Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

LEASES

Greenlane as a Lessee

As of September 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 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 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. 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. Additionally, we closed our Jacksonville, Florida distribution center in the third quarter of 2020. 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 serve as replacement facilities to the distribution centers we have closed.

In August 2020, we initiated the process of seeking a third-party to assume our Jacksonville, Florida distribution center lease. Accordingly, our United States operating segment recorded approximately $0.4 million of right-of-use assets held for sale within "assets held for sale" and approximately $0.4 million of liabilities held for sale within "accrued expenses and other current liabilities" as of September 30, 2020. We expect to transfer the right-of-use asset and corresponding operating lease liability by the third quarter of 2021.

During the nine months ended September 30, 2020, we recorded approximately $1.7 million in charges related to the closures above, 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 nine months ended September 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 September 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	$	54	$	215	$	269
2021	207		867		1,074
2022	145		965		1,110
2023	81		922		1,003
2024	4		627		631
Thereafter	—		245		245
Total minimum lease payments	491		3,841		4,332
Less: imputed interest	6		408		414
Present value of minimum lease payments	485		3,433		3,918
Less: current portion	208		725		933
Long-term portion	$	277	$	2,708	$	2,985

Rent expense under operating leases was approximately $0.3 million and $1.2 million for the three and nine months ended September 30, 2020 and approximately $0.3 million and $0.6 million for the three and nine months ended September 30, 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 $0.4 million and $0.3 million, respectively, of finance lease assets, net within "property and equipment, net" as of September 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 nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	93	$	96
Interest of lease liabilities	14		36
Operating lease costs
Operating lease cost	1,093		604
Variable lease cost	219		280
Total lease costs	$	1,419	$	1,016

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

	September 30, 2020
Weighted average remaining lease terms
Operating leases	4.1 years
Finance leases	2.7 years
Weighted average discount rate
Operating leases	4.9	%
Finance leases	4.2	%

Greenlane as a Lessor

As of September 30, 2020, we had four operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. Rental income of approximately $0.1 million and $0.5 million for the three and nine months ended September 30, 2020 and 2019, respectively, 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	$	139
2021	621
2022	154
2023	99
2024	77
Thereafter	53
Total	$	1,143

Leases

LEASES

Greenlane as a Lessee

As of September 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 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 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. 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. Additionally, we closed our Jacksonville, Florida distribution center in the third quarter of 2020. 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 serve as replacement facilities to the distribution centers we have closed.

In August 2020, we initiated the process of seeking a third-party to assume our Jacksonville, Florida distribution center lease. Accordingly, our United States operating segment recorded approximately $0.4 million of right-of-use assets held for sale within "assets held for sale" and approximately $0.4 million of liabilities held for sale within "accrued expenses and other current liabilities" as of September 30, 2020. We expect to transfer the right-of-use asset and corresponding operating lease liability by the third quarter of 2021.

During the nine months ended September 30, 2020, we recorded approximately $1.7 million in charges related to the closures above, 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 nine months ended September 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 September 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	$	54	$	215	$	269
2021	207		867		1,074
2022	145		965		1,110
2023	81		922		1,003
2024	4		627		631
Thereafter	—		245		245
Total minimum lease payments	491		3,841		4,332
Less: imputed interest	6		408		414
Present value of minimum lease payments	485		3,433		3,918
Less: current portion	208		725		933
Long-term portion	$	277	$	2,708	$	2,985

Rent expense under operating leases was approximately $0.3 million and $1.2 million for the three and nine months ended September 30, 2020 and approximately $0.3 million and $0.6 million for the three and nine months ended September 30, 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 $0.4 million and $0.3 million, respectively, of finance lease assets, net within "property and equipment, net" as of September 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 nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	93	$	96
Interest of lease liabilities	14		36
Operating lease costs
Operating lease cost	1,093		604
Variable lease cost	219		280
Total lease costs	$	1,419	$	1,016

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

	September 30, 2020
Weighted average remaining lease terms
Operating leases	4.1 years
Finance leases	2.7 years
Weighted average discount rate
Operating leases	4.9	%
Finance leases	4.2	%

Greenlane as a Lessor

As of September 30, 2020, we had four operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. Rental income of approximately $0.1 million and $0.5 million for the three and nine months ended September 30, 2020 and 2019, respectively, 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	$	139
2021	621
2022	154
2023	99
2024	77
Thereafter	53
Total	$	1,143

Leases

LEASES

Greenlane as a Lessee

As of September 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 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 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. 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. Additionally, we closed our Jacksonville, Florida distribution center in the third quarter of 2020. 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 serve as replacement facilities to the distribution centers we have closed.

In August 2020, we initiated the process of seeking a third-party to assume our Jacksonville, Florida distribution center lease. Accordingly, our United States operating segment recorded approximately $0.4 million of right-of-use assets held for sale within "assets held for sale" and approximately $0.4 million of liabilities held for sale within "accrued expenses and other current liabilities" as of September 30, 2020. We expect to transfer the right-of-use asset and corresponding operating lease liability by the third quarter of 2021.

During the nine months ended September 30, 2020, we recorded approximately $1.7 million in charges related to the closures above, 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 nine months ended September 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 September 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	$	54	$	215	$	269
2021	207		867		1,074
2022	145		965		1,110
2023	81		922		1,003
2024	4		627		631
Thereafter	—		245		245
Total minimum lease payments	491		3,841		4,332
Less: imputed interest	6		408		414
Present value of minimum lease payments	485		3,433		3,918
Less: current portion	208		725		933
Long-term portion	$	277	$	2,708	$	2,985

Rent expense under operating leases was approximately $0.3 million and $1.2 million for the three and nine months ended September 30, 2020 and approximately $0.3 million and $0.6 million for the three and nine months ended September 30, 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 $0.4 million and $0.3 million, respectively, of finance lease assets, net within "property and equipment, net" as of September 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 nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
(in thousands)	2020		2019
Finance lease costs
Amortization of leased assets	$	93	$	96
Interest of lease liabilities	14		36
Operating lease costs
Operating lease cost	1,093		604
Variable lease cost	219		280
Total lease costs	$	1,419	$	1,016

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

	September 30, 2020
Weighted average remaining lease terms
Operating leases	4.1 years
Finance leases	2.7 years
Weighted average discount rate
Operating leases	4.9	%
Finance leases	4.2	%

Greenlane as a Lessor

As of September 30, 2020, we had four operating leases for office space leased to third-party tenants in our corporate headquarters building in Boca Raton, Florida. Rental income of approximately $0.1 million and $0.5 million for the three and nine months ended September 30, 2020 and 2019, respectively, 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	$	139
2021	621
2022	154
2023	99
2024	77
Thereafter	53
Total	$	1,143