balance sheet as of June 30, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

(in thousands)	Finance Leases		Operating Leases		Total
Remainder of 2020	$	62	$	466	$	528
2021	114		958		1,072
2022	52		1,060		1,112
2023	18		1,023		1,041
2024	4		714		718
Thereafter	—		241		241
Total minimum lease payments	250		4,462		4,712
Less: imputed interest	14		464		478
Present value of minimum lease payments	236		3,998		4,234
Less: current portion	110		792		902
Long-term portion	$	126	$	3,206	$	3,332

Rent expense under operating leases was approximately $0.4 million and $0.9 million for the three and six months ended June 30, 2020. Rent expense under operating leases was approximately $0.2 million and $0.4 million for the three and six months ended June 30, 2019.

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 $0.2 million and $0.3 million of finance lease assets, net within "property and equipment, net" as of June 30, 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 six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	58	$	62
Interest of lease liabilities	10		12
Operating lease costs
Operating lease cost	571		245
Variable lease cost	63		101
Total lease costs	$	702	$	420

The table below presents lease-related terms and discount rates as of June 30, 2020:

	June 30, 2020
Weighted average remaining lease terms
Operating leases	4.3 years
Finance leases	2.4 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 and six months ended June 30, 2020 and 2019, rental income of approximately $0.2 million, and $0.3 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	$	335
2021	665
2022	198
2023	96
Thereafter	120
Total	$	1,414

Leases

LEASES

Greenlane as a Lessee

As of June 30, 2020, we had 12 facilities financed under operating leases consisting of warehouses, 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 streamlined distribution center network with fewer, centrally-located, highly automated facilities. In May 2020, we closed our Delta, B.C, Canada distribution center, and in June 2020 we terminated the lease agreements for our Torrance, California distribution center and Toronto, Canada office location. In March 2020, we entered into a new operating lease agreement for a new retail store location in Barcelona, Spain and we permanently closed our Ponce City Market retail store. During the second quarter of 2020, we entered into service agreements with two third-party logistics facilities located in Hebron, Kentucky and Delta, B.C., Canada, both of which will serve as improved replacement facilities to the distribution centers we have closed.

During the six months ended June 30, 2020, we recorded approximately $1.7 million in charges related to these closures, including $1.3 million related to right-of-use asset impairments, $0.1 million related to impairments of leasehold improvements, and a lease cancellation fee of approximately $0.3 million. These charges were offset by the derecognition of the associated operating lease liabilities of approximately $1.4 million, recorded within "general and administrative expenses" in our condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2020.

Additionally, we plan to close our Jacksonville, Florida and Visalia, California distribution centers in the third quarter of 2020. The aggregate right-of-use asset and operating lease liability balances for these distribution centers were approximately $0.5 million as of June 30, 2020.

The following table provides details of our future minimum lease payments under finance and operating lease liabilities recorded in our condensed consolidated balance sheet as of June 30, 2020. The table below does not include commitments that are contingent on events or other factors that are currently uncertain or unknown.

(in thousands)	Finance Leases		Operating Leases		Total
Remainder of 2020	$	62	$	466	$	528
2021	114		958		1,072
2022	52		1,060		1,112
2023	18		1,023		1,041
2024	4		714		718
Thereafter	—		241		241
Total minimum lease payments	250		4,462		4,712
Less: imputed interest	14		464		478
Present value of minimum lease payments	236		3,998		4,234
Less: current portion	110		792		902
Long-term portion	$	126	$	3,206	$	3,332

Rent expense under operating leases was approximately $0.4 million and $0.9 million for the three and six months ended June 30, 2020. Rent expense under operating leases was approximately $0.2 million and $0.4 million for the three and six months ended June 30, 2019.

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 $0.2 million and $0.3 million of finance lease assets, net within "property and equipment, net" as of June 30, 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 six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	58	$	62
Interest of lease liabilities	10		12
Operating lease costs
Operating lease cost	571		245
Variable lease cost	63		101
Total lease costs	$	702	$	420

The table below presents lease-related terms and discount rates as of June 30, 2020:

	June 30, 2020
Weighted average remaining lease terms
Operating leases	4.3 years
Finance leases	2.4 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 and six months ended June 30, 2020 and 2019, rental income of approximately $0.2 million, and $0.3 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	$	335
2021	665
2022	198
2023	96
Thereafter	120
Total	$	1,414