Climate Change Data

Environmental Metrics

Social Achievements

• Completed a series of reductions in force during 2022, which we expect to result in approximately $8.0 million in annualized cash compensation cost savings.

Climate Goals & Targets

Environmental Challenges

• Global economic conditions, including inflation and supply chain disruptions
• A significant percentage of our revenue is dependent on sales of products from a relatively small number of key suppliers
• Narrow margins may magnify the impact of variations in operating costs and of adverse or unforeseen events on operating results
• Management and employee turnover creates uncertainties and could harm our business
• The market for vaporizer products and related items is a niche market, subject to a great deal of uncertainty and is still evolving
• We depend on third-party suppliers for our products and may experience supply shortages
• We may enter into new markets or lines of business that offer new products and services, or may expand existing lines of business, which may subject us to additional risks
• Uncertainty related to the regulation of vaporization products and certain other consumption accessories
• Demand for the products we distribute could decrease if the trend of our suppliers selling products directly to consumers or retailers continues or accelerates
• We are vulnerable to third-party transportation risks
• We do not have long-term agreements or guaranteed price or delivery arrangements with most of our suppliers
• If we fail to maintain proper inventory levels, our business could be harmed
• Certain of our suppliers provide us with incentives and other assistance that reduce our operating costs, and any decline in these incentives and other assistance could materially harm our operating results
• We may not be able to maintain existing supplier relationships or continue receiving favorable terms from our suppliers
• We do not have long-term contracts with many of our customers
• Changes in our customer, product or competition mix could cause our product margin and results of operations to fluctuate
• We have experienced and may continue to experience difficulty collecting receivables
• Our ability to distribute certain licensed brands and to use or license certain trademarks may be terminated or not renewed
• We may not be successful in maintaining the consumer brand recognition and loyalty of our products
• We may not be able to establish sustainable relationships with large retailers or regional or national chains
• New products face intense media attention and public pressure
• Our success depends, in part, on the quality and safety of our products
• Damage to our reputation, or that of any of our key suppliers or their brands, could affect our business performance
• We are subject to substantial and increasing regulation regarding the vaporization industry
• Our business depends partly on continued purchases by businesses and individuals selling or using cannabis
• While we believe that our business and sales do not violate the Federal Paraphernalia Law, legal proceedings alleging violations of such law or changes in such law or interpretations thereof could materially and adversely affect our business
• Officials of the U.S. Customs and Border Protection agency (“CBP”) have broad discretion regarding products imported into the United States
• Because our business is dependent, in part, upon continued market acceptance of cannabis by consumers, any negative trends could materially and adversely affect our business
• We and our customers may have difficulty accessing the service of banks
• Our payments system and the payment systems of our customers depend on third-party providers and are subject to evolving laws and regulations
• We are subject to certain U.S. federal regulations relating to cash reporting
• If countries, states, and provinces continue the trend of imposing, expanding, and increasing taxes on vaporizer products, it could materially and adversely affect our business
• We could be required to collect additional sales taxes or be subject to other tax liabilities
• We may become involved in regulatory or agency proceedings, investigations, prosecutions, and audits
• We are subject to increasing international control and regulation
• New tariffs and the evolving trade policy dispute between the United States and China may adversely affect our business
• Our failure to comply with certain environmental, health and safety regulations could materially and adversely affect our business
• We are transitioning our business and have engaged, and may continue in engage in, dispositions via sales of our assets or other exit activities and other strategic initiatives and we may face risks related to such transactions
• We intend to continue to pursue selective acquisitions to complement our organic growth
• Our operations are subject to natural disasters
• Complications and disruptions associated with the design and implementation of our new ERP system
• We are subject to risks associated with public health crises
• Our principal asset is our interest in the Operating Company, and, accordingly, we depend on distributions from the Operating Company to pay our taxes and expenses
• Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results
• We may be subject to audits of our income, sales, and other transaction taxes
• If securities analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
• We have a large number of authorized but unissued shares of 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

Mitigation Strategies

• Announced numerous facility closures (both warehouse and office) throughout 2022
• Substantially reduced our headcount and associated salary and wages expenses
• Launched Groove, a new, innovative Greenlane Brands product line
• Rationalized our third-party brands product offering
• Renegotiated supplier partnership terms
• Consolidated and streamlined our office, warehouse, and distribution operations footprint
• Improved internal systems with a focus on improving efficiency through technology
• Completed several initiatives to optimize our working capital requirements
• Divesting the packaging product line
• Improving working capital arrangements with suppliers
• Reducing our workforce by approximately 49% throughout fiscal year 2022

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Social Achievements

• Completed a series of reductions in force, which we expect to result in approximately $10.0 million in annualized cash compensation cost savings.

Climate Goals & Targets

Environmental Challenges

• Global economic conditions, including inflation and supply chain disruptions
• Narrow margins
• Inability to fund capital requirements
• Failure to meet Nasdaq listing standards
• Management and employee turnover
• Uncertainty in the vaporizer market
• Dependence on third-party suppliers
• Regulatory uncertainty
• Supplier selling directly to consumers
• Third-party transportation risks
• Lack of long-term supplier agreements
• Inventory management challenges
• Lack of long-term customer contracts
• Shift to online retail
• Dependence on Operating Company distributions
• Tax Receivable Agreement obligations
• Potential investment company classification
• Stock price volatility
• Material weaknesses in internal control over financial reporting
• Lack of dividends
• Analyst coverage uncertainty
• Large number of authorized but unissued shares
• Anti-takeover provisions
• Potential issuance of preferred stock
• Smaller reporting company status
• Risks associated with international operations
• New tariffs and trade policy disputes
• Environmental, health, and safety regulations
• Risks related to asset dispositions
• Natural disasters and other disruptions
• Public health crises
• Conflicts of interest among executives and stockholders
• Difficulty accessing banking services
• Payment system risks
• Cash reporting regulations
• Increased taxes on vaporizer products
• Sales tax collection obligations
• Regulatory proceedings
• Intellectual property infringement
• Exchange rate fluctuations
• Intense competition
• Product defects
• Product contamination
• Inadequate insurance coverage
• Product liability litigation
• Long-term health effects of vaporizers
• Information technology disruptions
• Internet security risks
• Search engine algorithm changes
• Dependence on subsidiaries for cash flow
• Federal Paraphernalia Law
• Customs and Border Protection seizures
• Market acceptance of cannabis

Mitigation Strategies

• Liquidity Initiatives (technology enhancements, facility footprint rationalization, headcount reduction, cost structure optimization, inventory management, sales force upgrade, product innovation, capital investment)
• Strategic partnership with vape supplier (Vape Partnership)
• Asset purchase agreement with Synergy (sale of Eyce and DaVinci brands)
• Developing a world-class portfolio of products
• USPS PACT Act Exemption
• Efforts to enhance operating margins
• Building strong customer and supplier relationships
• Being the employer of choice
• Remediation plan to address material weaknesses in internal control over financial reporting

Supply Chain Management

Climate-Related Risks & Opportunities