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As filed with the Securities and Exchange Commission on May 27, 2021
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Greenlane Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
5099
(Primary Standard Industrial
Classification Code Number)
83-0806637
(I.R.S. Employer
Identification Number)
1095 Broken Sound Parkway, Suite 300
Boca Raton, FL 33487
(877) 292-7660
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Aaron LoCascio
Chief Executive Officer
Greenlane Holdings, Inc.
1095 Broken Sound Parkway, Suite 300
Boca Raton, FL 33487
(877) 292-7660
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
Justin R. Salon
David P. Slotkin
John Hensley
Morrison & Foerster LLP
2100 L Street, NW
Suite 900
Washington, D.C. 20037
Tel: (202) 887-1500
Jennifer W. Cheng
Marc D. Hauser
Wendy Grasso
Reed Smith LLP
599 Lexington Avenue
New York, NY 10022-7650
Tel: (212) 521-5400
Nicholas Kovacevich
Chairman and Chief Executive Officer
KushCo Holdings, Inc.
6261 Katella Avenue, Suite 250
Cypress, CA 90630
Tel: (714) 243-4311
Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and upon completion of the mergers described in the enclosed joint proxy statement/prospectus.
If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   ☐
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated filer   ☐
Accelerated filer   ☐
Non-accelerated filer   ☒
Smaller reporting company   ☒
Emerging growth company   ☒

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☒
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-1(d) (Cross-Border Issuer Third Party Tender Offer)   ☐
CALCULATION OF REGISTRATION FEE
Title of each class of securities to be registered
Amount to be
registered(1)
Proposed maximum
offering price per
share
Proposed maximum
aggregate offering
price(2)
Amount of
registration fee
Class A Common Stock, $0.01 par value per share
51,517,450 shares
N/A $ 180,371,873.14 $ 19,678.57
(1)
Represents the estimated maximum number of shares of Greenlane Holdings, Inc.’s (“Greenlane”) Class A common stock, $0.01 par value per share (“Greenlane Class A common stock”), to be issued in connection with the transactions contemplated by the Merger Agreement described herein. The number of shares of Greenlane Class A common stock to be issued is based on the sum of (i) 161,051,693 shares of common stock of KushCo Holdings, Inc. (“KushCo”), $0.001 par value per share (“KushCo common stock”), which reflects the estimated maximum number of shares of KushCo common stock that may be cancelled and exchanged in the Mergers described herein (which number includes 1,671,164 outstanding KushCo restricted stock units which will become fully vested in connection with the terms of the Merger Agreement); (ii) 10,179,474 shares of KushCo common stock issuable upon exercise of options which will be converted into options to purchase Greenlane Class A common stock in accordance with the terms of the Merger Agreement; and (iii) 31,433,859 shares of KushCo common stock issuable upon exercise of warrants, which will be converted into Greenlane warrants in accordance with the terms of the Merger Agreement); multiplied by the exchange ratio (based on the terms of the Merger Agreement, which is subject to adjustment as further descried herein) of 0.2542 shares of Greenlane Class A common stock for each share of KushCo common stock calculated as of May 25, 2021.
(2)
Estimated solely for purposes of calculating the registration fee required by Section 6(b) of the Securities Act, and calculated pursuant to Rules 457(f)(1) and 457(c) under the Securities Act. The proposed maximum aggregate offering price of the Greenlane Class A common stock was calculated based upon the market value of KushCo common stock (the securities to be exchanged in the Mergers) in accordance with Rule 457(c) under the Securities Act, calculated as the product of (i) $0.89, the last reported price per share of KushCo common stock on May 25, 2021, as quoted on the OTCQX, multiplied by (ii) 202,665,026, the estimated maximum number of shares of KushCo common stock, including shares of KushCo common stock issuable upon exercise of outstanding KushCo options and KushCo warrants, that may be cancelled and exchanged in connection with the Mergers described herein as of May 25, 2021.
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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The information in this joint proxy statement/prospectus is not complete and may be changed. Greenlane Holdings, Inc. may not sell the securities offered by this joint proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is effective. This joint proxy statement/prospectus is not an offer to sell these securities nor should it be considered a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION, DATED MAY 27, 2021
JOINT PROXY STATEMENT/PROSPECTUS
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To the Stockholders of Greenlane Holdings, Inc. and the Stockholders of KushCo Holdings, Inc.:
The board of directors (the “Greenlane Board”) of Greenlane Holdings, Inc. (“Greenlane”) and the board of directors (the “KushCo Board”) of KushCo Holdings, Inc. (“KushCo”) have approved a definitive agreement and plan of merger (the “Merger Agreement”), dated as of March 31, 2021, by and among Greenlane, Merger Sub Gotham 1, LLC, a wholly owned subsidiary of Greenlane (“Merger Sub 1”), Merger Sub Gotham 2, LLC, a wholly owned subsidiary of Greenlane (“Merger Sub 2”), and KushCo. Pursuant to the Merger Agreement, Greenlane and KushCo will combine through a merger of Merger Sub 1 with and into KushCo with KushCo as the surviving corporation and a wholly owned subsidiary of Greenlane (“Initial Surviving Corporation”) (such merger, “Merger 1”) and a merger of the Initial Surviving Corporation with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane (“Merger 2,” and together with Merger 1, the “Mergers”).
If completed, the Mergers will create the leading ancillary cannabis products and services company. The combined company (the “Combined Company”) will serve a premier group of customers, which includes many of the leading multi-state-operators and licensed producers, the top smoke shops in the United States, and millions of individuals. The Combined Company will retain the name “Greenlane Holdings, Inc.” and will continue to trade on the Nasdaq Capital Market (“Nasdaq”) under the symbol “GNLN.” Nicholas Kovacevich, the current Chief Executive Officer of KushCo, is expected to serve as the Chief Executive Officer of the Combined Company. Aaron LoCascio, the current Chief Executive Officer of Greenlane, is expected to serve as the President of the Combined Company. Additionally, William Mote and Adam Schoenfeld, the current Chief Financial Officer and Chief Strategy Officer of Greenlane, respectively, are expected to continue to serve in such positions for the Combined Company.
The obligations of Greenlane and KushCo to effect the Mergers are subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement (including certain approvals of the Greenlane and KushCo stockholders).
If the Mergers are completed pursuant to the Merger Agreement, each KushCo stockholder will receive a number of shares of Greenlane Class A common stock, $0.01 par value per share (“Greenlane Class A common stock”), for each share of KushCo’s common stock, $0.001 par value per share (“KushCo common stock”), held immediately prior to the effective time of the Mergers, with cash paid in lieu of any fractional shares that a KushCo stockholder would otherwise be entitled to receive, based on the formula set forth under the heading “Merger Consideration; Effects of the Merger” ​(the “Exchange Ratio”). In accordance with the Merger Agreement, and as described further elsewhere in this joint proxy statement/prospectus, the Exchange Ratio is subject to adjustment prior to the effective time of the Mergers in order to ensure that KushCo’s former stockholders (“KushCo stockholders”) will own no more than 49.9% of the issued and outstanding shares of Greenlane common stock and no less than 48.1% of the Greenlane Net Diluted Securities as of immediately following the effective time of Merger 1. As a result, the Exchange Ratio is subject to adjustment to reflect changes in the number of Greenlane Shares Outstanding, KushCo Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities (as such terms are defined in this joint proxy statement/prospectus), immediately prior to the effective time of Merger 1. Greenlane stockholders will continue to hold their existing shares of Greenlane Class A common stock or Greenlane Class B common stock, $0.0001 par value per share (“Greenlane Class B common stock”), as applicable. Pursuant to the Merger Agreement, in connection with the consummation of Merger 1, holders of Greenlane Class C common stock, $0.0001 par value per share (“Greenlane Class C common stock” and, prior to its elimination as a class, together with Greenlane Class A common stock and Greenlane Class B common stock, “Greenlane common stock”), will convert each share of Greenlane Class C common stock into one-third of a share of Greenlane Class B common stock, and, and subject to the approval of Greenlane stockholders as described in this joint proxy statement/prospectus, Greenlane will file an Amended and Restated Certificate of Incorporation, which will eliminate all references to the Greenlane Class C common stock.

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Shares of Greenlane Class A common stock are currently listed on Nasdaq under the symbol “GNLN” and shares of KushCo common stock are currently traded on the OTCQX tier of the OTC Markets Group, LLC (the “OTCQX”) under the symbol “KSHB.” Based on the closing price of Greenlane Class A common stock on the Nasdaq of $4.44 on March 29, 2021, the latest trading day before the announcement of the Mergers, using an Exchange Ratio of 0.2542 which is the Exchange Ratio calculated as of May 25, 2021, the Exchange Ratio represented approximately $1.13 in Greenlane Class A common stock for each share of KushCo common stock. Based on the closing price of Greenlane Class A common stock on the Nasdaq of $3.66 on May 25, 2021, the latest practicable trading day before the date of this joint proxy statement/prospectus, using an Exchange Ratio of 0.2542 which is the Exchange Ratio calculated as of May 25, 2021, the Exchange Ratio represented approximately $0.93 in Greenlane Class A common stock for each share of KushCo common stock. The value of the consideration to be received in the Mergers will fluctuate as a result of changes in the market price of Greenlane Class A common stock and changes in the number of shares of Greenlane common stock and KushCo common stock outstanding, on a fully diluted treasury basis (subject to certain exceptions). We urge you to obtain current market quotations for Greenlane Class A common stock and KushCo common stock.
It is anticipated that Greenlane will issue approximately 40,939,340 shares of Greenlane Class A common stock in connection with the Mergers based on the Exchange Ratio calculated as of May 25, 2021. Upon completion of the Mergers, it is estimated that the stockholders of Greenlane (“Greenlane stockholders”) prior to the Mergers will collectively own approximately 50.1% of the issued and outstanding shares of the Combined Company common stock and KushCo stockholders will collectively own approximately 49.9% of the issued and outstanding shares of the Combined Company common stock.
Greenlane will hold an annual meeting of its stockholders (the “Greenlane annual meeting”) and KushCo will hold a virtual special meeting of its stockholders (the “KushCo special meeting”). At the Greenlane annual meeting, all Greenlane stockholders will be asked to vote on (i) a proposal to elect the five director nominees named in this joint proxy statement/prospectus, each for a term expiring at Greenlane’s 2022 annual meeting of stockholders (the “Greenlane Director Proposal”); (ii) a proposal to ratify Deloitte & Touche LLP as Greenlane’s independent registered public accounting firm for Greenlane’s fiscal year ending December 31, 2021 (the “Greenlane Auditor Proposal”); (iii) a proposal to consider and vote upon the approval and adoption of the Amended and Restated Certificate of Incorporation of Greenlane to eliminate the Greenlane Class C common stock (the “Greenlane Charter Amendment Proposal”); (iv) a proposal to consider and vote upon the approval of the issuance of Greenlane Class A common stock in connection with the closing of Merger 1 (the “Greenlane Stock Issuance Proposal”); (v) a proposal to consider and vote upon the Amended and Restated Greenlane Holdings, Inc. 2019 Equity Incentive Plan (the “Greenlane Plan Proposal”); and (vi) a proposal to approve one or more adjournments of the Greenlane annual meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal (the “Greenlane Adjournment Proposal”). Additionally, Greenlane stockholders other than (i) Jacoby & Co. Inc. (“Jacoby”), an entity controlled by Greenlane’s co-founders, and its affiliates and (ii) Aaron LoCascio, Adam Schoenfeld, William Mote, William Bine and Douglas Fischer, the chief executive officer, chief strategy officer, chief financial officer, chief operating officer and general counsel of Greenlane, respectively (the “Greenlane Insiders” and Greenlane stockholders, other than the Greenlane Insiders, the “Greenlane Public Stockholders”), will be asked to vote on a proposal to consider and vote upon the approval and adoption of the Merger Agreement (the “Greenlane Merger Proposal”).
At the KushCo special meeting, KushCo stockholders will be asked to vote on (i) a proposal to consider and vote upon the approval and adoption of the Merger Agreement (the “KushCo Merger Proposal”); and (ii) a proposal to approve one or more adjournments of the KushCo special meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the KushCo Merger Proposal (the “KushCo Adjournment Proposal”).
The record date for determining the Greenlane stockholders entitled to receive notice of, and to vote at, the Greenlane annual meeting is the close of business on [•], 2021. The record date for determining the KushCo stockholders entitled to vote at the KushCo special meeting is the close of business on [•], 2021.
The Mergers cannot be completed without the approval by Greenlane stockholders of the Greenlane Charter Amendment Proposal and the Greenlane Stock Issuance Proposal, as well as the approval of the Greenlane Merger Proposal by the Greenlane Public Stockholders and the approval by KushCo stockholders of the KushCo Merger Proposal in accordance with the voting requirements described in this joint proxy statement/prospectus.

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The Greenlane Board, upon the recommendation of a special committee of the Greenlane Board (the “Greenlane Special Committee”) consisting entirely of its independent and disinterested directors, has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of Greenlane and the Greenlane stockholders, (ii) authorized, approved and adopted the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, and (iii) subject to the satisfaction or waiver of conditions to complete the Mergers set forth in the Merger Agreement, including approval of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal and the Greenlane Stock Issuance Proposal. The Greenlane Board unanimously recommends that Greenlane stockholders vote “FOR” each of the director nominees nominated pursuant to the Greenlane Director Proposal, “FOR” the Greenlane Auditor Proposal, “FOR” the Greenlane Charter Amendment Proposal, “FOR” the Greenlane Stock Issuance Proposal, “FOR” the Greenlane Plan Proposal and “FOR” the Greenlane Adjournment Proposal, if necessary or appropriate, to solicit additional proxies in favor of the approval of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal. The Greenlane Board unanimously recommends that the Greenlane Public Stockholders vote “FOR” the Greenlane Merger Proposal.
The KushCo Board has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of KushCo and the KushCo stockholders and (ii) subject to approval by KushCo stockholders, approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement. The KushCo Board recommends that KushCo stockholders vote “FOR” the KushCo Merger Proposal and “FOR” the KushCo Adjournment Proposal, if necessary or appropriate, to solicit additional proxies in favor of the approval of the KushCo Merger Proposal.
This joint proxy statement/prospectus contains important information about Greenlane, KushCo, the Mergers, the Merger Agreement and the annual and special meetings. This document is also a prospectus for shares of Greenlane Class A common stock that will be issued pursuant to the Merger Agreement. We encourage you to read this joint proxy statement/prospectus carefully before authorizing a proxy to vote your shares, including the section entitled “Risk Factors” beginning on page 30 of this joint proxy statement/prospectus.
Your vote is very important, regardless of the number of shares you own. Whether or not you plan to attend the Greenlane annual meeting or the KushCo special meeting, as applicable, please authorize a proxy to vote your shares as promptly as possible to make sure that your shares of Greenlane common stock and/or KushCo common stock, as applicable, are represented at the applicable meeting. Please review this joint proxy statement/prospectus for more information regarding the Mergers and the Greenlane annual meeting and the KushCo special meeting, as applicable.
If you are a Greenlane stockholder and have any questions or need assistance voting your shares, please contact Greenlane’s proxy solicitor, D.F. King & Co., Inc., by telephone at (212) 269-5550 (banks and brokers call collect at (800) 317-8033) or by email at GNLN@dfking.com. If you are a KushCo stockholder and have any questions or need assistance voting your shares, please contact KushCo’s proxy solicitor, [•], by telephone at [•] or by email at [•].
Sincerely,
Aaron LoCascio
Chief Executive Officer
Greenlane Holdings, Inc.
Nicholas Kovacevich
Chairman and Chief Executive Officer
KushCo Holdings, Inc.
Neither the Securities and Exchange Commission, nor any state securities regulatory authority, has approved or disapproved of the Mergers or the other transactions contemplated by the Merger Agreement or the securities to be issued under this joint proxy statement/prospectus or has passed upon the adequacy or accuracy of the disclosure in this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.
This joint proxy statement/prospectus is dated [•], 2021, and is first being mailed to Greenlane stockholders and KushCo stockholders on or about [•], 2021.

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GREENLANE HOLDINGS, INC.
1095 Broken Sound Parkway, Suite 300
Boca Raton, FL 33487
(877) 292-7660
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON [], 2021
To the Stockholders of Greenlane Holdings, Inc.:
You are invited to attend an annual meeting of stockholders of Greenlane Holdings, Inc., a Delaware corporation (“Greenlane”). The meeting will be held at [•], local time, on [•], 2021, at [•], to consider and vote upon the following matters:
1.
a proposal to elect the five director nominees named in this joint proxy statement/prospectus, each for a term expiring at Greenlane’s 2022 annual meeting of stockholders; provided that Neil Closner has executed a conditional resignation letter that will become effective if the Mergers (as defined below) are completed as described elsewhere in this joint proxy statement/prospectus (the “Greenlane Director Proposal”);
2.
a proposal to ratify Deloitte & Touche LLP (“Deloitte”) as Greenlane’s independent registered public accounting firm for Greenlane’s fiscal year ending December 31, 2021 (the “Greenlane Auditor Proposal”);
3.
a proposal to consider and vote upon the approval and adoption of the definitive agreement and plan of merger (the “Merger Agreement”), dated as of March 31, 2021, by and among Greenlane, Merger Sub Gotham 1, LLC, a wholly-owned subsidiary of Greenlane (“Merger Sub 1”), Merger Sub Gotham 2, LLC, a wholly owned subsidiary of Greenlane (“Merger Sub 2”) and KushCo Holdings, Inc. (“KushCo”). Pursuant to the Merger Agreement, Greenlane and KushCo will combine through a merger of Merger Sub 1 with and into KushCo with KushCo as the surviving corporation and a wholly owned subsidiary of Greenlane (“Initial Surviving Corporation”) (such merger, “Merger 1”) and a merger of the Initial Surviving Corporation with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane (“Merger 2,” and, together with Merger 1, the “Mergers”) (the “Greenlane Merger Proposal”);
4.
a proposal to consider and vote upon the approval and adoption of the Amended and Restated Certificate of Incorporation of Greenlane (the “Greenlane Charter Amendment Proposal”);
5.
a proposal to consider and vote upon the approval of the issuance of Greenlane Class A common stock in connection with the closing of Merger 1 (the “Greenlane Stock Issuance Proposal”);
6.
a proposal to consider and vote upon the Amended and Restated Greenlane Holdings, Inc. 2019 Equity Incentive Plan (the “Greenlane Plan Proposal”); and
7.
a proposal to approve one or more adjournments of the Greenlane annual meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal (the “Greenlane Adjournment Proposal”).
THE GREENLANE BOARD UNANIMOUSLY RECOMMENDS THAT GREENLANE STOCKHOLDERS VOTE “FOR” EACH OF THE DIRECTOR NOMINEES NOMINATED PURSUANT TO THE GREENLANE DIRECTOR PROPOSAL, “FOR” THE GREENLANE AUDITOR PROPOSAL, “FOR” THE GREENLANE CHARTER AMENDMENT PROPOSAL, “FOR” THE GREENLANE
 

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STOCK ISSUANCE PROPOSAL, “FOR” THE GREENLANE PLAN PROPOSAL AND “FOR” THE GREENLANE ADJOURNMENT PROPOSAL, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IN FAVOR OF THE APPROVAL OF THE GREENLANE MERGER PROPOSAL, THE GREENLANE CHARTER AMENDMENT PROPOSAL OR THE GREENLANE STOCK ISSUANCE PROPOSAL. THE GREENLANE BOARD UNANIMOUSLY RECOMMENDS THAT THE GREENLANE PUBLIC STOCKHOLDERS VOTE “FOR” THE GREENLANE MERGER PROPOSAL.
Only the matters set forth in the notice of meeting may be presented at the Greenlane annual meeting. As a result, Greenlane does not expect to transact any other business at the Greenlane annual meeting. Greenlane stockholders of record at the close of business on [•], 2021 are entitled to receive notice of, and vote at, the Greenlane annual meeting and any postponement or adjournment thereof.
The following votes are required to approve the proposals:

Greenlane Director Proposal: Greenlane directors are elected by the affirmative vote of the majority of votes cast once a quorum has been established. If any director nominee is not elected by such standard, the director must submit an irrevocable resignation, contingent on the acceptance of that resignation by the Greenlane Board. There is no cumulative voting in the election of Greenlane’s directors.

Greenlane Auditor Proposal: The affirmative vote of a majority of the votes cast once a quorum has been established is required to ratify the appointment of Deloitte & Touche LLP as Greenlane’s independent registered public accounting firm for its fiscal year ending December 31, 2021.

Greenlane Merger Proposal: The affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of Greenlane common stock, held by stockholders other than (i) Jacoby, an entity controlled by Greenlane’s co-founders, and its affiliates and (ii) Aaron LoCascio, Adam Schoenfeld, William Mote, William Bine and Douglas Fischer, the chief executive officer, chief strategy officer, chief financial officer, chief operating officer and general counsel of Greenlane, respectively, is required to approve the Greenlane Merger Proposal. The foregoing approval standard is referred to herein as approval by the “majority of the minority.”

Greenlane Charter Amendment Proposal: The affirmative vote of the holders of a majority of the voting power of the outstanding shares of Greenlane common stock entitled to vote thereon is required to approve the Greenlane Charter Amendment Proposal.

Greenlane Stock Issuance Proposal: The affirmative vote of the majority of votes cast, excluding abstentions and any broker non-votes, by the holders of Greenlane common stock is required to approve the Greenlane Stock Issuance Proposal.

Greenlane Plan Proposal: The affirmative vote of the majority of votes cast excluding abstentions and any broker non-votes, by the holders of Greenlane common stock is required to approve the Greenlane Plan Proposal.

Greenlane Adjournment Proposal: The affirmative vote of the majority of votes cast, excluding abstentions and any broker non-votes, by holders of Greenlane common stock at a stockholders’ meeting is required to approve the Greenlane Adjournment Proposal.
Please refer to the accompanying joint proxy statement/prospectus for further information with respect to the business to be transacted at the Greenlane annual meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF GREENLANE COMMON STOCK YOU OWN. WE CANNOT COMPLETE THE MERGERS UNLESS THE GREENLANE MERGER PROPOSAL, THE GREENLANE CHARTER AMENDMENT PROPOSAL AND THE GREENLANE STOCK ISSUANCE PROPOSAL ARE APPROVED BY GREENLANE STOCKHOLDERS. ACCORDINGLY, WE URGE YOU TO REVIEW THE ENCLOSED MATERIALS AND REQUEST THAT YOU COMPLETE, SIGN, DATE AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE OR AUTHORIZE YOUR PROXY BY INTERNET OR TELEPHONE.
Please refer to the proxy card and the accompanying joint proxy statement/prospectus for information regarding your voting options. Even if you plan to attend the Greenlane annual meeting, please take advantage of one of the advance voting options to assure that your shares of Greenlane common stock are

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represented at the Greenlane annual meeting. You may revoke your proxy at any time before it is exercised by following the procedures described in the accompanying joint proxy statement/prospectus.
By Order of the Board of Directors
Douglas Fischer
General Counsel
Boca Raton, Florida
[•], 2021
Your vote is important. Whether or not you expect to attend the Greenlane annual meeting in person, we urge you to authorize a proxy to vote your shares of Greenlane common stock as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card, or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares of Greenlane common stock may be represented and voted at the Greenlane annual meeting. If your shares of Greenlane common stock are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the record holder of your shares of Greenlane common stock.

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KUSHCO HOLDINGS, INC.
6261 Katella Avenue, Suite 250
Cypress, CA 90630
(714) 243-4311
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [], 2021
To the Stockholders of KushCo Holdings, Inc.:
You are invited to attend a virtual special meeting (the “KushCo special meeting”) of the stockholders of KushCo Holdings, Inc., a Nevada corporation (“KushCo”). The KushCo special meeting will be held virtually at [•], local time, on [•], 2021. You can attend the KushCo special meeting via the internet, vote your shares electronically and submit your questions during the KushCo special meeting by visiting [•] (there is no physical location for the KushCo special meeting).
At the KushCo special meeting, KushCo will ask the KushCo stockholders to consider and vote upon the following matters:
1.
a proposal to consider and vote upon the approval of the definitive agreement and plan of merger (the “Merger Agreement”), dated as of March 31, 2021, by and among Greenlane Holdings, Inc. (“Greenlane”), Merger Sub Gotham 1, LLC, a wholly owned subsidiary of Greenlane (“Merger Sub 1”), Merger Sub Gotham 2, LLC, a wholly owned subsidiary of Greenlane (“Merger Sub 2”), and KushCo. Pursuant to the Merger Agreement, Greenlane and KushCo will combine through a merger of Merger Sub 1 with and into KushCo with KushCo as the surviving corporation and a wholly owned subsidiary of Greenlane (“Initial Surviving Corporation”) (such merger, “Merger 1”), and a merger of the Initial Surviving Corporation with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane (“Merger 2,” and, together with Merger 1, the “Mergers”) (the “KushCo Merger Proposal”); and
2.
a proposal to approve one or more adjournments of the KushCo special meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the KushCo Merger Proposal (the “KushCo Adjournment Proposal”).
THE BOARD OF DIRECTORS OF KUSHCO RECOMMENDS THAT KUSHCO STOCKHOLDERS VOTE “FOR” THE KUSHCO MERGER PROPOSAL AND “FOR” THE KUSHCO ADJOURNMENT PROPOSAL, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IN FAVOR OF THE APPROVAL OF THE KUSHCO MERGER PROPOSAL.
Only the matters set forth in the notice of meeting may be presented at the KushCo special meeting. As a result, KushCo does not expect to transact any other business at the KushCo special meeting. KushCo stockholders of record at the close of business on [•], 2021 are entitled to vote at the KushCo special meeting and any postponement or adjournment thereof.
The KushCo Merger Proposal requires the affirmative vote of stockholders holding a majority of the voting power of the outstanding shares of KushCo common stock, $0.001 par value per share (“KushCo common stock”), once a quorum has been established. The KushCo Adjournment Proposal requires the affirmative vote of holders of a majority of the votes cast at the KushCo special meeting.
Please refer to the accompanying joint proxy statement/prospectus for further information with respect to the business to be transacted at the KushCo special meeting.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF KUSHCO COMMON STOCK YOU OWN. WE CANNOT COMPLETE THE MERGERS UNLESS THE KUSHCO MERGER PROPOSAL IS APPROVED BY KUSHCO STOCKHOLDERS. ACCORDINGLY, WE URGE YOU TO REVIEW THE ENCLOSED MATERIALS AND REQUEST THAT YOU

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COMPLETE, SIGN, DATE AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE OR AUTHORIZE YOUR PROXY BY INTERNET OR TELEPHONE.
Please refer to the proxy card and the accompanying joint proxy statement/prospectus for information regarding your voting options. Even if you plan to attend the KushCo special meeting online, please take advantage of one of the advance voting options to assure that your shares of KushCo common stock are represented at the KushCo special meeting. You may revoke your proxy at any time before it is exercised by following the procedures described in the accompanying joint proxy statement/prospectus.
By Order of the Board of Directors,
Nicholas Kovacevich
Chairman and Chief Executive Officer
Cypress, California
[•], 2021
Your vote is important. Whether or not you expect to attend the KushCo special meeting online, we urge you to authorize a proxy to vote your shares of KushCo common stock as promptly as possible by (1) accessing the Internet website specified on your proxy card, (2) calling the toll-free number specified on your proxy card, or (3) signing and returning the enclosed proxy card in the postage-paid envelope provided, so that your shares of KushCo common stock may be represented and voted at the KushCo special meeting. If your shares of KushCo common stock are held in the name of a bank, broker or other nominee, please follow the instructions on the voting instruction card furnished by the record holder of your shares of KushCo common stock.

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ABOUT THIS DOCUMENT
This joint proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed by Greenlane (File No. 333-[•]) with the Securities and Exchange Commission (the “SEC”), constitutes a prospectus of Greenlane for purposes of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Greenlane Class A common stock to be issued in the Mergers and the other transactions contemplated by the Merger Agreement This joint proxy statement/prospectus also constitutes a proxy statement for each of Greenlane and KushCo for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, this joint proxy statement/prospectus contains a notice of meeting with respect to the Greenlane annual meeting and a notice of meeting with respect to the KushCo special meeting.
You should rely only on the information contained in this joint proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in this joint proxy statement/prospectus. This joint proxy statement/prospectus is dated [•], 2021. You should not assume that the information contained in this joint proxy statement/prospectus is accurate as of any other date. Neither the mailing of this joint proxy statement/prospectus to Greenlane stockholders or KushCo stockholders nor the issuance by Greenlane of shares of Greenlane Class A common stock to KushCo’s equity holders pursuant to the Merger Agreement will create any implication to the contrary.
This joint proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Information contained in this joint proxy statement/prospectus regarding Greenlane has been provided by Greenlane and information contained in this joint proxy statement/prospectus regarding KushCo has been provided by KushCo.

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QUESTIONS AND ANSWERS
The following are answers to some questions that Greenlane stockholders and KushCo stockholders may have regarding the proposed transaction between Greenlane and KushCo and the other proposals being considered at the Greenlane annual meeting and the KushCo special meeting, as applicable. Greenlane and KushCo urge you to read carefully this entire joint proxy statement/prospectus, including the Annexes, because the information in this section does not provide all the information that might be important to you.
Unless stated otherwise, all references in this joint proxy statement/prospectus to:

the “Class C Conversion” are to the conversion of each share of Greenlane Class C common stock into one-third of a share of Greenlane Class B common stock concurrently with the effectiveness of the Greenlane A&R Charter in accordance with the terms of the Merger Agreement and the Greenlane Voting Agreement;

the “Combined Company” are to Greenlane after the completion of the Mergers;

the “Exchange Ratio” is the right of KushCo stockholders to receive shares of Greenlane Class A common stock for each share of KushCo common stock if the Mergers are completed pursuant to the Merger Agreement, pursuant to a ratio calculated as set forth below:
(i)(a) if the number equal to the quotient obtained by dividing

(1) the number obtained by multiplying (I) 0.2890 by (II) the KushCo Fully Diluted Securities by

(2) the sum of

(I) the number obtained by multiplying (X) 0.2890 by (Y) the KushCo Fully Diluted Securities plus

(II) the Greenlane Shares Outstanding,
is greater than (b) 0.499, then the Exchange Ratio shall equal the quotient obtained by dividing

(A) the difference between (x) the quotient obtained by dividing (I) Greenlane Shares Outstanding by (II) 0.501 and (y) the Greenlane Shares Outstanding by

(B) the KushCo Fully Diluted Securities,
(ii)(a) if the number equal to the quotient obtained by dividing

(1) the number obtained by multiplying (I) 0.2890 by (II) the KushCo Net Diluted Securities by

(2) the sum of

(I) the number obtained by multiplying (X) 0.2890 by (Y) the KushCo Net Diluted Securities plus

(II) the Greenlane Net Diluted Securities
is less than (b) 0.481, then the Exchange Ratio shall equal the quotient obtained by dividing

(A) the difference between (x) the quotient obtained by dividing (I) Greenlane Net Diluted Securities by (II) 0.519 and (y) the Greenlane Net Diluted Securities by

(B) the KushCo Net Diluted Securities, and
if neither of the bullets above are true, the Exchange Ratio shall equal 0.2890.
 
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Below is the Exchange Ratio expressed as a formula:
[MISSING IMAGE: tm2117168d1-eq_greenlabw.jpg]

“Greenlane” are to Greenlane Holdings, Inc., a Delaware corporation;

the “Greenlane A&R Charter” are to the Amended and Restated Certificate of Incorporation of Greenlane attached as Annex B to this joint proxy statement/prospectus;

the “Greenlane Adjournment Proposal” are to the proposal to Greenlane stockholders to approve one or more adjournments of the Greenlane annual meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal;

the “Greenlane Amended Equity Plan” are to the Amended and Restated Greenlane Holdings, Inc. 2019 Equity Incentive Plan attached as Annex C to this joint proxy statement/prospectus;

the “Greenlane Auditor Proposal” are to the proposal to Greenlane stockholders to ratify the appointment of Deloitte & Touche LLP as Greenlane’s independent registered public accounting firm for Greenlane’s fiscal year ending December 31, 2021;

the “Greenlane Board” are to the board of directors of Greenlane;

the “Greenlane Charter Amendment Proposal” are to the proposal to Greenlane stockholders to approve the Greenlane A&R Charter;

“Greenlane Class A common stock” are to Greenlane’s Class A common stock, $0.01 par value per share;

“Greenlane Class B common stock” are to Greenlane’s Class B common stock, $0.0001 par value per share;

“Greenlane Class C common stock” are to Greenlane’s Class C common stock, $0.0001 par value per share;

“Greenlane common stock” are to Greenlane Class A common stock, Greenlane Class B common stock and Greenlane Class C common stock (prior to its elimination as a class), collectively;

the “Greenlane Director Proposal” are to the proposal to Greenlane stockholders to elect five directors to serve on the Greenlane Board;

the “Greenlane Insiders” are to, collectively, (i) Jacoby & Co. Inc. (“Jacoby”), an entity controlled by Greenlane’s co-founders, and its affiliates and (ii) Aaron LoCascio, Adam Schoenfeld, William Mote, William Bine and Douglas Fischer, the chief executive officer, chief strategy officer, chief financial officer, chief operating officer and general counsel of Greenlane, respectively;

“Greenlane In-the-Money options” are to each Greenlane option and Greenlane restricted common unit that have an exercise price that is equal to or below the closing price of a share of Greenlane Class A common stock on Nasdaq on the date of any such calculation;

the “Greenlane Merger Proposal” are to the proposal to the Greenlane Public Stockholders (as defined below) to approve the Merger Agreement;

“Greenlane Public Stockholders” are to Greenlane stockholders other than the Greenlane Insiders;
 
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“Greenlane Net Diluted Securities” are to the number of securities obtained by calculating (i) the sum of (x) all outstanding shares of Greenlane Class A common stock (including any shares of Greenlane Class A common stock issuable upon vesting of any Greenlane restricted stock), plus (y) all outstanding shares of Greenlane Class B common stock (after giving effect to the Class C Conversion) plus (z) each share of Greenlane Class A common stock issuable upon the exercise of any Greenlane In-the-Money options minus (ii) the number of shares of Greenlane Class A common stock that could be purchased with the aggregate exercise proceeds of the Greenlane In-the-Money options at the Greenlane trading price on the date of such calculation;

“Greenlane options” are to options to purchase Greenlane Class A common stock;

the “Greenlane Parties” are to Greenlane, Merger Sub 1 and Merger Sub 2, collectively;

the “Greenlane Plan Proposal” are to the proposal to Greenlane stockholders to approve the Greenlane Amended Equity Plan;

the “Greenlane Record Date” are to [•], 2021, which is the record date for the determination of Greenlane stockholders entitled to receive notice of, and to vote at, the Greenlane annual meeting and any postponements or adjournments of the Greenlane annual meeting;

“Greenlane restricted common units” are to restricted common membership interests in Greenlane Holdings, LLC;

“Greenlane restricted stock” are to an award of Greenlane common stock that is unvested or is subject to a repurchase option, risk of forfeiture or other condition on title or ownership;

the “Greenlane Special Committee” are to the special committee of the Greenlane Board consisting entirely of Greenlane’s independent and disinterested directors formed in connection with the review and negotiation of the Merger Agreement and the transactions contemplated by the Merger Agreement;

“Greenlane Shares Outstanding” are to the sum of (i) all shares of Greenlane Class A common stock (including any Greenlane Class A common stock issuable pursuant to any Greenlane restricted stock) and (ii) all shares of Greenlane Class B common stock (after giving effect to the Class C Conversion);

the “Greenlane Stock Issuance Proposal” are to the proposal to Greenlane stockholders to approve the issuance of shares of Greenlane Class A common stock in connection with the Mergers;

“KushCo” are to KushCo Holdings, Inc., a Nevada corporation;

the “KushCo Adjournment Proposal” are to the proposal to KushCo stockholders to approve one or more adjournments of the KushCo special meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the KushCo Merger Proposal;

the “KushCo Board” are to the board of directors of KushCo;

“KushCo Fully Diluted Securities” are to the sum of (i) all KushCo common stock (including any shares of KushCo common stock issuable pursuant to any KushCo RSUs) and (ii) all KushCo common stock issuable upon the exercise of all KushCo In-the-Money options and warrants;

“KushCo In-the-Money options and warrants” are to each KushCo options and KushCo warrant that would have a post-closing exercise price calculated by dividing (i) the current exercise price of such KushCo option or KushCo warrant by (ii) the Exchange Ratio, that is equal to or below the closing price of a share of Greenlane Class A common stock on Nasdaq on the date of any such calculation;

the “KushCo Merger Proposal” are to the proposal to KushCo stockholders to approve the Merger Agreement;

“KushCo Net Diluted Securities” are to the number of securities obtained by calculating (i) the sum of (x) all outstanding KushCo common stock (including any shares of KushCo common stock issuable pursuant to any KushCo RSUs), plus (y) all KushCo common stock issuable upon the exercise of all KushCo In-the-Money options and warrants minus (ii) the number of shares of KushCo common stock that could be purchased with the aggregate exercise proceeds of the KushCo In-the-Money options and warrants at the KushCo trading price on the date of such calculation;
 
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the “KushCo Record Date” are to [•], 2021, which is the record date for the determination of KushCo stockholders entitled to vote at the KushCo special meeting and any postponements or adjournments of the KushCo special meeting;

“KushCo RSUs” are to any restricted stock unit of KushCo granted under a KushCo equity plan;

“KushCo options” are to options to purchase shares of KushCo common stock;

“KushCo warrants” are to the outstanding warrants to purchase one or more shares of KushCo common stock;

“Merger 1” are to the merger of Merger Sub 1 with and into KushCo with KushCo as the surviving corporation and a wholly -owned subsidiary of Greenlane;

“Merger 2” are to the merger of KushCo as the surviving corporation of Merger 1 with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane;

the “Merger Agreement” are to the Agreement and Plan of Merger, dated as of March 31, 2021, by and among Greenlane, Merger Sub 1, Merger Sub 2 and KushCo, as it may be amended from time to time, a copy of which is attached as Annex A to this joint proxy statement/prospectus and is incorporated herein by reference;

the “Mergers” are to, collectively, Merger 1 and Merger 2;

“Merger Sub 1” are to Merger Sub Gotham 1, LLC, a Delaware limited liability company and a wholly -owned subsidiary of Greenlane;

“Merger Sub 2” are to Merger Sub Gotham 2, LLC, a Delaware limited liability company and a wholly -owned subsidiary of Greenlane; and

“Nasdaq” are to the Nasdaq Stock Market LLC.
Q:
What is the proposed transaction?
A:
Greenlane and KushCo have entered into the Merger Agreement, pursuant to which: (i) Merger Sub 1 will be merged with and into KushCo with KushCo as the surviving corporation and a wholly-owned subsidiary of Greenlane, and (ii) KushCo, as the surviving corporation of Merger 1, will be merged with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly-owned subsidiary of Greenlane.
Q:
What will happen in the proposed transaction?
A:
At the effective time of Merger 1, each issued and outstanding share of KushCo common stock will convert into the right to receive a number of newly-issued shares of Greenlane Class A common stock based on the Exchange Ratio. Holders of KushCo common stock will not receive any fractional shares of Greenlane Class A common stock in Merger 1 and instead will be paid cash (without interest) in lieu of any fractional share to which they otherwise would be entitled.
Immediately prior to the effective time of Merger 1, each unvested KushCo option will accelerate and vest in full and each then outstanding KushCo option will be converted into an option to purchase, on the same terms and conditions that apply to such KushCo option, a number of shares of Greenlane Class A common stock, rounded down to the nearest whole share, equal to (i) the number of shares of KushCo common stock subject to such KushCo option multiplied by (ii) the Exchange Ratio, and each such KushCo option will have an exercise price, rounded up to the nearest whole cent, determined by dividing (a) the per share exercise price covered by the KushCo option immediately prior to the effective time of Merger 1 by (b) the Exchange Ratio.
Immediately prior to the effective time of Merger 1, each KushCo warrant outstanding (whether or not exercisable) will be converted into a warrant to purchase Greenlane Class A common stock. Greenlane will assume each such KushCo warrant in accordance with its terms (the “Assumed Warrants”). The Assumed Warrants: (i) shall solely be exercisable for Greenlane Class A common stock, (ii) the number of shares of Greenlane Class A common stock subject to such Assumed Warrant shall be
 
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equal to the number of shares of KushCo common stock subject to such Assumed Warrant that is outstanding immediately prior to the effective time of Merger 1 multiplied by the Exchange Ratio, rounded up to the nearest whole share, and (iii) the per share exercise price under each such Assumed Warrant shall be adjusted by dividing the per share exercise price under such Assumed Warrant by the Exchange Ratio and rounding up to nearest cent.
Immediately prior to the effective time of Merger 1, each unvested KushCo RSU will accelerate and vest in full and will thereafter be treated as a share of KushCo common stock in Merger 1.
Q:
What is the Exchange Ratio and what adjustments may be made?
A:
The Exchange Ratio will be calculated immediately prior to the effective time of Merger 1. Assuming an Exchange Ratio of 0.2542 shares of Greenlane Class A common stock for each share of KushCo common stock, based upon the Exchange Ratio calculated as of May 25, 2021, KushCo stockholders will collectively own approximately 49.9% of the Combined Company common stock and Greenlane stockholders prior to the Mergers will collectively own approximately 50.1% of the Combined Company common stock after consummation of the Mergers. In accordance with the Merger Agreement, the Exchange Ratio is subject to adjustment prior to the effective time of Merger 1 to reflect changes in the number of Greenlane Shares Outstanding, KushCo Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities, immediately prior to the effective time of Merger 1 provided that in no event will the aggregate number of shares of Greenlane Class A common stock issued to KushCo stockholders in Merger 1 be greater than (i) 49.9% of all issued and outstanding shares of Greenlane common stock (after giving effect to the Class C Conversion) immediately following the effective time of Merger 1, or (ii) less than 48.1% of the Greenlane Net Diluted Securities immediately following the effective time of Merger 1. For a depiction of the Exchange Ratio formula see the definition of “Exchange Ratio” above and “The Merger Agreement — Merger Consideration; Effects of the Mergers” beginning on page 206 of this joint proxy statement/prospectus.
As discussed below, a change in the market price of Greenlane Class A common stock may cause the number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities to change for purposes of the Exchange Ratio calculation because such changes could result in an increase or decrease in the total number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities, in each case measured immediately prior to the effective time of Merger 1, which will cause the Exchange Ratio to fluctuate. Additionally, if either Greenlane or KushCo issues additional equity prior to the effective time of the Mergers or if Greenlane engages in certain capital raising activities pursuant to which it issues additional shares of Greenlane Class A common stock, in each case as permitted under the Merger Agreement, the Exchange Ratio will be adjusted to give effect to such events. An increase in Greenlane Outstanding Securities or Greenlane Net Diluted Securities would generally result in an increase in the Exchange Ratio, while an increase in KushCo Fully Diluted Securities or KushCo Net Diluted Securities would generally result in a decrease in the Exchange Ratio. See “The Merger Agreement — Merger Consideration; Effects of the Mergers” beginning on page 206 of this joint proxy statement/prospectus for more information regarding potential adjustments to the Exchange Ratio.
Pursuant to the formula used in calculating the Exchange Ratio, in accordance with the Merger Agreement, regardless of adjustments to the Exchange Ratio, under no circumstances will KushCo stockholders own more than 49.9% of all issued and outstanding shares of the Combined Company common stock (after giving effect to the Class C Conversion) immediately following the effective time of Merger 1 nor less than 48.1% of the Greenlane Net Diluted Securities immediately following the effective time of Merger 1 and under no circumstances will Greenlane stockholders own more than 51.9% of the Greenlane Net Diluted Securities nor less than 50.1% of all Greenlane common stock immediately after giving effect to the Mergers and the Class C Conversion.
 
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Q:
What happens if the market price of shares of Greenlane common stock or KushCo common stock changes before the closing of the Mergers?
A:
As described above, the Exchange Ratio may fluctuate upon the occurrence of certain events. A change in the market price of KushCo common stock individually will not have an impact on the Exchange Ratio. However, the number KushCo Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities may change as a result of a change in the market price of Greenlane Class A common stock. A change in the market price of Greenlane Class A common stock may change the number of Greenlane In-the-Money options and KushCo In-the-Money options and warrants. An increase or decrease in the number of Greenlane In-the-Money options or KushCo In-the-Money options and warrants will result in a change in the number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities, which in turn will cause the Exchange Ratio to fluctuate. For example, a reduction in the market price of Greenlane Class A common stock is likely to lower the Exchange Ratio by increasing the number of KushCo In-the-Money options and warrants. However, this reduction could be offset by an increase in the Greenlane Net Diluted Securities caused by an increase in the number of Greenlane In-the-Money options resulting from decreases in the market price of Greenlane Class A common stock. This example could be impacted by the multiple Exchange Ratio inputs and is intended for illustrative purposes only. The aggregate value of the consideration payable to KushCo stockholders in Merger 1 will also fluctuate as a result of changes in the market price of Greenlane Class A common stock. As a result, the value of the consideration to be received by KushCo stockholders in Merger 1 will increase or decrease depending on the market price of shares of Greenlane Class A common stock at the effective time of Merger 1. See “The Merger Agreement — Merger Consideration; Effects of the Mergers — Merger Consideration” beginning on page 206 of this joint proxy statement/prospectus.
Q:
How will Greenlane stockholders be affected by the Mergers and the issuance of shares of Greenlane Class A common stock as a result of the transactions contemplated by the Merger Agreement?
A:
After the Mergers, each Greenlane stockholder, other than holders of Greenlane Class C common stock, will continue to own the shares of Greenlane common stock that such stockholder held immediately prior to the effectiveness of the Mergers. As a result, each Greenlane stockholder will own shares of common stock in a larger company with more assets. However, because Greenlane will be issuing new shares of Greenlane Class A common stock in Merger 1, each outstanding share of Greenlane common stock immediately prior to the effective time of Merger 1 will represent a smaller percentage of the aggregate number of shares of the Combined Company common stock outstanding after the Mergers.
Q:
Why am I receiving this joint proxy statement/prospectus?
A:
The Greenlane Board and the KushCo Board are using this joint proxy statement/prospectus to solicit proxies of Greenlane stockholders and KushCo stockholders, respectively, in connection with the Merger Agreement and the Mergers. In addition to the proposals submitted to Greenlane stockholders relating to the Merger Agreement and the Mergers, Greenlane is submitting certain proposals to Greenlane stockholders that are traditionally submitted to stockholders at a Greenlane annual meeting of its stockholders. Greenlane is also using this joint proxy statement/prospectus as a prospectus for holders of KushCo common stock, KushCo RSUs, KushCo options and KushCo warrants because Greenlane is offering shares of Greenlane common stock to be issued in exchange for KushCo common stock and in respect of KushCo RSUs in the Mergers.
The Greenlane annual meeting and the KushCo special meeting will be held separately to obtain these approvals of their respective stockholders and to consider other proposals as described elsewhere in this joint proxy statement/prospectus.
You should read this joint proxy statement/prospectus carefully because it contains important information about Greenlane, KushCo, the Mergers and the Merger Agreement, and the proposals being voted on at the respective meetings of stockholders. The enclosed voting materials allow you to vote your shares of Greenlane common stock and/or KushCo common stock, as applicable, without attending the applicable meeting in person or online, as applicable.
 
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Your vote is very important regardless of the number of shares you own. You are encouraged to authorize your proxy as promptly as possible to ensure that your shares are represented at the applicable meeting of stockholders.
Q:
What am I being asked to vote on?
A:
Greenlane.   At the Greenlane annual meeting, Greenlane stockholders (unless otherwise noted) will be asked to consider and vote upon the following proposals:

Greenlane Proposal 1 (the Greenlane Director Proposal): a proposal to elect the five director nominees named in this joint proxy statement/prospectus, each for a term expiring at Greenlane’s 2022 annual meeting of stockholders;

Greenlane Proposal 2 (the Greenlane Auditor Proposal): a proposal to ratify Deloitte & Touche LLP as Greenlane’s independent registered public accounting firm for Greenlane’s fiscal year ending December 31, 2021;

Greenlane Proposal 3 (Greenlane Merger Proposal): a proposal to consider and vote upon the approval and adoption of the Merger Agreement by the Greenlane Public Stockholders ;

Greenlane Proposal 4 (the Greenlane Charter Amendment Proposal): a proposal to consider and vote upon the approval and adoption of the Greenlane A&R Charter;

Greenlane Proposal 5 (the Greenlane Stock Issuance Proposal): a proposal to consider and vote upon the approval of the issuance of Greenlane Class A common stock in connection with the closing of Merger 1;

Greenlane Proposal 6 (the Greenlane Plan Proposal): a proposal to consider and vote upon the Greenlane Amended Equity Plan; and

Greenlane Proposal 7 (the Greenlane Adjournment Proposal): a proposal to approve one or more adjournments of the Greenlane annual meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal.
KushCo.   At the KushCo special meeting, KushCo stockholders will be asked to consider and vote upon the following proposals:

KushCo Proposal 1 (the KushCo Merger Proposal): a proposal to consider and vote upon the approval of the Merger Agreement; and

KushCo Proposal 2 (the KushCo Adjournment Proposal): a proposal to approve one or more adjournments of the KushCo special meeting to another date, time and/or place, if necessary or appropriate, to solicit additional proxies in favor of the KushCo Merger Proposal.
Q:
What proposals must be approved in order for the Mergers to be completed?
A:
The Mergers cannot be completed unless:

the Greenlane Merger Proposal is approved by the Greenlane Public Stockholders;

the Greenlane Charter Amendment Proposal is approved by Greenlane stockholders;

the Greenlane Stock Issuance Proposal is approved by Greenlane stockholders; and

the KushCo Merger Proposal is approved by KushCo stockholders.
See “— What vote is required to approve the proposals? — “ below for information about the vote required to approve the foregoing proposals.
Q:
Why is the Greenlane Board proposing the approval of the Merger Agreement?
A:
After careful consideration and consultation, and upon recommendation from the Greenlane Special Committee, the Greenlane Board believes that the consummation of the transactions contemplated by the Merger Agreement will result in a number of strategic benefits for the Combined Company,
 
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including the expectation that certain synergies will be realized, the ability of Greenlane stockholders to participate in a combined entity that, among other things, is expected to benefit from higher revenue growth, have greater access to the capital markets and lower financing costs. To review the reasons for the Greenlane Board’s approval of the Mergers in greater detail, see “The Mergers — Recommendation of the Greenlane Board; Reasons for the Recommendation” beginning on page 169 of this joint proxy statement/prospectus.
Q:
Why is the KushCo Board proposing the approval of the Merger Agreement?
A:
After careful consideration and consultation, the KushCo Board believes that the consummation of the transactions contemplated by the Merger Agreement will result in a number of strategic benefits for the Combined Company, including, the expectation that certain synergies will be realized, the ability of KushCo stockholders to participate in a combined entity that, among other things, is expected to benefit from higher revenue growth, have greater access to the capital markets and lower financing costs. To review the reasons for the KushCo Board’s approval of the Mergers in greater detail, see “The Mergers — Recommendation of the KushCo Board; Reasons for the Recommendation” beginning on page 169 of this joint proxy statement/prospectus.
Q:
Who will be the board of directors and management of the Combined Company?
A:
Immediately following the effective time of Merger 1, the board of directors of the Combined Company (the “Combined Company Board”) will be increased from five to seven members, with four current Greenlane directors, Aaron LoCascio, Adam Schoenfeld, Richard Taney and Jeff Uttz, continuing as directors of the Combined Company. Neil Closner, a current independent director of Greenlane, has submitted to the Greenlane Board a duly executed conditional resignation letter pursuant to which, in the event the Mergers are consummated, Mr. Closner will resign from the Greenlane Board and all applicable committees thereof automatically and effective immediately at the effective time of Merger 1. In addition, Nicholas Kovacevich, the current Chief Executive Officer of KushCo, Don Hunter, a current member of the KushCo Board, and Dallas Imbimbo, a current member of the KushCo Board, will join the Combined Company Board as of the effective time of Merger 1.
As of the effective time of Merger 1, Mr. Kovacevich will become the Combined Company’s Chief Executive Officer, and Mr. LoCascio will serve as the Combined Company’s President. Mr. Schoenfeld will continue to serve as the Combined Company’s Chief Strategy Officer, and William Mote will continue to serve as the Combined Company’s Chief Financial Officer.
Q:
When and where are the meetings of the Greenlane and KushCo stockholders?
A:
The Greenlane annual meeting will be held at [•] on [•], 2021 commencing at [•], local time.
The KushCo special meeting will be held virtually at [•], local time, on [•], 2021. The KushCo special meeting will be held entirely via the internet as a virtual meeting. Online access will begin at [•], local time, and KushCo encourages the KushCo stockholders to access the meeting prior to the start time. For instructions on how to attend the KushCo special meeting see “How can I vote and attend the KushCo special meeting online” below.
Q:
Who can vote at the Greenlane annual meeting and KushCo special meeting, respectively?
A:
Greenlane.   All holders of Greenlane common stock of record (or their duly appointed proxies) as of the close of business on the Greenlane Record Date are entitled to notice of, and to vote at, the Greenlane annual meeting; provided, however, that only Greenlane Public Stockholders will be entitled to vote on the Greenlane Merger Proposal. As of the close of business on the Greenlane Record Date, there were [•] shares of Greenlane common stock outstanding and entitled to vote at the Greenlane annual meeting, consisting of [•] shares of Greenlane Class A common stock (each of which entitles the holder to one vote), [•] shares of Greenlane Class B common stock (each of which entitles the holder to one vote) and [•] shares of Greenlane Class C common stock (each of which entitles the holder to one vote). An aggregate of [•] shares of Greenlane common stock, consisting of [•] shares of Greenlane Class A common stock, [•] shares of Greenlane Class B common stock and [•] shares of Greenlane Class C
 
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common stock, will not be entitled to vote on the Greenlane Merger Proposal because they are held by the Greenlane Insiders.
KushCo.   All holders of KushCo common stock of record (or their duly appointed proxies) as of the close of business on the KushCo Record Date are entitled to vote at the KushCo special meeting. As of the close of business on the KushCo Record Date, there were [•] shares of KushCo common stock outstanding and entitled to vote at the KushCo special meeting. Each share of KushCo common stock is entitled to one vote on each proposal presented at the KushCo special meeting.
Q:
Are there any voting agreements in relation to the Mergers?
A:
Yes. Jacoby, which owned approximately [•]% of the issued and outstanding shares of Greenlane common stock as of the Greenlane Record Date, has entered into a voting agreement pursuant to which it has agreed to vote in favor of the Greenlane Stock Issuance Proposal, the Greenlane Charter Amendment Proposal, the Greenlane Plan Proposal and the Greenlane Adjournment Proposal (the “Greenlane Voting Agreement”). Jacoby is not entitled to vote on the Greenlane Merger Proposal. As a result of the voting agreement with Jacoby, all proposals other than the Greenlane Merger Proposal will be approved regardless of how the other holders of Greenlane common stock vote at the Greenlane annual meeting. Mr. Kovacevich, KushCo’s Chief Executive Officer, and Dallas Imbimbo, a member of the KushCo Board, who collectively owned approximately [•]% of KushCo’s outstanding common stock as of the KushCo Record Date, have each entered into voting agreements pursuant to which they have agreed to vote all of their shares in favor of approval of both of the proposals to be presented at the KushCo special meeting (together, the “KushCo Voting Agreements”).
Q:
What constitutes a quorum?
A:
Greenlane.   The presence at the Greenlane annual meeting, either in person or by proxy, of the holders of a majority of Greenlane common stock outstanding on the Greenlane Record Date entitled to vote at the Greenlane annual meeting will constitute a quorum, permitting Greenlane stockholders to conduct business at the Greenlane annual meeting.
KushCo.   The presence at the KushCo special meeting, either online or by proxy, of the holders of a majority of KushCo common stock outstanding on the KushCo Record Date will constitute a quorum, permitting KushCo stockholders to conduct business at the KushCo special meeting.
Shares that are voted, virtually or by proxy, shares abstaining from voting and broker non-votes (to the extent that any are submitted) are treated as present at each of the Greenlane annual meeting and the KushCo special meeting, respectively, for purposes of determining whether a quorum is present.
Q:
What vote is required to approve the proposals?
A:
Greenlane.

Greenlane Proposal 1 (Greenlane Director Proposal):   Greenlane directors are elected by the affirmative vote of the majority of votes cast once a quorum has been established. If any director nominee is not elected by such standard, the director must submit an irrevocable resignation, contingent on the acceptance of that resignation by the Greenlane Board. There is no cumulative voting in the election of Greenlane’s directors.

Greenlane Proposal 2 (Greenlane Auditor Proposal):   The affirmative vote of a majority of the votes cast once a quorum has been established is required to ratify the appointment of Deloitte & Touche LLP as Greenlane’s independent registered public accounting firm for its fiscal year ending December 31, 2021.

Greenlane Proposal 3 (Greenlane Merger Proposal):   The affirmative vote of the Greenlane Public Stockholders holding a majority of the voting power of the outstanding shares of Greenlane common stock, other than shares held by the Greenlane Insiders. The foregoing approval standard is referred to herein as approval by the “majority of the minority.”

Greenlane Proposal 4 (Greenlane Charter Amendment Proposal):   The affirmative vote of the holders of a majority of the voting power of the outstanding shares of Greenlane common stock entitled to vote thereon is required to approve the Greenlane Charter Amendment Proposal.
 
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Greenlane Proposal 5 (Greenlane Stock Issuance Proposal):   The affirmative vote of the majority of votes cast, excluding abstentions and any broker non-votes, by the holders of Greenlane common stock is required to approve the Greenlane Stock Issuance Proposal.

Greenlane Proposal 6 (Greenlane Plan Proposal):   The affirmative vote of the majority of votes cast excluding abstentions and any broker non-votes, by the holders of Greenlane common stock is required to approve the Greenlane Plan Proposal.

Greenlane Proposal 7 (Greenlane Adjournment Proposal):   The affirmative vote of the majority of votes cast, excluding abstentions and any broker non-votes, by the holders of Greenlane common stock at a stockholders’ meeting is required to approve the Greenlane Adjournment Proposal.
KushCo.

KushCo Proposal 1 (KushCo Merger Proposal):   The affirmative vote of the holders of a majority of the voting power of the outstanding shares of KushCo common stock is required to approve the KushCo Merger Proposal.

KushCo Proposal 2 (KushCo Adjournment Proposal):   The affirmative vote of the majority of votes cast once a quorum has been established is required to approve the KushCo Adjournment Proposal.
Q:
What was the role of the Greenlane Special Committee in connection with the Merger Agreement and the transactions contemplated by the Merger Agreement?
A:
The Greenlane Board formed the Greenlane Special Committee in light of the potential conflicts of interest that could have arisen for Messrs. LoCascio and Schoenfeld in connection with the Mergers due to their ownership and their affiliates’ ownership of Greenlane Class C common stock and potential benefits to Messrs. LoCascio and Schoenfeld and their affiliates to be received under the Tax Receivable Agreement by and among Greenlane, Greenlane Holdings, LLC, and the members of Greenlane Holdings, LLC, dated as of April 17, 2019 (the “TRA”) in connection with the transaction. As a result, the Greenlane Board discussed certain procedural protections, including the formation of a special committee consisting entirely of Greenlane’s independent and disinterested directors in order to review, evaluate and negotiate a potential transaction with KushCo, as well as requiring a “majority of the minority vote”. The Greenlane Board delegated the full power and authority of the Greenlane Board to the Greenlane Special Committee to, among other things, review, evaluate, negotiate and reject or approve the terms and conditions of the Merger Agreement and the transactions contemplated by the Merger Agreement. Thereafter, the Greenlane Special Committee, with the assistance of its advisors, reviewed, evaluated and negotiated the terms and conditions of the Merger Agreement and the transactions contemplated by the Merger Agreement, and unanimously determined that the Merger Agreement and the transactions contemplated by the Merger Agreement are advisable and fair to, and in the best interests of, Greenlane and the Greenlane stockholders. The Greenlane Special Committee thereafter recommended that the Greenlane Board approve the Merger Agreement and the transactions contemplated by the Merger Agreement and recommended that the Greenlane Board submit the approval and adoption of Greenlane Proposal 3 (the Greenlane Merger Proposal), Greenlane Proposal 4 (the Greenlane Charter Amendment Proposal), Greenlane Proposal 5 (the Greenlane Stock Issuance Proposal) and Greenlane Proposal 6 (the Greenlane Plan Proposal) to Greenlane’s stockholders.
Q:
How does the Greenlane Board recommend that Greenlane stockholders vote on the proposals?
A:
After careful consideration and upon recommendation by the Greenlane Special Committee, the Greenlane Board has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of Greenlane and the Greenlane stockholders, (ii) approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, (iii) approved the Greenlane A&R Charter, the Greenlane Amended Equity Plan, and the issuance of shares of Greenlane Class A common stock in connection with the Mergers, and (iv) recommended that the foregoing be submitted to the Greenlane stockholders for approval and adoption and that the Greenlane stockholders approve and adopt each of the foregoing.
 
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The Greenlane Board unanimously recommends that Greenlane stockholders vote “FOR” each of the director nominees nominated pursuant to the Greenlane Director Proposal, “FOR” the Greenlane Auditor Proposal, “FOR” the Greenlane Charter Amendment Proposal, “FOR” the Greenlane Stock Issuance Proposal, “FOR” the Greenlane Plan Proposal and “FOR” the Greenlane Adjournment Proposal, if necessary or appropriate, to solicit additional proxies in favor of the approval of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal. The Greenlane Board unanimously recommends that the Greenlane Public Stockholders vote “FOR” the Greenlane Merger Proposal.
For a more complete description of the recommendation of the Greenlane Board, see “The Mergers —  Recommendation of Greenlane Board; Reasons for the Recommendation” beginning on page 169 of this joint proxy statement/prospectus.
Q:
How does the KushCo Board recommend that KushCo stockholders vote on the proposals?
A:
After careful consideration, the KushCo Board has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of KushCo and the KushCo stockholders and (ii)  subject to approval by KushCo stockholders, approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement.
The KushCo Board unanimously recommends that KushCo stockholders vote “FOR” the KushCo Merger Proposal and “FOR” the KushCo Adjournment Proposal.
For a more complete description of the recommendation of the KushCo Board, see “The Mergers —  Recommendation of the KushCo Board; Reasons for the Recommendation” beginning on page 169 of this joint proxy statement/prospectus.
Q:
What if I sell my shares of Greenlane common stock after the Greenlane Record Date but before the Greenlane annual meeting or my shares of KushCo common stock after the KushCo Record Date before the KushCo special meeting?
A:
Greenlane. If you transfer your shares of Greenlane common stock after the Greenlane Record Date but before the Greenlane annual meeting, you will, unless you provide the transferee of your shares with a proxy, retain your right to vote at the Greenlane annual meeting.
KushCo. If you transfer your shares of KushCo common stock after the KushCo Record Date but before the KushCo special meeting, you will, unless you provide the transferee of your shares with a proxy, retain your right to vote at the KushCo special meeting, but will have transferred the right to receive consideration to be paid by Greenlane in Merger 1. In order to receive the consideration to be paid by Greenlane in Merger 1, you must hold your shares of KushCo common stock through the effective time of Merger 1.
Q:
Do any of Greenlane’s executive officers or directors have interests in the Mergers that may differ from those of Greenlane stockholders?
A:
Certain of Greenlane’s executive officers and directors have interests in the Mergers that are different from, or in addition to, the interests of Greenlane stockholders generally. The members of the Greenlane Special Committee and the Greenlane Board were aware of and considered these interests, among other matters, in evaluating the Merger Agreement and the transactions contemplated by the Merger Agreement, and in recommending that Greenlane Public Stockholders vote “FOR” the Greenlane Merger Proposal. For a description of these interests, see “The Mergers — Interests of Greenlane’s Directors and Executive Officers in the Mergers” beginning on page 169 of this joint proxy statement/prospectus.
Q:
Do any of KushCo’s executive officers or directors have interests in the Mergers that may differ from those of KushCo stockholders?
A:
Certain of KushCo’s executive officers and directors have interests in the Mergers that are different from, or in addition to, the interests of KushCo stockholders generally. The members of the KushCo Board were aware of and considered these interests, among other matters, in evaluating the Merger
 
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Agreement and the Mergers, and in recommending that KushCo stockholders vote “FOR” the KushCo Merger Proposal. For a description of these interests, see “The Mergers — Interests of KushCo’s Directors and Executive Officers in the Mergers” beginning on page 200 of this joint proxy statement/prospectus.
Q:
Are there any conditions that must be satisfied for the Mergers to be completed?
A:
Yes. In addition to the approval of the Greenlane Public Stockholders of the Greenlane Merger Proposal, the approval of the Greenlane stockholders of the Greenlane Charter Amendment Proposal as well as the Greenlane Stock Issuance Proposal and the approval of the KushCo stockholders of the KushCo Merger Proposal, there are a number of customary conditions that must be satisfied or waived for the Mergers to be consummated. These customary conditions include certain authorizations for listing on Nasdaq and the expiration or termination of the waiting period (or any extension thereof) under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). The waiting period with respect to the notification and report forms filed by Greenlane and KushCo under the HSR Act expired at 11:59 p.m., Eastern Time, on May 21, 2021.
For a description of all of the conditions to the Mergers, see “The Merger Agreement — Conditions to Completion of the Mergers” beginning on page 224 of this joint proxy statement/prospectus.
Q:
Are there risks associated with the Mergers that I should consider in deciding how to vote?
A:
Yes. There are a number of risks related to the Mergers that are discussed in this joint proxy statement/prospectus described in the section entitled “Risk Factors” beginning on page 30 of this joint proxy statement/prospectus.
Q:
What is the impact of the Greenlane A&R Charter if adopted?
A:
The Greenlane A&R Charter will amend and restate Greenlane’s existing amended and restated certificate of incorporation in order to (i) increase the number of authorized shares of Greenlane Class B common stock from 10,000,000 shares to 30,000,000 shares in order to effect the conversion of each outstanding share of Greenlane Class C common stock into one-third of a share of Greenlane Class B common stock (the “Class C Conversion”), (ii) increase the number of authorized shares of Greenlane Class A common stock from 125,000,000 shares to 600,000,000 shares, and (iii) eliminate references to the Greenlane Class C common stock. Following the Class C Conversion, previous holders of Class C Common Stock will have one share of Class B common stock for each common unit in Greenlane Holdings LLC (the “Operating Company”) whereas currently each holder of Class C common stock owns three shares of Class C common stock for each common unit in the Operating Company. For more information about the Greenlane A&R Charter, see “Proposals Submitted to Greenlane Stockholders — Proposal 4: The Greenlane Charter Amendment Proposal” beginning on page 128 of this joint proxy statement/prospectus and the full text of the Greenlane A&R Charter, which is attached to this joint proxy statement/prospectus as Annex B.
Q:
If my shares of Greenlane common stock or my shares of KushCo common stock, as applicable, are held in “street name” by my broker, bank or other nominee, will my broker, bank or other nominee vote my shares of Greenlane common stock or my shares of KushCo common stock, as applicable, for me?
A:
Unless you instruct your broker, bank or other nominee how to vote your shares of Greenlane common stock and/or your shares of KushCo common stock, as applicable, held in street name, your shares will NOT be voted on any proposal except for the Greenlane Auditor Proposal for which broker discretionary votes are permitted. If you hold your shares of Greenlane common stock and/or your shares of KushCo common stock in a stock brokerage account or if your shares are held by a bank or other nominee (that is, in street name), in order for your shares to be voted at the applicable meeting of the stockholders, you must either provide your broker, bank or other nominee with instructions on how to vote your shares, access the proxy materials and vote over the internet or by telephone, or attend the Greenlane annual meeting or KushCo special meeting, as applicable, in person or online, as applicable. If you hold your shares of Greenlane common stock with a broker or other nominee, however, and wish to attend the Greenlane annual meeting you must obtain a legal proxy, executed in your favor, from the broker or other nominee that holds your shares and bring that legal proxy to the
 
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Greenlane annual meeting. KushCo stockholders who hold their shares in “street name” will need the 16 digit control 16 digit control number in order to be able to virtually attend and vote at the KushCo special meeting. See “How can I vote and attend the KushCo special meeting online?” below.
Q:
How can I vote and attend the KushCo special meeting online?
A:
If your shares of KushCo common stock are registered directly in your name with KushCo’s transfer agent, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by KushCo. If you are a stockholder of record, you may attend the KushCo special meeting and vote your shares online at the meeting. Even if you plan to attend the KushCo special meeting online, KushCo requests that you sign and return the enclosed proxy to ensure that your shares will be represented at the KushCo special meeting if you become unable to attend.
If your shares of KushCo common stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the beneficial owner, you are also invited to attend the KushCo special meeting online.
The KushCo special meeting will be a completely virtual meeting of stockholders, which will be conducted via live webcast. You will be able to attend the KushCo special meeting and submit your questions during the meeting by attending the meeting online at [•]. KushCo stockholders of record as of the close of business on the KushCo Record Date will be able to vote their shares online at the KushCo special meeting. To attend the KushCo special meeting online, you will need the control number included on the proxy card or voting instructions card that accompanied your proxy materials. The live webcast will begin promptly at [•], local time. KushCo’s management encourages you to access the KushCo special meeting prior to the start time. Online check-in will begin at [•], local time, and you should allow ample time for the check-in procedures.
Q:
What happens if I do not vote for a proposal?
A:
Greenlane. If you are a Greenlane stockholder, abstentions and broker non-votes, if any, will be counted in determining the presence of a quorum but will not be counted as votes cast. Abstentions and broker non-votes will have the same effect as a vote cast “AGAINST” the Greenlane Merger Proposal and the Greenlane Charter Amendment Proposal and will have no effect on the Greenlane Director Proposal, the Greenlane Auditor Proposal, the Greenlane Stock Issuance Proposal, the Greenlane Plan Proposal or the Greenlane Adjournment Proposal. A broker non-vote occurs when shares held by a broker or other nominee are represented at the meeting, but the broker or other nominee has not received voting instructions from the beneficial owner and does not have the discretion to direct the voting of the shares on a particular proposal but has discretionary voting power on other proposals. The Greenlane Auditor Proposal is considered a routine matter, and, as a result, brokers and other nominees may provide discretionary votes on the Greenlane Auditor Proposal but not on the other proposals being considered and voted upon at the Greenlane annual meeting, which could result in broker non-votes on all other proposals if beneficial owners do not provide voting instructions on such proposals.
KushCo. If you are a KushCo stockholder, abstentions and broker non-votes, if any, will be counted in determining the presence of a quorum. Abstentions will have the same effect as a vote cast “AGAINST” the KushCo Merger Proposal and will have no effect on the KushCo Adjournment Proposal. Because there are no discretionary matters to be voted on at the KushCo special meeting, KushCo does not expect to receive any broker non-votes.
Q:
Will my rights as a stockholder of Greenlane or KushCo change as a result of the Mergers?
A:
The rights of holders of Greenlane Class A common stock and Greenlane Class B common stock will be unchanged as a result of the Mergers. However, upon the effectiveness of the Greenlane A&R Charter, each share of Greenlane Class C common stock will convert into one-third of a share of Class B common stock and references to the Greenlane Class C common stock will be eliminated in the Greenlane A&R Charter. The Greenlane A&R Charter is attached as Annex B to this joint proxy statement/prospectus.
 
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KushCo stockholders will have different rights following the effective time of Merger 1 due to the differences between the governing documents of Greenlane and KushCo. At the effective time of Merger 1, the Greenlane A&R Charter and the existing Greenlane bylaws will thereafter be the charter and bylaws of the Combined Company. For more information regarding the differences in stockholder rights, see “Comparison of Rights of Greenlane Stockholders and KushCo Stockholders Following the Mergers” beginning on page 241 of this joint proxy statement/prospectus.
Q:
When are the Mergers expected to be completed?
A:
Greenlane and KushCo expect to complete the Mergers as soon as reasonably practicable following satisfaction of all of the required conditions, but in no event after December 31, 2021. If approval is obtained from the stockholders of both Greenlane and KushCo, and if the other conditions to closing of the Mergers are satisfied or waived, it is currently expected that the Mergers will be completed in the second half of 2021. However, there is no guarantee that the conditions to the Mergers will be satisfied or that the Mergers will close on the anticipated timeline or at all.
Q:
If I am a KushCo stockholder what will happen to the shares of KushCo common stock that I currently own?
A:
Following the completion of Merger 1, your shares of KushCo common stock will be cancelled and will only represent the right to receive a number of shares of Greenlane Class A common stock based on the Exchange Ratio. Trading in shares of KushCo common stock on the OTCQX will cease, price quotations for shares of KushCo common stock will no longer be available and KushCo will cease filing periodic and other reports with the SEC.
Q:
If I am a KushCo stockholder how will I receive the merger consideration?
A:
You should not submit your stock certificates at this time. After Merger 1 is completed, if you held shares of KushCo common stock in certificate form, the exchange agent for the Combined Company will send you a letter of transmittal and instructions for exchanging your certificate(s) representing shares of KushCo common stock for shares of Greenlane Class A common stock pursuant to the terms of the Merger Agreement. Upon surrender of a certificate for cancellation along with a properly executed letter of transmittal and other required documents described in the instructions, a holder of KushCo common stock will receive shares of Greenlane Class A common stock (and any cash amounts payable in lieu of fractional shares of Greenlane Class A common stock) pursuant to the terms of the Merger Agreement.
Each registered holder of book-entry shares of KushCo common stock will automatically be entitled to receive shares of Greenlane common stock (and any cash amounts payable in lieu of fractional shares of Greenlane Class A common stock) pursuant to the terms of the Merger Agreement, which shall be delivered no more than three business days following the effective time of Merger 1.
Q:
What are the anticipated U.S. federal income tax consequences to me of the Mergers?
A:
The Mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). It is a condition to Greenlane’s obligation to complete the Mergers that Greenlane receive an opinion of Morrison & Foerster LLP (“Morrison & Foerster”), counsel to Greenlane, to the effect that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to KushCo’s obligation to complete the Mergers that KushCo receive an opinion of Reed Smith LLP (“Reed Smith”), counsel to KushCo, to the effect that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the Mergers, taken together, so qualify, a U.S. Holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers”) of KushCo common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of shares of KushCo common stock for shares of Greenlane common stock pursuant to the Mergers, except with respect to cash received in lieu of fractional shares of KushCo common stock. For further information, see “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 230 of this joint proxy statement/prospectus.
 
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Q:
Are Greenlane or KushCo stockholders entitled to appraisal or dissenters’ rights?
A:
No. Neither Greenlane stockholders nor KushCo stockholders are entitled to exercise appraisal or dissenter’s rights in connection with Merger 1. See “The Merger Agreement — Merger Consideration; Effects of the Mergers — Appraisal Rights” beginning on page 210 of this joint proxy statement/prospectus.
Q:
What do I need to do now?
A:
After you have carefully read this joint proxy statement/prospectus, please respond by completing, signing and dating your proxy card or voting instruction card and returning it in the enclosed pre-addressed postage-paid envelope or, if available, by authorizing your proxy by one of the other methods specified in your proxy card or voting instruction card as promptly as possible so that your shares of Greenlane common stock and/or your shares of KushCo common stock, as applicable, will be represented and voted at the Greenlane annual meeting or the KushCo special meeting, as applicable.
Please refer to your proxy card or voting instruction card forwarded by your broker, bank or other nominee to see which voting options are available to you.
The method by which you authorize a proxy will in no way limit your right to vote at the Greenlane annual meeting or the KushCo special meeting, as applicable, if you later decide to attend the applicable meeting and vote in person or online, as applicable. Your vote as a Greenlane stockholder or KushCo stockholder is important. Accordingly, please sign and return the enclosed proxy card whether or not you plan to attend the Greenlane annual meeting or the KushCo special meeting, as applicable, in person or online, as applicable.
However, if your shares of Greenlane common stock or your shares of KushCo common stock are held in the name of a broker, bank or other nominee, you must obtain a legal proxy, executed in your favor, from your broker, bank or other nominee, to be able to vote in person at the Greenlane annual meeting or virtually at the KushCo special meeting, as applicable.
Q:
How will my proxy be voted?
A:
Greenlane. All shares of Greenlane common stock entitled to vote and represented by properly completed proxies received prior to the Greenlane annual meeting, and not revoked, will be voted at the Greenlane annual meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of Greenlane common stock should be voted on a matter, the shares of Greenlane common stock represented by your proxy will be voted as the Greenlane Board recommends and, therefore, “FOR” each of the director nominees included in the Greenlane Director Proposal, “FOR” the Greenlane Auditor Proposal, “FOR” the Greenlane Merger Proposal, “FOR” the Greenlane Charter Amendment Proposal, “FOR” the Greenlane Stock Issuance Proposal, “FOR” the Greenlane Plan Proposal and “FOR” the Greenlane Adjournment Proposal (if necessary). If you hold your shares of Greenlane common stock in “street name” and do not provide voting instructions to your broker, bank or other nominee, your shares of Greenlane common stock will NOT be voted at the Greenlane annual meeting except with respect to the Greenlane Auditor Proposal for which broker discretionary votes are permitted and will have the same impact as a vote “AGAINST” the Greenlane Merger Proposal and the Greenlane Charter Amendment Proposal.
KushCo. All shares of KushCo common stock entitled to vote and represented by properly completed proxies received prior to the KushCo special meeting, and not revoked, will be voted at the KushCo special meeting as instructed on the proxies. If you properly sign, date and return a proxy card, but do not indicate how your shares of KushCo common stock should be voted on a matter, the shares of KushCo common stock represented by your proxy will be voted as the KushCo Board recommends and, therefore, “FOR” the KushCo Merger Proposal and “FOR” the KushCo Adjournment Proposal (if necessary). If you hold your shares of KushCo common stock in “street name” and do not provide voting instructions to your broker, bank or other nominee, your shares of KushCo common stock will NOT be voted at the KushCo special meeting and will have the same effect as a vote cast “AGAINST” the KushCo Merger Proposal.
 
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Q:
Can I revoke my proxy or change my vote after I have delivered my proxy?
A:
Yes. You may revoke your proxy or change your vote at any time before your proxy is exercised at the Greenlane annual meeting or the KushCo special meeting, as applicable. If you are a holder of record, you can do this in any of the three following ways:

by sending a written notice to the corporate secretary of Greenlane or the corporate secretary of KushCo, as applicable, in time to be received before the Greenlane annual meeting or the KushCo special meeting, as applicable, stating that you would like to revoke your proxy;

by completing, signing and dating another proxy card and returning it by mail in time to be received before the Greenlane annual meeting or the KushCo special meeting, as applicable, or by submitting a later dated proxy by the internet or telephone in which case your later-submitted proxy will be recorded and your earlier proxy revoked; or

by attending the Greenlane annual meeting or the KushCo special meeting, as applicable, and voting in person or virtually, as applicable. Simply attending the Greenlane annual meeting or the KushCo special meeting, as applicable, without voting will not revoke your proxy or change your vote.
Your last vote is the vote that will be counted.
If your shares of Greenlane common stock or your shares of KushCo common stock, as applicable, are held in “street name” in an account at a broker, bank or other nominee and you desire to change your vote or vote in person or virtually, as applicable, you should contact your broker, bank or other nominee for instructions on how to do so. If you hold your shares of Greenlane common stock in “street name,” you may not vote your shares in person at the Greenlane annual meeting unless you bring a legal proxy executed in your favor from the broker, bank or other nominee that holds your shares.
Q:
What does it mean if I receive more than one set of voting materials for the Greenlane annual meeting or the KushCo special meeting?
A:
You may receive more than one set of voting materials for the Greenlane annual meeting and/or the KushCo special meeting, as applicable, including multiple copies of this joint proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares of Greenlane common stock or your shares of KushCo common stock, as applicable, in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of Greenlane common stock or shares of KushCo common stock, as applicable. If you are a holder of record and your shares of Greenlane common stock or your shares of KushCo common stock, as applicable, are registered in more than one name, you may receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive or, if available, please authorize your proxy by telephone or over the internet.
Q:
What happens if I am a stockholder of both Greenlane and KushCo?
A:
You will receive separate proxy cards for each entity and should (i) complete, sign and date each proxy card and return each proxy card in the appropriate pre-addressed postage-paid envelope, or (ii) if available, authorize a proxy by one of the other methods specified in your proxy card or voting instruction card for each entity.
Q:
Do I need identification to attend the Greenlane annual meeting or KushCo special meeting, as applicable, in person or online, as applicable?
A:
Yes. Please bring proper identification, together with proof that you are a record owner of shares of Greenlane common stock or shares of KushCo common stock, as applicable, reflecting your share ownership as of the close of business on the Greenlane Record Date or the KushCo Record Date, as applicable. If your shares are held in street name, please bring acceptable proof of ownership, such as a letter from your broker or an account statement showing that you beneficially owned shares of Greenlane common stock or shares of KushCo common stock, as applicable, on the applicable record date, as well as a legal proxy executed in your favor from your broker giving you the right to vote your shares at the applicable meeting of the stockholders.
 
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Q:
Will a proxy solicitor be used?
A:
Greenlane has engaged D.F. King & Co., Inc. to assist in the solicitation of proxies for the Greenlane annual meeting. KushCo has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the KushCo special meeting.
Q:
How can I find out the results of the voting at the meetings of the stockholders?
A:
Preliminary voting results will be announced at the Greenlane annual meeting and the KushCo special meeting, as applicable.. Final voting results will be published in a Current Report on Form 8-K filed by each of Greenlane and KushCo with the SEC within four business days after the Greenlane annual meeting and the KushCo special meeting, as applicable.
Q:
What happens if a meeting of the stockholders is postponed or adjourned?
A:
If the Greenlane annual meeting or the KushCo special meeting is postponed or adjourned, your proxy will still be in effect and will be voted at such postponed or adjourned meeting. You will be able to change or revoke your proxy until it is exercised.
Q:
Who can answer my questions?
A:
If you have any questions about the Mergers or the other matters to be voted on at the meetings of stockholders or how to authorize your proxy or need additional copies of this joint proxy statement/prospectus, the enclosed proxy card or voting instructions, you should contact:
If you are an Greenlane stockholder:
D.F. King & Co., Inc.
48 Wall Street, 22nd Floor
New York, NY 10005
Telephone: (212) 269-5550
(banks and brokers call collect at (800) 317-8033
Email: GNLN@dfking.com
If you are an KushCo stockholder:
[•]
 
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SUMMARY
The Companies (See p. 97)
Greenlane Holdings, Inc. (See p. 97)
Greenlane is one of the largest global sellers of premium cannabis accessories and liquid nicotine products in the world. Greenlane operates as a third-party brand accelerator, a powerful house of brands, and a distribution platform for consumption devices and lifestyle brands serving the global cannabis, hemp-derived CBD, and liquid nicotine markets.
Greenlane Class A common stock is listed on Nasdaq, trading under the symbol “GNLN.”
Greenlane’s principal executive offices are located at 1095 Broken Sound Parkway, Suite 300, Boca Raton, FL 33487, and its telephone number is (877) 292-7660. Greenlane’s corporate website is www.gnln.com. Information contained on Greenlane’s website is not incorporated by reference into this joint proxy statement/prospectus, and such information should not be considered to be part of this joint proxy statement/prospectus.
KushCo Holdings, Inc. (See p. 97)
KushCo is a Nevada corporation founded in 2010 specializing in the sale of a wide variety of ancillary products and services to customers operating in the regulated medical and adult recreational cannabis and hemp-derived cannabidiol (“CBD”) industries. KushCo common stock is listed on the OTCQX, trading under the symbol “KSHB.”
KushCo’s principal executive offices are located at 6261 Katella Avenue, Suite 250, Cypress, CA 90630, and its telephone number is (714) 243-4311. KushCo’s corporate website is www.kushco.com. Information contained on KushCo’s website is not incorporated by reference into this joint proxy statement/prospectus, and such information should not be considered to be part of this joint proxy statement/prospectus.
The Combined Company (See p. 97)
References to the Combined Company are to Greenlane after the effective time of the Mergers. The Combined Company will be named “Greenlane Holdings, Inc.” and will be a Delaware corporation.
The Combined Company will be the leading ancillary cannabis products and services company. The Combined Company will serve a premier group of customers, which includes many of the leading multi-state-operators and licensed producers, the top smoke shops in the United States, and millions of individuals.
The Mergers will bring together two highly complementary offerings of brands, products and services. KushCo’s deep upstream customer relationships in the U.S. and Canada coupled with Greenlane’s downstream focus and Greenlane-owned brands enable significant growth opportunities and ability to deliver additional value to customers.
The Combined Company common stock will continue to be listed on Nasdaq, trading under the symbol “GNLN.”
The Combined Company’s principal executive offices will be located at located at 1095 Broken Sound Parkway, Suite 300, Boca Raton, FL 33487, and its telephone number is (877) 292-7660. The Combined Company’s corporate website will be www.gnln.com.
The Mergers (See p. 142)
The Merger Agreement (See p. 204)
Greenlane and KushCo have entered into a Merger Agreement attached as Annex A to this joint proxy statement/prospectus. Greenlane and KushCo encourage you to carefully read the Merger Agreement in its entirety because it is the principal document governing the Mergers and the other transactions contemplated by the Merger Agreement.
 
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The Mergers (See p. 142)
Pursuant to the Merger Agreement, Greenlane and KushCo will combine through a merger of Merger Sub 1 with and into KushCo with KushCo as the surviving corporation and a wholly owned subsidiary of Greenlane (“Initial Surviving Corporation”) and a merger of the Initial Surviving Corporation with and into Merger Sub 2 with Merger Sub 2 as the surviving limited liability company and a wholly owned subsidiary of Greenlane. The shares of the Combined Company will continue to be listed and traded on Nasdaq under the symbol “GNLN.”
The Merger Consideration (See p. 206)
If the Mergers are completed pursuant to the Merger Agreement, each KushCo stockholder will receive a number of shares of Greenlane Class A common stock, $0.01 par value per share (“Greenlane Class A common stock”), for each share of KushCo common stock, $0.001 par value per share (“KushCo common stock”), held immediately prior to the effective time of the Mergers, with cash paid in lieu of any fractional shares that a KushCo stockholder would otherwise be entitled to receive, based on the formula set forth under the heading “Merger Consideration; Effects of the Merger” ​(the “Exchange Ratio”). In accordance with the Merger Agreement, and as described further elsewhere in this joint proxy statement/prospectus, the Exchange Ratio is subject to adjustment prior to the effective time of the Mergers in order to ensure that KushCo’s former stockholders (“KushCo stockholders”) will own no more than 49.9% of the issued and outstanding shares of Combined Company common stock (after giving effect to the Class C Conversion) immediately following the Merger 1 and no less than 48.1% of the Greenlane Net Diluted Securities as of immediately following the effective time of Merger 1. As a result, the Exchange Ratio is subject to adjustment to reflect changes in the number of Greenlane Shares Outstanding, KushCo Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities (as such terms are defined in this joint proxy statement/prospectus), immediately prior to the effective time of Merger 1. Greenlane stockholders will continue to hold their existing shares of Greenlane Class A common stock or Greenlane Class B common stock, $0.0001 par value per share (“Greenlane Class B common stock”), as applicable. Pursuant to the Merger Agreement, in connection with the consummation of Merger 1, holders of Greenlane Class C common stock, $0.0001 par value per share (“Greenlane Class C common stock” and, prior to its elimination as a class, together with Greenlane Class A common stock and Greenlane Class B common stock, “Greenlane common stock”), will convert each share of Greenlane Class C common stock into one-third of a share of Greenlane Class B common stock, and, subject to the approval of Greenlane stockholders as described in this joint proxy statement/prospectus, Greenlane will file an Amended and Restated Certificate of Incorporation, that will eliminate all references to the Greenlane Class C common stock.
Shares of Greenlane Class A common stock are currently listed on Nasdaq under the symbol “GNLN” and shares of KushCo common stock are currently traded on the OTCQX tier of the OTC Markets Group, LLC (the “OTCQX”) under the symbol “KSHB.” Based on the closing price of Greenlane Class A common stock on the Nasdaq of $4.44 on March 29, 2021, the last trading day before the announcement of the Mergers, using an Exchange Ratio of 0.2542 which is the Exchange Ratio calculated as of May 25, 2021, the Exchange Ratio represented approximately $1.13 in Greenlane Class A common stock for each share of KushCo common stock. Based on the closing price of Greenlane Class A common stock on the Nasdaq of $3.66 on May 25, 2021, the latest practicable trading day before the date of this joint proxy statement/prospectus, using an Exchange Ratio of 0.2542 which is the Exchange Ratio calculated as of May 25, 2021, the Exchange Ratio represented approximately $0.93 in Greenlane Class A common stock for each share of KushCo common stock. For a depiction of the Exchange Ratio formula see the definition of “Exchange Ratio” above and “The Merger Agreement — Merger Consideration; Effects of the Mergers” beginning on page 206 of this joint proxy statement/prospectus.
It is anticipated that Greenlane will issue approximately 40,939,340 shares of Greenlane Class A common stock in connection with the Mergers based on the Exchange Ratio calculated as of May 25, 2021. Upon the completion of the Mergers, it is estimated that Greenlane stockholders prior to the Mergers will collectively own approximately 50.1% of the issued and outstanding shares of Combined Company common stock and KushCo stockholders will collectively own approximately 49.9% of the issued and outstanding shares of the Combined Company common stock.
 
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A change in the market price of Greenlane Class A common stock may cause the number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities to change for purposes of the Exchange Ratio calculation because such changes could result in an increase or decrease in the total number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities, in each case measured immediately prior to the effective time of Merger 1, which will cause the Exchange Ratio to fluctuate. Additionally, if either Greenlane or KushCo issues additional equity prior to the effective time of the Mergers or if Greenlane engages in certain capital raising activities pursuant to which it issues additional shares of Greenlane Class A common stock, in each case as permitted under the Merger Agreement, the Exchange Ratio will be adjusted to give effect to such events. An increase in Greenlane Outstanding Securities or Greenlane Net Diluted Securities would generally result in an increase in the Exchange Ratio, while an increase in KushCo Fully Diluted Securities or KushCo Net Diluted Securities would generally result in a decrease in the Exchange Ratio. See “The Merger Agreement — Merger Consideration; Effects of the Mergers” beginning on page 206 of this joint proxy statement/prospectus for more information regarding potential adjustments to the Exchange Ratio and the Exchange Ratio formula.
Pursuant to the formula used in calculating the Exchange Ratio, in accordance with the Merger Agreement, regardless of adjustments to the Exchange Ratio, under no circumstances will KushCo stockholders own more than 49.9% of all issued and outstanding shares of Combined Company common stock (after giving effect to the Class C Conversion) immediately following the effective time of Merger 1 nor less than 48.1% of the Greenlane Net Diluted Securities immediately following the effective time of Merger 1 and under no circumstances will Greenlane stockholders own more than 51.9% of the Greenlane Net Diluted Securities as of immediately following the effective time of Merger 1 or less than 50.1% of all Greenlane outstanding common stock immediately after giving effect to the Mergers and the Class C Conversion.
Greenlane’s and KushCo’s management urge you to obtain current market quotations for Greenlane Class A common stock and KushCo common stock. You are cautioned that the trading price of the common stock of the Combined Company (the “Combined Company common stock”) after the Mergers may be affected by factors different from those currently affecting the trading prices of Greenlane Class A common stock and KushCo common stock, and therefore, the historical trading prices of Greenlane and KushCo may not be indicative of the trading price of the Combined Company. See the risks related to the Mergers and the related transactions described under the section “Risk Factors — Risk Factors Related to the Mergers” beginning on page 30 of this joint proxy statement/prospectus.
Recommendation of the Greenlane Board (See p. 99)
After careful consideration and upon recommendation by the Greenlane Special Committee, the Greenlane Board has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of Greenlane and the Greenlane stockholders, (ii) authorized, approved and adopted the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement, (iii), approved the Greenlane A&R Charter, the Greenlane Amended Equity Plan and the issuance of shares of Greenlane Class A common stock in connection with the Mergers, and (iv) recommended that the foregoing be submitted to the Greenlane stockholders for approval and adoption and that the Greenlane stockholders approve and adopt each of the foregoing.
The Greenlane Board unanimously recommends that Greenlane stockholders vote “FOR” each of the director nominees nominated pursuant to the Greenlane Director Proposal, “FOR” the Greenlane Merger Proposal, “FOR” the Greenlane Charter Amendment Proposal, “FOR” the Greenlane Stock Issuance Proposal, “FOR” the Greenlane Plan Proposal and “FOR” the Greenlane Adjournment Proposal, if necessary or appropriate, to solicit additional proxies in favor of the approval of the Greenlane Merger Proposal, the Greenlane Charter Amendment Proposal or the Greenlane Stock Issuance Proposal. The Greenlane Board unanimously recommends that the Greenlane Public Stockholders vote “FOR” the Greenlane Merger Proposal.
 
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Recommendation of the KushCo Board (See p. 136)
After careful consideration and consultation, the KushCo Board has unanimously (i) determined that the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement are advisable, fair to and in the best interests of KushCo and the KushCo stockholders and (ii) subject to the approval by KushCo stockholders approved the Merger Agreement, the Mergers and the other transactions contemplated by the Merger Agreement. The KushCo Board recommends that KushCo stockholders vote “FOR” the KushCo Merger Proposal, and “FOR” the KushCo Adjournment Proposal, if necessary or appropriate, to permit further solicitation of proxies in favor of the approval of the KushCo Merger Proposal.
Summary of Risk Factors Related to the Mergers (See p. 30)
You should carefully consider all of the risk factors together with all of the other information included in this joint proxy statement/prospectus before deciding how to vote. The risks related to the Mergers are described under the section “Risk Factors — Risk Factors Related to the Mergers” beginning on page 30 of this joint proxy statement/prospectus.

Failure to consummate the Mergers and the other transactions contemplated by the Merger Agreement as currently contemplated or at all could adversely affect the price of Greenlane Class A common stock, KushCo common stock and the future business and financial results of Greenlane and KushCo.

The Exchange Ratio is not fixed and will be adjusted prior to the effective time of the Mergers to reflect changes in the number of Greenlane Shares Outstanding, KushCo Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities, immediately prior to the effective time of Merger 1.

The Greenlane Charter Amendment Proposal, the Greenlane Stock Issuance Proposal, the Greenlane Merger Proposal and the KushCo Merger Proposal are each cross-conditioned on the approval of each other.

The relative ownership positions of Greenlane stockholders and KushCo stockholders will be diluted as a result of the Mergers.

The consummation of the Mergers and the other transactions contemplated by the Merger Agreement are subject to a number of conditions which, if not satisfied or waived, would adversely impact the parties’ ability to complete the Mergers and the other transactions contemplated by the Merger Agreement.

Greenlane and KushCo may waive one or more conditions set forth in the Merger Agreement without resoliciting approval of Greenlane stockholders or KushCo stockholders.

If the Mergers do not occur, one of the companies may incur payment obligations to the other.

The pendency of the transactions contemplated by the Merger Agreement could materially and adversely affect the business and operations of Greenlane and KushCo.

The Merger Agreement contains provisions that could discourage a potential competing acquirer of either Greenlane or KushCo or could result in any competing acquisitions proposal being at a lower price than it might otherwise be.

If the Mergers and the other transactions contemplated by the Merger Agreement are not consummated by December 31, 2021, either Greenlane or KushCo may terminate the Merger Agreement.

If the Mergers do not qualify as a tax-free reorganization, KushCo stockholders may recognize a taxable gain.

Certain directors and executive officers of Greenlane and directors and executive officers of KushCo have interests in seeing the Mergers completed that are different from, or in addition to, those of the other Greenlane stockholders and KushCo stockholders, as applicable.
 
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The Combined Company’s actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this joint proxy statement/prospectus.

Following the Mergers, the Combined Company may be unable to integrate the businesses of Greenlane and KushCo successfully and realize the anticipated synergies and other expected benefits of the Mergers on the anticipated timeframe or at all.

The future results of the Combined Company will suffer if the Combined Company does not effectively manage the increased scale of its operations, enhanced geographic footprint and its optimization and expansion opportunities following the Mergers.
Opinions of Financial Advisors
Opinion of the Greenlane Special Committee’s Financial Advisor (See p. 174)
The Greenlane Special Committee engaged Canaccord Genuity Corp. (“Canaccord Genuity”) as its financial advisor in connection with the Mergers. As part of this engagement, Canaccord Genuity delivered to the Greenlane Special Committee a written opinion, dated March 30, 2021, to the effect that, as of that date and based upon and subject to certain assumptions, explanations and limitations set forth in the written opinion, the Exchange Ratio was fair, from a financial point of view, to Greenlane. The full text of Canaccord Genuity’s written opinion, dated March 30, 2021, is attached to this joint proxy statement/prospectus as Annex D and is incorporated into this joint proxy statement/prospectus by reference. The summary of Canaccord Genuity’s opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of such opinion. Greenlane stockholders are encouraged to read Canaccord Genuity’s opinion carefully and in its entirety for a description of the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by Canaccord Genuity in connection with its opinion. Canaccord Genuity’s opinion was provided for the sole use and benefit of the Greenlane Special Committee (in its capacity as such) with, and for the purpose of, its consideration of the Mergers and does not address any other term or aspect of the Mergers or other matters. Canaccord Genuity’s opinion does not address the relative merits of the Mergers as compared to other transactions or business strategies that might be available to Greenlane, nor does it address the underlying business decision of Greenlane to proceed with the Mergers or any view on another term or aspect of the Mergers, including, without limitation, the structure or form of the Mergers. Canaccord Genuity’s opinion does not constitute advice or a recommendation to the Greenlane Board, Greenlane Special Committee, any stockholder of Greenlane or any other person as to how the Greenlane Board, the Greenlane Special Committee or such stockholder or other person should vote with respect to the Mergers or otherwise act on any other matter with respect to the Mergers, or whether to proceed with the Mergers or any related transaction. Canaccord Genuity’s opinion was given as at March 30, 2021 and it should be understood that (i) subsequent developments may affect the conclusions expressed in Canaccord Genuity’s opinion if such opinion were rendered as of a later date, and (ii) Canaccord Genuity has disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Canaccord Genuity’s opinion after the date thereof. For a more complete description, see the section of this joint proxy statement/prospectus captioned “The Mergers — Opinion of the Greenlane Special Committee’s Financial Advisor” and the full text of Canaccord Genuity’s opinion attached as Annex D to this joint proxy statement/prospectus.
Opinion of KushCo’s Financial Advisor (See p. 188)
KushCo has engaged Jefferies LLC (“Jefferies”) as financial advisor to KushCo in connection with the Mergers. As part of this engagement, Jefferies delivered a written opinion, dated March 30, 2021, to the KushCo Board as to the fairness, from a financial point of view and as of such date, of the Exchange Ratio provided for pursuant to the Merger Agreement. The full text of Jefferies’ opinion, which describes various assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Jefferies, is attached as Annex E to this joint proxy statement/prospectus and is incorporated herein by reference. Jefferies’ opinion was provided for the use and benefit of the KushCo Board (in its capacity as such) in its evaluation of the Exchange Ratio from a financial point of view and did not address any other aspect of the Mergers or any other matter. Jefferies’ opinion did not address the relative merits of the Mergers or related transactions as compared to any alternative transaction or opportunity that might be
 
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available to KushCo nor did it address the underlying business decision by KushCo to engage in the Mergers or related transactions. Jefferies’ opinion did not constitute a recommendation as to how the KushCo Board, and does not constitute a recommendation as to how any securityholder, should vote or act with respect to the Mergers, related transactions or any other matter. The summary of Jefferies’ opinion set forth herein is qualified in its entirety by reference to the full text of Jefferies’ opinion attached as Annex E to this joint proxy statement/prospectus.
Treatment of the KushCo Equity Incentive Awards and Plan (See p. 209)
KushCo Options
At the effective time of Merger 1, KushCo stock options will be treated as follows:

Each KushCo option that is outstanding immediately prior to the Merger 1 effective time, whether or not then vested or exercisable (but after taking into account any acceleration or vesting as provided under the KushCo equity plan covering such option), will be converted into an option to purchase, on the same terms and conditions that applied to such KushCo option immediately prior to the Merger 1 effective time, (A) that number of shares of Greenlane Class A common stock, rounded down to the nearest whole share, determined by multiplying (1) the total number of KushCo shares subject to such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio, (B) at a per-share exercise price, rounded up to the nearest whole cent, determined by dividing (1) the exercise price per share covered by such KushCo option immediately prior to the Merger 1 effective time by (2) the Exchange Ratio; and

Greenlane shall assume the sponsorship of each KushCo equity plan covering such KushCo options, provided that references to KushCo therein shall, after such assumption, be deemed references to Greenlane and references to shares of KushCo common stock therein shall, after such assumption, be deemed references to Greenlane Class A common stock.
KushCo RSUs
Immediately prior to the effective time of Merger 1, each unvested KushCo RSU will accelerate and vest in full in accordance with the terms of the KushCo equity plan covering such RSUs and will thereafter be treated as a share of KushCo common stock in Merger 1.
Treatment of Greenlane Equity Incentive Awards (See p. 209)
Greenlane Options
At the effective time of Merger 1, options to purchase shares of Greenlane Class A common stock (“Greenlane options”) will be treated as follows:

Each unvested Greenlane option, other than unvested Greenlane options held by non-employee directors of Greenlane, will accelerate and vest in full; and

Each Greenlane option held by non-employee directors of Greenlane, whether vested or unvested, will remain outstanding in accordance with the terms of Greenlane’s equity plan covering each such option.
Greenlane Restricted Stock
At the effective time of Merger 1, shares of Greenlane restricted stock will be treated as follows:

Each share of Greenlane restricted stock or Greenlane restricted common units, other than unvested Greenlane restricted stock or Greenlane restricted common units held by non-employee directors of Greenlane, will accelerate and vest in full in accordance with the terms of Greenlane’s equity plan covering each such award; and

Each share of Greenlane restricted stock or Greenlane restricted common units of Greenlane held by non-employee directors of Greenlane, whether vested or unvested, will remain outstanding in accordance with the terms of Greenlane’s equity plan covering each such award.
 
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Employee Matters (See p. 222)
Pursuant to the Merger Agreement, Greenlane will provide employees of KushCo and its subsidiaries who continue to be employed by Greenlane (or the Combined Company or any subsidiary thereof) with levels of base compensation no less favorable than those in effect immediately prior to the Merger 1 effective time, cash bonus, commission and equity compensation opportunities that, on an aggregate basis, are no less favorable than those in effect immediately prior to the Merger 1 effective time and other compensation and benefits that are no less favorable, in the aggregate, than those provided to similarly situated employees of Greenlane or its subsidiaries.
Greenlane will cause each employee of KushCo and its subsidiaries to provide full crediting for his or her years of service with KushCo and its subsidiaries (and their respective predecessors) in all benefit plans and arrangements of Greenlane in effect immediately prior to the Merger 1 effective time (the “Greenlane Benefit Plans”). Such crediting will exclude benefit accrual, except for vacation, if applicable. In addition, Greenlane will cause each eligible employee of KushCo and its subsidiaries and his or her dependents to be immediately eligible to participate, without any waiting period, in all Greenlane Benefit Plans that are welfare plans, to the extent coverage under such plan replaces or is intended to replace coverage under a comparable KushCo employee benefit plan. With respect to any Greenlane Benefit Plans providing medical, dental, pharmaceutical and/or vision benefits to any employee of KushCo or its subsidiaries or his or her dependents, Greenlane will (i) cause all pre-existing condition exclusions, waiting periods and actively-at-work requirements to be waived for such persons, and (ii) use commercially reasonable efforts to take into account any eligible expenses incurred for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such persons under the corresponding Greenlane Benefit Plans.
KushCo 401(k) Plan (See p. 223)
If requested by Greenlane in writing not less than five business days before the closing date of the Mergers, KushCo will adopt resolutions terminating the KushCo 401(k) plan effective as of the day prior to the closing date of the Mergers. Upon such termination, Greenlane will permit the participants in such plan who are then actively employed by KushCo or its subsidiaries to make rollover contributions of any or all of their “eligible rollover distributions” ​(within the meaning of Section 401(a)(31) of the Code and including loans) to a 401(k) plan maintained by Greenlane, assuming that KushCo’s 401(k) plan allows for the same.
Directors and Management of the Combined Company after the Mergers (See p. 205)
Immediately following the effective time of Mergers and as a result of the Mergers, the Greenlane Board will take action to increase the size of the Combined Company Board to seven directors, four of which will be individuals that are current members of the Greenlane Board and three of which will be individuals that are current members of the KushCo Board. Aaron LoCascio, Greenlane’s Chief Executive Officer and Chairman of the Greenlane Board, Adam Schoenfeld, Greenlane’s Chief Strategy Officer and a member of the Greenlane Board, and Richard Taney and Jeff Uttz, both of whom are independent members of the Greenlane Board, are expected to continue as directors of the Combined Company. Neil Closner, a current independent director of Greenlane, has submitted to the Greenlane Board a duly executed conditional resignation letter pursuant to which, in the event the Mergers are consummated, Mr. Closner will resign from the Greenlane Board and all applicable committees thereof automatically and effective immediately at the effective time of Merger 1.The Greenlane Board will fill the vacancy and newly created directorships with three individuals that are current members of the KushCo Board to serve until the 2022 annual meeting of Greenlane’s stockholders (and until their successors have been duly elected and qualified). It is expected that Nicholas Kovacevich, the current Chief Executive Officer of KushCo, Don Hunter, a current member of the KushCo Board, and Dallas Imbimbo, a current member of the KushCo Board, will serve as directors of the Combined Company. Greenlane and KushCo will designate one of the independent directors of the Combined Company to serve as Chairman of the Board.
Nick Kovacevich, the current Chief Executive Officer of KushCo, is expected to serve as the Chief Executive Officer of the Combined Company. Aaron LoCascio, the current Chief Executive Officer of Greenlane, is expected to serve as the President of the Combined Company. Additionally, William Mote
 
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and Adam Schoenfeld, the current Chief Financial Officer and Chief Strategy Officer of Greenlane, respectively, are expected to continue to serve in such positions for the Combined Company.
Interests of Greenlane’s Directors and Executive Officers in the Mergers (See p. 199)
In considering the recommendation of the Greenlane Board to Greenlane stockholders to vote in favor of the Greenlane Merger Proposal, the Greenlane Stock Issuance Proposal and the Greenlane Charter Proposal and the other matters to be acted upon by Greenlane stockholders at the Greenlane annual meeting, Greenlane stockholders should be aware that Greenlane’s executive officers and certain members of the Greenlane Board have interests in the Mergers that may be different from, in addition to, or may conflict with the interests of Greenlane stockholders.
Interests of KushCo’s Directors and Executive Officers in the Mergers (See p. 200)
In considering the recommendation of the KushCo Board to approve the Mergers, KushCo’s stockholders should be aware that certain directors and executive officers of KushCo have certain interests in the Mergers that may be different from, or in addition to, the interests of KushCo stockholders generally. The members of the KushCo Board were aware of these different or additional interests and considered these interests, among other matters, in evaluating and approving the Mergers, and in recommending to KushCo stockholders that they approve the Mergers at the KushCo special meeting.
Listing of Shares of the Combined Company’s Common Stock; Delisting and Deregistration of KushCo Common Stock (See p. 203)
It is a condition to the completion of the Mergers that the shares of Greenlane Class A common stock issuable in Merger 1 be approved for listing on Nasdaq, subject to official notice of issuance. After Merger 1 is completed, the shares of KushCo common stock currently listed on the OTCQX tier of the OTC Markets Group, LLC (the “OTCQX”) will cease to be listed on the OTCQX and will be deregistered under the Exchange Act. The Combined Company will retain the name “Greenlane Holdings, Inc.” and will continue to trade on Nasdaq under the symbol “GNLN.”.
Conditions to Completion of the Mergers (See p. 224)
A number of conditions must be satisfied or waived, where legally permissible, before the Mergers can be consummated. These include, among others:

approval of the Merger Agreement by the holders of a majority of the outstanding shares of KushCo common stock;

approval of the Greenlane Stock Issuance Proposal by affirmative vote of the majority of votes cast, excluding abstentions and any broker non-votes, by the holders of Greenlane common stock;

approval of the Greenlane Charter Amendment Proposal by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of Greenlane common stock entitled to vote thereon;

approval of the Merger Agreement by the affirmative vote of the Greenlane Public Stockholders holding a majority of the voting power of the outstanding shares of Greenlane common stock, other than shares held by the Greenlane Insiders, which are comprised of (i) Jacoby, an entity controlled by Greenlane’s co-founders, and its affiliates and (ii) Aaron LoCascio, Adam Schoenfeld, William Mote, William Bine and Douglas Fischer, the chief executive officer, chief strategy officer, chief financial officer, chief operating officer and general counsel of Greenlane, respectively, is required to approve the Greenlane Merger Proposal (approval by the “majority of the minority”);

the issuance of shares of Greenlane Class A common stock to the KushCo stockholders will have been authorized for listing on the Nasdaq Global Market or the listing of Greenlane or KushCo, after giving effect to the Mergers, on the Nasdaq Global Market will have been approved;

the waiting period (and any extensions thereof) applicable under the HSR Act, will have expired or been terminated;
 
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this registration statement on Form S-4 will have been declared effective and no stop order suspending the effectiveness of such registration statement on Form S-4 will have been issued and remain in effect and no proceeding for that purpose will have been initiated or threatened by the SEC;

receipt by Greenlane and KushCo, respectively, of a tax opinion relating to the nature of the transactions for tax purposes; and

the repayment of certain indebtedness of KushCo, unless such indebtedness is assumed by Greenlane or one of its subsidiaries.
For more information regarding the conditions to the consummation of the Mergers and a complete list of such conditions, see “The Merger Agreement — Conditions to Completion of the Mergers” beginning on page 224 of this joint proxy statement/prospectus.
Regulatory Approvals Required for the Mergers (See p. 201)
In connection with the Mergers or the other transactions contemplated by the Merger Agreement, the waiting period (and any extensions thereof) applicable under the HSR Act must be complied with or and any waiting period (and any extensions thereof) applicable under the HSR Act must have expired or been terminated. The waiting period with respect to the notification and report forms filed by Greenlane and KushCo under the HSR Act expired at 11:59 p.m., Eastern Time, on May 21, 2021.
No Solicitation (See p. 216)
Under the Merger Agreement, each of Greenlane and KushCo has agreed it will not, nor will it permit any of its respective subsidiaries to, and it shall use commercially reasonable efforts to cause respective representatives not to (i) solicit, initiate, seek or knowingly encourage or knowingly facilitate any inquiries, discussions, requests, proposals, or offers with respect to, or the announcement, making or completion of, any Acquisition Proposal (as defined “The Merger Agreement — Covenants and Agreements — No Solicitations” beginning on page 216 of this joint proxy statement/prospectus), (ii) enter into, continue or otherwise participate or engage in any negotiations or discussions regarding, or furnish to any person other than Greenlane or KushCo, or their respective representatives, as applicable, any non-public information or data with respect to any Acquisition Proposal, (iii) approve, recommend, publicly declare advisable or enter into any letter of intent, memorandum of understanding, agreement in principle, acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement, partnership agreement or other agreement, in each case providing for an Acquisition Proposal, or require or have the effects of requiring KushCo or Greenlane, as applicable, to abandon, terminate or materially breach its obligations under the Merger Agreement or fail to consummate the Mergers, or (iv) agree to or propose publicly to do any of the foregoing.
However, prior to the receipt of the KushCo Requisite Vote or the Greenlane Requisite Vote (each as defined in “The Merger Agreement — Requisite Votes” beginning on page 204 of this joint proxy statement/prospectus), as applicable, each of KushCo and Greenlane may, under certain specified circumstances, furnish non-public information and engage in discussions and participate in negotiations regarding itself to a third party making an unsolicited, bona fide written Acquisition Proposal. Under the Merger Agreement, KushCo is required to notify Greenlane promptly, and Greenlane is required to notify KushCo promptly, if it receives any Acquisition Proposal or any request for non-public information relating to KushCo or any of its subsidiaries, or Greenlane and any of its subsidiaries, as applicable (but, in either case, in no event more than 48 hours following receipt of such Acquisition Proposal or request for such information).
Prior to receipt of the KushCo Requisite Vote or the Greenlane Requisite Vote, as applicable, each of the KushCo Board and, with respect to Greenlane, the Greenlane Board or the Greenlane Special Committee, may, under certain specified circumstances, withdraw its recommendation to the applicable stockholders with respect to the KushCo Merger Proposal or the Greenlane Merger Proposal, the Greenlane Stock Issuance Proposal and the Greenlane Charter Amendment Proposal (each “The Greenlane Annual Meeting — Vote Required for Approval” beginning on page 100 of this joint proxy statement/prospectus), as applicable, if it reasonably determines, after consultation with outside legal counsel, that failure to take such action would be inconsistent with the directors’ fiduciary duties under applicable law. For more
 
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information regarding the limitations on KushCo, the KushCo Board, Greenlane, the Greenlane Board and the Greenlane Special Committee to consider Acquisition Proposals, see “The Merger Agreement —  Covenants and Agreements — No Solicitations” beginning on page 216 of this joint proxy statement/prospectus.
Termination of the Merger Agreement (See p. 225)
The Merger Agreement may be terminated at any time prior to the effective time of Merger 1 by the mutual written consent of KushCo and Greenlane.
In addition, either KushCo or Greenlane may terminate the Merger Agreement prior to the effective time of Merger 1 if:

the consummation of the Mergers has not occurred on or before the Termination Date (as defined below in “The Merger Agreement — Termination of the Merger Agreement — Termination by Either Greenlane or KushCo” beginning on page 225 of this joint proxy statement/prospectus), provided that the Termination Date may be extended pursuant to the Merger Agreement, provided further that this termination right will not be available to a party that has breached, in any material respect, its obligations under the Merger Agreement in any manner that will have been the primary cause of the failure of the Mergers to be consummated by the Termination Date);

any court or other governmental entity has entered, enacted, promulgated, enforced or issued any law, whether, temporary, preliminary or permanent, that would restrain, prevent, enjoin or otherwise prohibit any of the transactions contemplated by the Merger Agreement (provided, that this termination right will not be available to a party if such restraint, prevention, injunction or prohibition was primarily due to the failure of such party to perform any of its obligations under the Merger Agreement); or

either KushCo failed to obtain the KushCo Requisite Vote or Greenlane failed to obtain Greenlane Requisite Vote.
KushCo may also decide to terminate the Merger Agreement if:

there has been a breach of any representation, warranty, covenant or agreement made by Greenlane, Merger Sub 1 or Merger Sub 2 or any representation or warranty shall have become untrue after the execution of the Merger Agreement such that the certain closing conditions would not be satisfied and such breach or condition is not curable, or if curable, is not cured within the earlier of (i) 30 days after written notice thereof is given and (ii) the Termination Date;

prior to obtaining the KushCo Requisite Vote, the KushCo Board makes an Adverse Recommendation Change (as defined below in “The Merger Agreement — Covenants and Agreements — No Solicitations” beginning on page 216), provided that such termination will not be effective until KushCo has paid the KushCo Termination Fee described in “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable to Greenlane by KushCo” beginning on page 227 of this joint proxy statement/prospectus;

prior to obtaining the Greenlane Requisite Vote; (i) the Greenlane Board or any committee thereof shall have effected an Adverse Recommendation Change; (ii) any person shall have first publicly announced a Greenlane Acquisition Proposal with respect to Greenlane (or made any material modification thereto) and the Greenlane Board or any committee thereof fails to publicly reaffirm the approval, recommendation or declaration of advisability by the Greenlane Board of the Merger Agreement, the Mergers or any of the other transactions contemplated by the Merger Agreement within five business days (or if the Greenlane stockholders meeting is to be held within five business days, prior to the Greenlane stockholders meeting being held) of being requested to do so by KushCo; (iii) the Greenlane Board or any committee thereof approves, adopts, publicly endorses, declares advisable or recommends or enters into or allows Greenlane or any of its subsidiaries to enter into any agreement relating to an Acquisition Proposal with respect to Greenlane; or (iv) Greenlane has materially breached or violated any of its obligations as described below in “The Merger Agreement — Covenants and Agreements — No Solicitations” beginning on page 216 of this joint proxy statement/prospectus; or
 
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a Greenlane Material Adverse Effect has occurred (as defined in “The Merger Agreement — Definition of “Material Adverse Effect” — “Greenlane Material Adverse Effect” beginning on page 213 of this joint proxy statement/prospectus).
Greenlane has reciprocal termination rights with respect to the Merger Agreement as those of KushCo described above.
For more information regarding the rights of KushCo and Greenlane to terminate the Merger Agreement, see “The Merger Agreement — Termination of the Merger Agreement” beginning on page 225 of this joint proxy statement/prospectus.
Termination Fee (See p. 227)
If the Merger Agreement is terminated in certain circumstances, either party may be obligated to pay the other party a termination fee of $8,000,000. For more information regarding the termination fee, see “The Merger Agreement — Termination of the Merger Agreement — Termination Fee Payable to Greenlane by KushCo” beginning on page 227 of this joint proxy statement/prospectus and “The Merger Agreement —  Termination of Merger Agreement — Termination Fee Payable to KushCo by Greenlane” beginning on page 228 of this joint proxy statement/prospectus.
Material U.S. Federal Income Tax Consequences of the Mergers (See p. 230)
The Mergers, taken together, are intended to qualify as a “reorganization” within the meaning of Section 368(a) of the Code. It is a condition to Greenlane’s obligation to complete the Mergers that Greenlane receive an opinion of Morrison & Foerster to the effect that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code, and it is a condition to KushCo’s obligation to complete the Mergers that KushCo receive an opinion of Reed Smith, to the effect that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. If the Mergers, taken together, so qualify, a U.S. Holder (as defined under “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 230 of this joint proxy statement/prospectus) of KushCo common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of shares of KushCo common stock for shares of Greenlane Class A common stock pursuant to the Mergers, except with respect to cash received in lieu of fractional shares of KushCo common stock. For further information, see “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 230 of this joint proxy statement/prospectus.
Accounting Treatment of the Mergers (See p. 202)
Greenlane prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Mergers will be accounted for using the acquisition method of accounting. Greenlane will be treated as the acquirer for accounting purposes.
Comparison of Rights of Greenlane Stockholders and KushCo Stockholders Following the Mergers (See p. 241)
If the Mergers are consummated, KushCo stockholders will become stockholders of the Combined Company. The rights of KushCo stockholders are currently governed by and subject to the provisions of the Nevada Revised Statues Chapter 78 (the “NRS”) and the charter and bylaws of KushCo. Upon consummation of the Mergers, the rights of the KushCo stockholders who receive shares of Greenlane Class A common stock in the Mergers will be governed by the Delaware General Corporation Law (the “DGCL”) and the charter and bylaws of Greenlane, rather than the charter and bylaws of KushCo.
For a summary of certain differences between the rights of Greenlane stockholders and KushCo stockholders, see “Comparison of Rights of Greenlane Stockholders and KushCo Stockholders Following the Mergers” beginning on page 241 of this joint proxy statement/prospectus.
 
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COMPARATIVE MARKET PRICES AND DIVIDEND INFORMATION
Greenlane’s Class A common stock trades on Nasdaq under the symbol “GNLN.” KushCo common stock is listed on the OTCQX under the symbol “KSHB.” The table below sets forth the closing prices per share of Greenlane Class A common stock as reported on the Nasdaq and KushCo common stock as reported on the OTCQX, in each case as of March 30, 2021, the last full trading day before the public announcement of the execution of the Merger Agreement by Greenlane and KushCo, and on May 25, 2021, the latest practicable trading day before the date of this joint proxy statement/prospectus. The KushCo pro forma equivalent closing share price is equal to the closing price of a share of Greenlane Class A common stock on each such date multiplied by 0.2542, which is the Exchange Ratio calculated as of May 25, 2021.
Greenlane Class A
Common Stock
KushCo
Common Stock
KushCo
Pro Forma
Equivalent
March 29, 2021
$ 4.44 $ 1.24 $ 1.13
May 25, 2021
$ 3.66 $ 0.89 $ 0.93
The market price of Greenlane Class A common stock and KushCo common stock will fluctuate between the date of this joint proxy statement/prospectus and the effective time of the Mergers.
Following the transaction, Greenlane Class A common stock will continue to be listed on the Nasdaq and, until the completion of the Mergers, KushCo common stock will continue to be listed on the OTCQX.
As of [•], 2021, the record date for the Greenlane annual meeting, there were approximately [•] holders of record of Greenlane Class A common stock.
As of [•], 2021, the record date for the KushCo special meeting, there were approximately [•] holders of record of KushCo common stock.
Dividends
Greenlane has never declared or paid any cash dividends on Greenlane Class A common stock and does not anticipate paying cash dividends on Greenlane Class A common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Mergers will be at the discretion of the Combined Company’s then-current board of directors and will depend upon a number of factors, including the Combined Company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.
KushCo has never declared or paid any cash dividends on KushCo common stock and does not anticipate paying cash dividends on KushCo common stock for the foreseeable future. Notwithstanding the foregoing, any determination to pay cash dividends subsequent to the Mergers will be at the discretion of the Combined Company’s then-current board of directors and will depend upon a number of factors, including the Combined Company’s results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors the then-current board of directors deems relevant.
 
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RISK FACTORS
The Combined Company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information included in this joint proxy statement/prospectus, including the matters addressed in the section entitled “Cautionary Statement Concerning Forward-Looking Statements,” whether you are a Greenlane stockholder or a KushCo stockholder, you should carefully consider the following risks before deciding how to vote with respect to the proposals to be considered and voted on at the Greenlane annual meeting and/or the KushCo special meeting, as applicable. Any of the following risks could materially and adversely affect the business, financial condition and results of operations of the Combined Company and the actual outcome of matters as to which forward-looking statements are made in this joint proxy statement/prospectus. The risks described below are not the only risks that Greenlane and KushCo currently face or that the Combined Company likely will face after the consummation of the Mergers. Additional risks and uncertainties not currently known or that are currently expected to be immaterial may also materially and adversely affect the Combined Company’s business, financial condition and results of operations or the price of Combined Company’s common stock in the future. Past financial performance may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.
Risk Factors Related to the Mergers
Failure to consummate the Mergers and the other transactions contemplated by the Merger Agreement as currently contemplated or at all could materially and adversely affect Greenlane or KushCo, as applicable.
The consummation of the Mergers and the other transactions contemplated by the Merger Agreement may be delayed, the Mergers and the other transactions contemplated by the Merger Agreement may be consummated on terms different than those contemplated by the Merger Agreement, or the Mergers and the other transactions contemplated by the Merger Agreement may not be consummated at all. Failure to consummate the Mergers and the other transactions contemplated by the Merger Agreement would prevent Greenlane’ stockholders and KushCo stockholders from realizing the anticipated benefits of the Mergers and the other transactions contemplated by the Merger Agreement. In addition, the Exchange Ratio reflects a valuation of KushCo in excess of the price at which KushCo common stock was trading prior to the public announcement of the parties’ entry into the Merger Agreement. The current market price of KushCo common stock may reflect a market assumption that the Mergers will occur, and a failure to consummate the Mergers could result in a significant decline in the market price of Greenlane common stock and/or KushCo common stock and a negative perception of Greenlane and/or KushCo, generally. Any delay in the consummation of the Mergers and the other transactions contemplated by the Merger Agreement or any uncertainty about the consummation of the Mergers and the other transactions contemplated by the Merger Agreement on terms different than those contemplated by the Merger Agreement or at all could also materially and adversely affect the stock price and future business and financial results of Greenlane and/or KushCo, as applicable.
The Exchange Ratio is not fixed and may be adjusted prior to the effective time of the Mergers to reflect changes in the number of shares of Greenlane Class A common stock and KushCo common stock outstanding prior to the effective time of the Mergers.
As described in the section of this joint proxy statement/prospectus entitled “The Merger Agreement — Merger Consideration; Effects of the Mergers,” the number of shares of Greenlane Class A common stock to be issued to KushCo stockholders in connection with the Mergers is based on the Exchange Ratio, which is subject to adjustment based on a calculation that will not be known until immediately prior to the consummation of the Mergers. Assuming an Exchange Ratio of 0.2542 shares of Greenlane Class A common stock for each share of KushCo common stock, based upon the Exchange Ratio calculated as of May 25, 2021, KushCo stockholders will collectively own approximately 49.9% of the Combined Company common stock and Greenlane stockholders prior to the Mergers will collectively own approximately 50.1% of the Combined Company common stock after consummation of the Mergers.
In accordance with the Merger Agreement, the Exchange Ratio is subject to adjustment prior to the effective time of the Mergers to reflect changes in the number of Greenlane Shares Outstanding, KushCo
 
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Fully Diluted Securities, Greenlane Net Diluted Securities and KushCo Net Diluted Securities, immediately prior to the effective time of Merger 1, provided that in no event will the aggregate number of shares of the Combined Company common stock issued in Merger 1 be greater than (i) 49.9% of all issued and outstanding shares of the Combined Company common stock after giving effect to the Class C Conversion immediately following the effective time of Merger 1; or (ii) less than 48.1% of the Greenlane Net Diluted Securities immediately following the effective time of Merger 1. For example, a change in the market price of Greenlane Class A common stock may change the number of Greenlane In-the-Money options and KushCo In-the-Money options and warrants. An increase or decrease in the number of Greenlane In-the-Money options or KushCo In-the-Money options and warrants will result in a change in the number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities, which in turn will cause the Exchange Ratio to fluctuate.
If either Greenlane or KushCo issues additional equity prior to the effective time of the Mergers or if Greenlane engages in certain capital raising activities pursuant to which it issues additional shares of Greenlane Class A common stock, in each case as permitted under the Merger Agreement, the Exchange Ratio will be adjusted to give effect to such events. An increase in Greenlane Outstanding Securities or Greenlane Net Diluted Securities would generally result in an increase in the Exchange Ratio, while an increase in KushCo Fully Diluted Securities or KushCo Net Diluted Securities would generally result in a decrease in the Exchange Ratio. For a depiction of the Exchange Ratio formula see the definition of “Exchange Ratio” above and “The Merger Agreement — Merger Consideration; Effects of the Mergers” beginning on page 206 of this joint proxy statement/prospectus.
Pursuant to the formula used in calculating the Exchange Ratio, in accordance with the Merger Agreement, regardless of adjustments to the Exchange Ratio, under no circumstances will KushCo stockholders own more than 49.9% of all issued and outstanding shares of Combined Company common stock (after giving effect to the Class C Conversion) immediately following Merger 1 nor less than 48.1% of the Greenlane Net Diluted Securities immediately following Merger 1 and under no circumstances will Greenlane stockholders own more than 51.9% of the Greenlane Net Diluted Securities as of immediately following Merger 1 nor less than 50.1% of all Greenlane outstanding common stock immediately after giving effect to the Mergers and the Class C Conversion. For example, a reduction in the market price of Greenlane Class A common stock could lower the Exchange Ratio by increasing the number of KushCo In-the-Money options and warrants. However, this reduction could be offset by an increase in the Greenlane Net Diluted Securities caused by an increase in the number of Greenlane In-the-Money options resulting from decreases in the market price of Greenlane Class A common stock.
As a result, Greenlane stockholders and KushCo stockholders will not know the number of shares of Greenlane Class A common stock that will be issued to KushCo stockholders in connection with the Mergers (and therefore the relative ownership of existing Greenlane stockholders and existing KushCo stockholders in the Combined Company) until after the respective dates of the Greenlane annual meeting and the KushCo special meeting.
The market price of Greenlane Class A common stock will fluctuate prior to the effective time of the Mergers and, accordingly, KushCo stockholders cannot be certain of the market value of the merger consideration they will receive in the Mergers.
In connection with the Mergers, each share of KushCo common stock (other than KushCo common stock held by Greenlane, Merger Sub 1, Merger Sub 2, KushCo or any direct or indirect wholly owned subsidiary of Greenlane or KushCo) outstanding immediately prior to the effective time of Merger 1 will be automatically converted into the number of shares of Greenlane Class A common stock equal to the product of one multiplied by the Exchange Ratio. As described elsewhere in this joint proxy statement/prospectus, a change in the market price of Greenlane Class A common stock may change the number of Greenlane In-the-Money options and KushCo In-the-Money options and warrants. An increase or decrease in the number of Greenlane In-the-Money options or KushCo In-the-Money options and warrants will result in a change in the number of Greenlane Net Diluted Securities, KushCo Fully Diluted Securities and KushCo Net Diluted Securities, which in turn will cause the Exchange Ratio to fluctuate. For example, a reduction in the market price of Greenlane Class A common stock could lower the Exchange Ratio by increasing the number of KushCo In-the-Money options and warrants. However, this reduction could be
 
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offset by an increase in the Greenlane Net Diluted Securities caused by an increase in the number of Greenlane In-the-Money options resulting from decreases in the market price of Greenlane Class A common stock. The aggregate value of the consideration payable to KushCo stockholders in Merger 1 will also fluctuate as a result of changes in the market price of Greenlane Class A common stock. Accordingly, the value of the consideration to be received by KushCo stockholders in Merger 1 will increase or decrease depending on the market price of shares of Greenlane Class A common stock at the effective time of Merger 1. See “The Merger Agreement — Merger Consideration; Effects of the Mergers — Merger Consideration” beginning on page 206 of this joint proxy statement/prospectus.
Stock price changes may result from a variety of factors, including general market and economic conditions, the status of the U.S. and global economy, economic recessions and depressions, pandemics, including the recent pandemic related to COVID-19, and world governmental responses to such pandemics, changes in Greenlane’s and KushCo’s businesses, operations and prospects and regulatory considerations, many of which factors are beyond Greenlane’s and KushCo’s control. Therefore, at the time of the KushCo special meeting, KushCo stockholders will not know the market value of the consideration to be received at the effective time. KushCo stockholders should obtain current market quotations for shares of Greenlane Class A common stock and for shares of KushCo common stock.
The relative ownership positions of Greenlane stockholders and KushCo stockholders will be diluted as a result of the Mergers.
The Mergers will dilute the ownership position of existing Greenlane stockholders and result in KushCo stockholders having an ownership stake in the Combined Company that is smaller than their current stake in KushCo. Assuming an Exchange Ratio of 0.2542 shares of Greenlane Class A common stock for each share of KushCo common stock, based upon the Exchange Ratio calculated as of May 25, 2021, KushCo stockholders will collectively own approximately 49.9% of the Combined Company common stock and Greenlane stockholders prior to the Mergers will collectively own approximately 50.1% of the Combined Company common stock after consummation of the Mergers. Consequently, existing Greenlane stockholders and existing KushCo stockholders, as a general matter, will have less influence over the management and policies of the Combined Company after the effective time of the Mergers than each currently exercise over the management and policies of Greenlane and KushCo, as applicable.
The consummation of the Mergers and the other transactions contemplated by the Merger Agreement are subject to a number of conditions, which, if not satisfied or waived, would adversely impact the parties’ ability to complete the Mergers and the other transactions contemplated by the Merger Agreement.
The Mergers and the other transactions contemplated by the Merger Agreement are subject to certain closing conditions, including, among others: (i) the approval of the Greenlane Merger Proposal; (ii) the approval of the Greenlane Charter Amendment Proposal; (iii) the approval of the Greenlane Stock Issuance Proposal and the approval for listing on Nasdaq of the shares of Greenlane Class A common stock approved for issuance; (iv) the approval of the KushCo Merger Proposal; (v)  the SEC having declared effective the Registration Statement on Form S-4 of which this joint proxy statement/prospectus forms a part, pursuant to which the issuance of the shares of Greenlane Class A common stock to be issued to KushCo stockholders in the Mergers will be registered under the Securities Act; (vi) the repayment of certain KushCo indebtedness and release of related liens; (vii) the accuracy of the respective representations and warranties made by Greenlane and KushCo (subject to customary materiality qualifications); (viii) the performance by Greenlane and KushCo in all material respects of their respective covenants, obligations and agreements under the Merger Agreement; (ix) the absence of certain changes; and (x) the delivery of tax opinions that the Mergers, taken together will qualify as a reorganization within the meaning of Section 368(a) of the Code.
There can be no assurance that these conditions will be satisfied or waived, if permitted. Therefore, there can be no assurance with respect to the timing of the closing of the Mergers and the other transactions contemplated by the Merger Agreement or that the Mergers and the other transactions contemplated by the Merger Agreement will be completed at all.
 
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Greenlane and KushCo may waive one or more conditions set forth in the Merger Agreement without resoliciting the approval of Greenlane stockholders or KushCo stockholders.
Certain conditions to Greenlane’s and KushCo’s obligations to complete the Mergers and the other transactions contemplated by the Merger Agreement may be waived, in whole or in part, to the extent legally allowed, either unilaterally or by agreement of Greenlane and KushCo. In the event that any such waiver does not require resolicitation of stockholders, the parties will have the discretion to complete the Mergers and the other transactions contemplated by the Merger Agreement without seeking further approval of Greenlane stockholders or KushCo stockholders.
Jacoby, which owns approximately [•]% of the issued and outstanding shares of Greenlane common stock as of the Greenlane Record Date, has entered into a voting agreement to vote in favor of certain proposals.
Jacoby, which owns approximately [•]% of the issued and outstanding shares of Greenlane common stock as of the Greenlane Record Date, has entered into a voting agreement to vote in favor of certain proposals (the “Greenlane Voting Agreement”). Jacoby has agreed to vote or cause to be voted any issued and outstanding shares of Greenlane common stock beneficially owned by it, or that may otherwise become beneficially owned by it, during the term of the Greenlane Voting Agreement, (i) in favor of all proposals presented at the Greenlane annual meeting (other than the Greenlane Merger Proposal, on which it is not entitled to vote), (ii) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation of Greenlane contained in the Merger Agreement or of Jacoby contained in the Greenlane Voting Agreement, and (iii) against any Acquisition Proposal (as defined “The Merger Agreement — Covenants and Agreements — No Solicitations” beginning on page 216 of this joint proxy statement/prospectus) or any other action, agreement or transaction that is intended, or could reasonably be expected, to materially impede, interfere or be inconsistent with, delay, postpone, discourage or materially and adversely affect the consummation of the transactions contemplated by the Merger Agreement or the Greenlane Voting Agreement. Since Jacoby holds more than 50% of the outstanding Greenlane common stock, the Greenlane Stock Issuance Proposal, the Greenlane Charter Amendment Proposal, the Greenlane Plan Proposal and the Greenlane Adjournment Proposal will be approved as a result of the Greenlane Voting Agreement, regardless of how Greenlane’s other stockholders vote on the proposals.
The Greenlane Charter Amendment Proposal, the Greenlane Stock Issuance Proposal, the Greenlane Merger Proposal and the KushCo Merger Proposal (collectively, the “Condition Precedent Proposals”) are each cross-conditioned on the approval of each other.
The Condition Precedent Proposals are each cross-conditioned on the approval of each other. The Greenlane Adjournment Proposal and the KushCo Adjournment Proposal are not conditioned upon the approval of any other proposal set forth in this joint proxy statement/prospectus. If one of the Condition Precedent Proposals is not approved by the required vote, each of the other Condition Precedent Proposals will not be effected, even if they are approved by the Greenlane stockholders, Greenlane Public Stockholders and KushCo stockholders, respectively.
If the Mergers do not occur, one of the parties may incur payment obligations to the other party, which could materially and adversely affect the financial condition and future business and operations of the party that becomes obligated to make such payments.
If the Merger Agreement is terminated under certain circumstances specified in the Merger Agreement, Greenlane or KushCo may be obligated to pay the other party a termination fee of $8,000,000. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 225 of this joint proxy statement/prospectus. Accordingly, in the event that one of the parties is obligated to pay a termination fee to the other party pursuant to the Merger Agreement, the financial condition and future business and operations of the party that incurs such obligation could be materially and adversely affected.
Subject to certain limitations set forth in the Merger Agreement, Greenlane may issue additional equity securities without the approval of its stockholders, KushCo or KushCo stockholders, which would further dilute the ownership position of Greenlane stockholders and may depress the market for Greenlane common stock.
Subject to certain limitations set forth in the Merger Agreement, Greenlane may issue additional equity securities during the pendency of the Mergers and any such issuances would result in further dilution in the
 
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ownership position of Greenlane stockholders and may adversely affect the market price of Greenlane common stock, which could reduce the value to be received by KushCo stockholders in the Mergers. In addition, after the effective time of the Mergers, Greenlane may issue additional Greenlane common stock or other equity securities in connection with, among other things, future acquisitions, repayment of indebtedness or grants under its 2019 Equity Incentive Plan without stockholder approval. If Greenlane issues additional common stock or other equity securities, the following consequences could result:

each Greenlane stockholder’s ownership interest in Greenlane will decrease;

the amount of cash available per share may decrease;

the relative voting strength of each previously outstanding share of Greenlane common stock may be diminished; and

the market price of Greenlane common stock could decline.
Failure to complete the Mergers and the other transactions contemplated by the Merger Agreement could materially and adversely affect the future business and financial results of both Greenlane and KushCo and their respective stock prices.
If the Mergers and the other transactions contemplated by the Merger Agreement are not completed for any reason, the ongoing businesses of Greenlane and KushCo could be materially and adversely affected and each of Greenlane and KushCo will be subject to a variety of risks associated with the failure to complete the Mergers and the other transactions contemplated by the Merger Agreement, including the following:

Greenlane or KushCo being required, under certain circumstances specified in the Merger Agreement, to pay to the other party a termination fee of $8,000,000;

having to pay certain costs relating to the proposed Mergers, including, without limitation, the reasonable fees of lawyers, accountants, financial advisors and investment bankers, as well as filing, printing and mailing fees; and

diversion of significant management focus and resources from operational matters and other strategic opportunities while working to implement the Mergers.
If the Mergers and the other transactions contemplated by the Merger Agreement are not completed, these risks could materially and adversely affect the business, financial results and stock prices of both Greenlane and KushCo. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 225 of this joint proxy statement/prospectus for more information regarding the specific circumstances under which termination fees are payable.
The pendency of the transactions contemplated by the Merger Agreement could materially and adversely affect the business and operations of Greenlane and KushCo.
Prior to the effective time of the Mergers, some customers or vendors of each of Greenlane and KushCo may delay or defer decisions regarding whether to continue to do business with Greenlane and KushCo, as applicable, which could materially and adversely affect the revenues, earnings, cash flows and expenses of Greenlane and KushCo, regardless of whether the Mergers are completed. In addition, the Merger Agreement restricts Greenlane and KushCo from taking specified actions until the Mergers occur without the consent of the other party. These restrictions may, among other things, prevent Greenlane or KushCo from pursuing attractive business opportunities that may arise prior to the consummation of the Mergers. See “The Merger Agreement — Covenants and Agreements” beginning on page 214 of this joint proxy statement/prospectus for a description of the restrictive covenants applicable to Greenlane and KushCo.
The Merger Agreement limits Greenlane’s and KushCo’s ability to pursue alternatives to the Mergers.
The Merger Agreement contains provisions that make it more difficult for Greenlane and KushCo to enter into alternative transactions. The Merger Agreement contains certain provisions that restrict Greenlane’s and KushCo’s ability to solicit, initiate, seek, encourage or engaging in discussions or negotiations regarding
 
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a proposal or inquiry that could reasonably be expected to lead to a proposal to acquire 20% of more of the respective assets or capital stock of Greenlane or KushCo, as applicable. Further, there are only limited exceptions to Greenlane’s and KushCo’s agreement that its board of directors will not change its recommendation in favor of the adoption of the Merger Agreement. However, at any time prior to the receipt of the Greenlane Requisite Vote and the KushCo Requisite Vote, as applicable, Greenlane or KushCo receives an unsolicited written bona fide Acquisition Proposal that was not a violation of the Merger Agreement and the Greenlane Board (or the Greenlane Special Committee) or KushCo Board, as applicable, determines in good faith (after consultation with outside counsel and its financial advisors and taking into account all adjustments to the terms of the Merger Agreement that may be offered by KushCo or Greenlane, as specified in the Merger Agreement) that such Acquisition Proposal constitutes a Superior Proposal (as defined below in “The Merger Agreement — Covenants and Agreements — No Solicitations” beginning on page 216) and, with respect to KushCo, the KushCo Board, and with respect to Greenlane, the Greenlane Board (or the Greenlane Special Committee) has reasonably determined (after consultation with outside counsel) that the failure to make an Adverse Recommendation Change (as defined below) would be inconsistent with the fiduciary duties owed by the KushCo Board or the Greenlane Board (or the Greenlane Special Committee), as applicable, to the stockholders of KushCo or Greenlane, as applicable, under applicable law, the Greenlane Board (or the Greenlane Special Committee) or the KushCo Board, as applicable, may make an Adverse Recommendation Change and terminate the Merger Agreement to enter into agreement relating to an Alternative Transaction. See the sections entitled “The Merger Agreement — Covenants and Agreements — No Solicitations” and “The Merger Agreement — Termination of the Merger Agreement” beginning on pages 216 and 225, respectively, of this joint proxy statement/prospectus.
If the Merger Agreement is terminated by Greenlane or KushCo in order to pursue an alternative transaction, the terminating party will be required to pay the non-terminating party a termination fee of $8,000,000.
While Greenlane and KushCo believe these provisions are reasonable, customary and not preclusive of other offers, the provisions might discourage a third party that has an interest in acquiring all or a significant part of Greenlane or KushCo from considering or proposing an alternative transaction, even if a third party were prepared to pay consideration or issue equity having a higher value than that which is anticipated in connection with the Mergers or if such party were prepared to enter into an agreement that may be more favorable to Greenlane or KushCo or their respective stockholders.
If the Mergers and the other transactions contemplated by the Merger Agreement are not consummated by December 31, 2021, either Greenlane or KushCo may terminate the Merger Agreement.
Either Greenlane or KushCo may terminate the Merger Agreement if the Mergers have not been consummated by December 31, 2021. However, this termination right will not be available to a party if that party failed to fulfill its obligations under the Merger Agreement and that failure was the cause of, or resulted in, the failure to consummate the Mergers. See “The Merger Agreement — Termination of the Merger Agreement” beginning on page 225 of this joint proxy statement/prospectus. In the event the Merger Agreement is terminated by either party due to the failure of the Mergers to close by December 31, 2021, both Greenlane and KushCo will have incurred significant costs and will have diverted significant management focus and resources from other strategic opportunities without realizing the anticipated benefits of the Mergers.
If the Mergers do not qualify as a tax-free reorganization KushCo stockholders may recognize a taxable gain.
As a condition to the completion of the Mergers, each of Greenlane and KushCo will have received a tax opinion from its respective counsel described in the section titled “The Merger Agreement — Conditions to Completion of the Mergers,” dated as of the closing date, that the Mergers, taken together, will qualify as a “reorganization” within the meaning of Section 368(a) of the Code. These opinions will be based on customary assumptions and representations from Greenlane and KushCo, as well as certain covenants and undertakings by Greenlane and KushCo. If any of the representations, assumptions, covenants or undertakings upon which the opinions are based is incorrect, incomplete, inaccurate or violated, the validity of the opinions may be affected and the tax consequences of the Mergers could differ from those described
 
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in this joint proxy statement/prospectus. An opinion of counsel represents such counsel’s best legal judgment but is not binding on the United States Internal Revenue Service (“IRS”) or any court. Neither Greenlane nor KushCo has obtained or intends to obtain a ruling from the IRS with respect to the tax consequences of the Mergers. Accordingly, there can be no assurances that the IRS will not assert, or that a court will not sustain, a position contrary to that contained in such opinions. If the IRS or a court determines that the Mergers, taken together, should not be treated as a “reorganization” within the meaning of Section 368(a) of the Code, a holder of KushCo common stock generally would recognize taxable gain or loss as if it sold its shares of KushCo common stock. See “Material U.S. Federal Income Tax Consequences of the Mergers” beginning on page 230 of this joint proxy statement prospectus.
The Mergers could trigger a limitation on the utilization of the historic U.S. net operating loss carryforwards and certain other attributes of KushCo.
As of August 31, 2020, KushCo had federal net operating loss carryforwards of approximately $95.3 million, of which approximately $9.8 million expire in 2038, and the remainder do not expire. If a corporation undergoes an “ownership change” within the meaning of Section 382 of the Code, the corporation’s net operating loss carryforwards and certain other tax attributes arising before the ownership change are subject to limitations on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds 50 percentage points by value over a rolling three-year period. Similar rules may apply under applicable state income tax laws. The Mergers could result in an ownership change for KushCo, and therefore, the Combined Company’s ability to utilize U.S. net operating loss carryforwards and certain other tax attributes of KushCo to reduce future taxable income could be subject to various limitations under the Code. Moreover, additional ownership changes in the future could result in additional limitations on KushCo’s, Greenlane’s, and the Combined Company’s net operating loss carryforwards and certain other tax attributes. Consequently, even if the Combined Company achieves profitability, it may not be able to utilize a portion of KushCo’s, Greenlane’s or the Combined Company’s net operating loss carryforwards and certain other tax attributes, which could have an adverse effect on cash flow and results of operations.
Certain directors and executive officers of Greenlane and KushCo have interests in seeing the Mergers completed that are different from, or in addition to, those of other Greenlane stockholders and KushCo stockholders.
Certain directors and executive officers of Greenlane and KushCo negotiated the terms of the Merger Agreement, and the Greenlane Board and the KushCo Board recommended that the stockholders of Greenlane and the stockholders of KushCo, respectively, vote in favor of the Greenlane Stock Issuance Proposal and the KushCo Merger Proposal, respectively, and the related proposals. Certain of Greenlane’s and KushCo’s directors and executive officers may have interests in the Mergers that are different from, or in addition to, those of Greenlane stockholders and KushCo stockholders, including, but are not limited to, the service of certain directors of Greenlane and KushCo as directors of the Combined Company, the continued employment of one or more executive officers of Greenlane and KushCo by the Combined Company, the treatment in the Mergers of stock options and other equity awards, and provisions in the Merger Agreement regarding continued indemnification of and advancement of expenses to Greenlane and KushCo directors and officers. These interests may influence or may have influenced the directors and officers of Greenlane and KushCo, and Greenlane and KushCo stockholders should be aware of these interests when they consider their respective board of directors’ recommendation that they vote in favor of the proposals submitted to the stockholders of Greenlane and KushCo.
The members of the Greenlane Board and the KushCo Board were aware of and considered these interests, among other matters, in evaluating the Merger Agreement, the Mergers and the related transactions, and in recommending the applicable proposals to their respective stockholders. See “The Mergers — Interests of Greenlane’s Directors and Executive Officers in the Mergers” and “The Mergers — Interests of KushCo’s Directors and Executive Officers in the Mergers” beginning on pages 199 and 200, respectively, of this joint proxy statement/prospectus.
 
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Risk Factors Related to the Combined Company Following the Mergers
The Combined Company’s actual financial position and results of operations may differ materially from the unaudited pro forma financial information included in this joint proxy statement/prospectus.
The unaudited pro forma financial information contained in this joint proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the transactions had been consummated at the beginning of the earliest period presented, nor is it necessarily indicative of future operating results or financial position of the Combined Company. In particular, the unaudited pro forma financial information was prepared under one set of assumptions, does not reflect the benefits of expected synergies or cost savings (or associated costs to achieve such synergies or savings), opportunities to earn additional revenue, or other factors that may result as a consequence of the Mergers, and do not attempt to predict or suggest future results. The unaudited pro forma financial information has been derived from the audited and unaudited historical financial statements of Greenlane and KushCo included elsewhere in this joint proxy statement/prospectus, and certain adjustments, estimates and assumptions have been made regarding the Combined Company after giving effect to the Mergers.
Furthermore, the process of preparing the unaudited pro forma financial information required management of Greenlane and KushCo to make certain assumptions and estimates, which may prove to be incorrect as additional information becomes available and as additional analyses are performed, and other factors may affect the Combined Company’s financial condition or results of operations following the closing of the Mergers. Any material variances between the preliminary estimates and assumptions used in the preparation of the unaudited pro forma financial information and the final acquisition accounting could have a material adverse impact on the unaudited pro forma financial information and the Combined Company’s financial position and future results of operations, which could have a material adverse effect on the market price of the Combined Company common stock. See “Index to Unaudited Pro Forma Condensed Combined Financial Information” beginning on page F-1 of this joint proxy statement/prospectus.
The Combined Company expects to incur substantial expenses related to the Mergers.
The Combined Company expects to incur substantial expenses in connection with completing the Mergers and integrating the business, operations, networks, systems, policies and procedures of the two companies. Although Greenlane and KushCo have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond their control that could affect the total amount or the timing of their integration expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. As a result, the transaction and integration expenses associated with the Mergers could, particularly in the near term, exceed the value of the synergies and cost savings that the Combined Company expects to achieve following the completion of the Mergers.
Following the Mergers, the Combined Company may be unable to integrate the businesses of Greenlane and KushCo successfully and realize the anticipated synergies and other expected benefits of the Mergers on the anticipated timeframe or at all.
The Mergers involve the combination of two companies that currently operate as independent public companies. The Combined Company is expected to benefit from the elimination of duplicative costs associated with supporting the Combined Company’s public company platform and resulting economies of scale. These savings are expected to be realized by 2023. Potential difficulties the Combined Company may encounter in the integration process include the following:

the inability to achieve the anticipated synergies resulting from the Mergers, which would result in the anticipated benefits of the Mergers not being realized in the timeframe currently anticipated or at all;

coordinating sales, distribution and marketing efforts;

the complexities of combining two companies with different products and services, customer bases and vendor relationships;
 
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harmonizing Greenlane’s and KushCo’s operating practices, employee development, compensation and benefit programs, internal controls and other policies, procedures and processes;

maintaining existing agreements with customers and vendors and avoiding delays in entering into new agreements with prospective customers and vendors;

coordinating geographically dispersed organizations; and

the inability to integrate company cultures and retain key personnel in light of changes in management following the completion of the Mergers.

potential unknown liabilities and unforeseen increased expenses, delays or conditions associated with the Mergers.
For all these reasons, you should be aware that it is possible that the integration process could result in the distraction of the Combined Company’s management, the disruption of the Combined Company’s ongoing business or inconsistencies in the Combined Company’s operations, services, standards, controls, procedures and policies, any of which could materially and adversely affect the ability of the Combined Company to maintain relationships with customers, vendors and employees or to achieve the anticipated benefits of the Mergers, or could otherwise materially and adversely affect the business and financial results of Greenlane and KushCo.
Third parties may terminate or alter existing contracts or relationships with Greenlane or KushCo.
Each of Greenlane and KushCo has contracts with customers, vendors and other business partners, which may require Greenlane or KushCo, as applicable, to obtain consents from these other parties in connection with the Mergers. If these consents cannot be obtained, the counterparties to these contracts and other third parties with which Greenlane and/or KushCo currently have relationships may have the ability to terminate, reduce the scope of or otherwise materially adversely alter their relationships with either party in anticipation of the Mergers, or with the Combined Company following the Mergers. The pursuit of such rights may result in Greenlane and KushCo suffering a loss of potential future revenue, incurring liabilities in connection with a breach of such agreements or losing rights that are material to its business. Any such disruptions could limit the Combined Company’s ability to achieve the anticipated benefits of the Mergers. The adverse effect of such disruptions could also be exacerbated by a delay in the completion of the Mergers or the termination of the Merger Agreement.
The Mergers will result in changes to the board of directors and management of the Combined Company that may affect the strategy of the Combined Company as compared to that of Greenlane and KushCo independently.
If the parties complete the Mergers, the composition of the Combined Company Board and management team will change from the respective current boards of directors and management teams of Greenlane and KushCo. The Combined Company Board will consist of seven members, with four directors from the current Greenlane Board and three directors from the current KushCo Board constituting the members of the Combined Company’s board of directors. The new composition of the board of directors and the management team of the Combined Company may affect the business strategy and operating decisions of the Combined Company upon the completion of the Mergers. See “The Merger Agreement —  Management of the Combined Company; Board of Directors of the Combined Company” beginning on page 205 of this joint proxy statement/prospectus.
The future results of the Combined Company will suffer if the Combined Company does not effectively manage the increased scale of its operations and its optimization and expansion opportunities following the Mergers.
Following the Mergers, the Combined Company will be significantly larger and more diverse than Greenlane and KushCo independently. The future success of the Combined Company will depend, in part, upon the ability of the Combined Company to manage its optimization and expansion opportunities, which may pose substantial challenges for the Combined Company to integrate new operations into its existing business in an efficient and timely manner, and upon its ability to successfully monitor its operations, costs, regulatory compliance, and to maintain other necessary internal controls. There is no assurance that the
 
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Combined Company’s optimization and expansion opportunities will be successful, or that the Combined Company will realize its expected operating efficiencies, cost savings, revenue enhancements, synergies or other expected benefits.
The forward-looking financial information included elsewhere in this joint proxy statement/prospectus was prepared by Greenlane and KushCo on a standalone basis after consideration of numerous variables and assumptions, which are inherently uncertain, including factors related to general economic and competitive conditions, and should not be relied upon as a prediction or forecast of the actual future performance of Greenlane, KushCo or the Combined Company.
Prior to approval of the Merger Agreement and the related transactions by the Greenlane Board, the KushCo Board and the recommendation of the Greenlane Special Committee, certain forward-looking financial information was prepared on a standalone, pre-transaction basis by each of Greenlane and KushCo in connection with the Mergers and the related transactions. See the section entitled “The Mergers — Certain Unaudited Prospective Financial Information” beginning on page 195, in this joint proxy statement prospectus. The forward-looking financial information was prepared for the KushCo Board and the Greenlane Special Committee and not with a view toward public disclosure. Furthermore, the forward-looking financial information included elsewhere in this joint proxy statement/prospectus was prepared on a standalone basis for each of Greenlane and KushCo, and adding together the forward-looking financial information for Greenlane and KushCo would not necessarily represent the results the Combined Company might achieve if the Mergers are completed. The forward-looking financial information prepared for the KushCo Board and the Greenlane Special Committee reflects Greenlane’s and KushCo’s, as applicable, assumptions that may prove to be inappropriate and that are subject to change. Accordingly, neither Greenlane nor KushCo can provide any assurances that the forward-looking financial information is necessarily indicative of the actual future performance of the Combined Company (if the Mergers are consummated) or of Greenlane or KushCo (if the Mergers are not consummated and Greenlane and KushCo remain independent public companies), and actual results may differ materially from those reflected in such forward-looking financial information. Inclusion of the forward-looking financial information in this joint proxy statement/prospectus should not be regarded as a representation by Greenlane, KushCo, their respective affiliates, officers, directors or other representatives that the results contained in the forward-looking financial information will be necessarily achieved, and such information has not been included in this joint proxy statement/prospectus in order to induce any stockholder to vote in favor of any proposals included in this joint proxy statement/prospectus.
Risk Factors Related to an Investment in the Combined Company’s Common Stock
The market price of shares of the Combined Company common stock may be affected by factors different from those affecting the price of shares of Greenlane Class A common stock or KushCo common stock before the Mergers.
After the consummation of the Mergers, the results of operations of the Combined Company, as well as the market price of the Combined Company common stock, may be affected by other factors in addition to those currently affecting Greenlane’s or KushCo’s results of operations and the market prices of shares of Greenlane Class A common stock and KushCo common stock. These factors include:

a greater number of shares of the Combined Company common stock outstanding as compared to the number of currently outstanding shares of Greenlane common stock or KushCo common stock;

different stockholder bases; and

different assets and capitalizations.
Accordingly, the historical market prices and financial results of Greenlane and KushCo may not be indicative of these matters for the Combined Company after the Mergers.
The market price of the Combined Company common stock may decline as a result of the Mergers.
The market price of the Combined Company common stock may decline as a result of the Mergers if the Combined Company does not achieve the perceived benefits of the Mergers as rapidly or to the extent
 
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anticipated by financial or industry analysts, or the effect of the Mergers on the Combined Company’s financial results is not consistent with the expectations of financial or industry analysts.
In addition, upon consummation of the Mergers, Greenlane stockholders and KushCo stockholders will own interests in a Combined Company operating an expanded business with a different mix of properties, risks and liabilities. Current stockholders of Greenlane and KushCo may not wish to continue to invest in the Combined Company, or for other reasons may wish to dispose of some or all of their shares of the Combined Company common stock. If, following the effective time of the Mergers, large amounts of the Combined Company common stock are sold, or there is a perception in the market that such shares will be sold, the price of the Combined Company common stock could decline, potentially significantly.
In connection with the Mergers, KushCo stockholders will receive shares of the Combined Company common stock that will have different rights that may be less favorable than their current rights as KushCo stockholders.
In connection with the Mergers, KushCo stockholders will receive shares of the Combined Company common stock that will have different rights than they currently have as KushCo stockholders and these rights may be, or may be perceived to be, less favorable than their current rights as KushCo stockholders. For a detailed discussion of the differences between the current rights as a stockholder of KushCo and the rights as a stockholder of the Combined Company following the Mergers, see “Comparison of Rights of Greenlane Stockholders and KushCo Stockholders Following the Mergers” beginning on page 241 of this joint proxy statement/prospectus.
The Combined Company may need to incur additional indebtedness in the future.
In connection with executing the Combined Company’s business strategy following the Mergers, the Combined Company expects to evaluate the possibility of making strategic investments, and the Combined Company may elect to finance these endeavors by incurring additional indebtedness. The amount of such indebtedness could have material adverse consequences for the Combined Company, including hindering the Combined Company’s ability to adjust to changing market, industry or economic conditions; limiting the Combined Company’s ability to access the capital markets to refinance maturing debt or to fund acquisitions; limiting the amount of free cash flow available for future operations, acquisitions, stock repurchases or other uses; making the Combined Company more vulnerable to economic or industry downturns, including interest rate increases; and placing the Combined Company at a competitive disadvantage compared to less leveraged competitors. If the Combined Company’s increased indebtedness results in any of the foregoing or other adverse consequences, it could have a material adverse effect on the Combined Company’s results of operations, financial condition, prospects or the market price of its common stock.
Risk Factors Related to Greenlane
Risks Related to Greenlane’s Business and Industry
Greenlane has experienced rapid growth, both domestically and internationally, and expect continued future growth, including growth from additional acquisitions. If Greenlane fails to manage its growth effectively, it may be unable to execute its business plan, maintain high levels of service or address competitive challenges adequately. Furthermore, Greenlane’s corporate culture has contributed to its success, and if Greenlane cannot maintain this culture as it grows, it could lose the innovation, creativity, and teamwork fostered by Greenlane’s culture, and Greenlane’s business may be materially and adversely affected.
Greenlane intends to continue to grow its business. Greenlane’s success will depend, in part, on its ability to manage this growth, both domestically and internationally. Any growth in, or expansion of, Greenlane’s business is likely to continue to place a strain on its management and administrative resources, infrastructure and systems. As with other growing businesses, Greenlane expects that it will need to further refine and expand its business development capabilities, its systems and processes and its access to financing sources. Greenlane will also need to hire, train, supervise, and manage new employees. These processes are time consuming and expensive and will increase management responsibilities and divert management attention. Greenlane cannot assure that it will be able to:

expand its product offerings effectively or efficiently or in a timely manner, if at all;
 
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allocate its human resources optimally;

meet its capital needs;

identify and hire qualified employees or retain valued employees;

effectively incorporate the components of any business or product line that it may acquire in its effort to achieve growth; or

continue to grow its business.
Greenlane’s inability or failure to manage its growth and expansion effectively could harm its business and materially adversely affect its operating results and financial condition. In addition, Greenlane believes that an important contributor to their success has been and will continue to be their corporate culture, which they believe fosters innovation, teamwork and a passion for their products and customers. As a result of its rapid growth, Greenlane may find it difficult to build and maintain its strong corporate culture, which could limit Greenlane’s ability to innovate and operate effectively. Any failure to preserve Greenlane’s culture could also negatively affect Greenlane’s ability to retain current and recruit new personnel, continue to perform at current levels or execute on its business strategy.
The market for vaporizer products and related items is a niche market, subject to a great deal of uncertainty and is still evolving.
Vaporizer products comprise a significant portion of Greenlane’s product portfolio. Many of these products have only recently been introduced to the market and are at an early stage of development. These products represent core components of a niche market that is evolving rapidly, is characterized by a number of market participants and is subject to regulatory oversight and a potentially fluctuating regulatory framework. Rapid growth in the use of, and interest in, vaporizer products is recent, and may not continue on a lasting basis. The demand and market acceptance for these products is subject to a high level of uncertainty, including, but not limited to, changes in governmental regulation, developments in product technology, perceived safety and efficacy of Greenlane’s products, perceived advantages of competing products and sale and use of materials that can be vaporized, including in the expanding legal state cannabis markets. For example, recent concerns about EVALI and youth use of vaporizers have, by some metrics, negatively impacted demand for vaporizers and led to laws and regulations restricting the sale of certain products in different markets. Therefore, Greenlane is subject to many of the business risks associated with a new enterprise in a niche market. Continued technical evolution, market uncertainty, evolving regulation and the resulting risk of failure of Greenlane’s new and existing product offerings in this market could have a material adverse effect on its ability to build and maintain market share and on its business, results of operations and financial condition. Further, there can be no assurance that Greenlane will be able to continue to compete effectively in this marketplace.
Greenlane depends on third-party suppliers for its products and may experience unexpected supply shortages which could have a material adverse effect on its business.
Greenlane depends on third-party suppliers for its vaporization products and consumption accessories product offerings. Greenlane’s customers associate certain characteristics of its products, including the weight, feel, draw, flavor, packaging and other unique attributes, to the brands it markets, distributes and sells. In the future, Greenlane may have difficulty obtaining the products it needs from its suppliers as a result of unexpected demand or production difficulties that might extend lead times. Also, products may not be available to Greenlane in quantities sufficient to meet customer demand. Any interruption in supply and/or consistency of these products may adversely impact Greenlane’s ability to deliver products to its customers, may harm its relationships and reputation with its customers, and may have a material adverse effect on its business, results of operations and financial condition. Interruptions in supply or consistency of products could arise for a number of reasons, including but not limited to economic and civil unrest, epidemics/pandemics, such as coronavirus (COVID-19), embargoes, and sanctions.
A significant percentage of Greenlane’s revenue is dependent on sales of products from a relatively small number of key suppliers, and a decline in sales of products from these suppliers could materially harm its business.
A significant percentage of Greenlane’s revenue is dependent on sales of products, primarily vaporizers and related components, that it purchases from a small number of key suppliers, including JUUL Labs, PAX
 
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Labs, Grenco Science, and Storz & Bickel. For example, products manufactured by JUUL Labs represented approximately 8.8% and 38.6% of its net sales in the years ended December 31, 2020 and 2019, respectively, and products manufactured by PAX Labs represented approximately 14.5% and 11.1% of its net sales in the years ended December 31, 2020 and 2019, respectively. Products manufactured by Grenco Science represented approximately 13.5% and 6.3% of its net sales in the years ended December 31, 2020 and 2019, respectively, and products manufactured by Storz & Bickel represented approximately 12.7% and 7.4% of its net sales in the years ended December 31, 2020 and 2019, respectively. A decline in sales of any of Greenlane’s key suppliers’ products, whether due to decreases in supply of, or demand for, their products, termination of Greenlane’s agreements with them, regulatory actions or otherwise, could have a material adverse impact on Greenlane’s sales and earnings and adversely affect its business.
The FDA has and may continue to implement regulations that significantly limit Greenlane’s ability to sell certain types of ENDS products. Additional regulatory actions may further impact its ability to sell these products in the United States or online.
Any regulatory action by the FDA that adversely affects the sale or distribution of Electronic Nicotine Delivery Systems (“ENDS”) products may have a material adverse effect on Greenlane’s business, results of operations and financial condition.
For many years, ENDS in general, and ENDS produced by JUUL Labs in particular, have been subject to intense regulatory scrutiny at all levels of government. Dating back to at least 2018, the FDA has undertaken a number of initiatives designed to limit the appeal and availability of ENDS to minors. These actions include crackdowns on retailers identified as having sold ENDS to minors, among other steps. As a result of public pressure, JUUL Labs took numerous steps to address regulators’ concerns, including deleting social media accounts and ceasing the sale of certain flavored JUUL products.
On December 20, 2019, the President signed legislation to amend the Federal Food, Drug, and Cosmetic Act (“FFDCA”), and raise the federal minimum age of sale of tobacco products (including ENDS products) from 18 to 21 years. Although many states had already established a minimum age of 21 years, Greenlane’s sales could be adversely impacted by this change in federal law.
In January 2020, FDA issued a guidance document titled Enforcement Priorities for ENDS and Other Deemed Products on the Market Without Premarket Authorization (“ENDS Enforcement Guidance”). According to the ENDS Enforcement Guidance, FDA intends to prioritize enforcement against (1) flavored, cartridge-based ENDS products (except tobacco or menthol flavored products), (2) all other ENDS products for which the manufacturer has or is failing to take adequate measures to prevent minors’ access, and (3) any ENDS product targeted to minors or whose marketing is likely to promote use by minors. FDA also intends to prioritize any ENDS product offered for sale after May 12, 2020 for which the manufacturer has not submitted a premarket application. As discussed below, this date was later shifted to September 9, 2020. The FDA has taken actions against manufacturers that have continued to market ENDS without submitting a premarket authorization application.
The ENDS Enforcement Guidance had the effect of prohibiting the sale of certain products Greenlane may sell, including mint flavored products from JUUL Labs and other flavored ENDS. Greenlane expects that its sales will be adversely impacted by this prohibition. Products impacted by the ENDS Enforcement Guidance represented less than 0.1% and 17.8% of its net sales for the years ended December 31, 2020 and 2019, respectively.
In February 2020, FDA published a notice seeking data and information related to the use of vaping products associated with recent lung injuries. FDA seeks information relating to product design and ways to prevent consumers from modifying or adding substances to these products that are not intended by the manufacturers. The notice states that FDA may use the information in future rule making, review of premarket authorization applications, or other regulatory activity. The notice further states that FDA has not found one product or substance implicated in all of the cases of injury, and that FDA is following all potential leads and will take appropriate actions as additional facts emerge. The FDA’s actions resulting from this request for information could adversely affect Greenlane’s sales of ENDS products and may have a material adverse effect on its business, results of operations and financial condition.
 
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There is uncertainty related to the regulation of vaporization products and certain other consumption accessories. Increased regulatory compliance burdens could have a material adverse impact on Greenlane’s business development efforts and its operations.
United States
There is uncertainty regarding whether, in what circumstances, how and when the FDA will seek to enforce the tobacco-related provisions of the FFDCA relative to vaporizer hardware and accessories that can be used to vaporize cannabis and other material, including electronic cigarettes, rolling papers and glassware, in light of the potential for dual use with tobacco.
Through amendments to the FFDCA, the Tobacco Control Act established, by statute, that the FDA has oversight over specific types of tobacco products (cigarettes, cigarette tobacco, roll-your-own (“RYO”) tobacco, and smokeless tobacco) and granted the FDA the authority to “deem” other types of tobacco products as subject to the statutory requirements. In addition to establishing authority, defining key terminology, and setting adulteration and misbranding standards, the Tobacco Control Act established FDA’s authority over tobacco products in a number of areas such as: submission of health information to the FDA; registration with the FDA; premarket authorization requirements; good manufacturing practice requirements; tobacco product standards; notification, recall, corrections, and removals; records and reports; marketing considerations and restrictions; post-market surveillance and studies; labeling and warnings; and recordkeeping and tracking.
In a final rule effective August 8, 2016 (“Deeming Rule”), the FDA deemed all products that meet the Tobacco Control Act’s definition of “tobacco product,” including components and parts but excluding accessories, to be subject to the tobacco control requirements of the FFDCA and the FDA’s implementing regulations. Accordingly, as of the Deeming Rule’s effective date, deemed tobacco products that are “new” (i.e., those that were not commercially marketed in the United States as of February 15, 2007) are subject to the premarket authorization requirements. Deemed new tobacco products that remain on the market without authorization are marketed unlawfully.
Deemed new tobacco products include, among other things: products such as electronic cigarettes, electronic cigars, electronic hookahs, vape pens, vaporizers and e-liquids and their components or parts (such as tanks, coils and batteries). The FDA’s interpretation of components and parts of a tobacco product includes any assembly of materials intended or reasonably expected to be used with or for the human consumption of a tobacco product. In a 2017 decision of the D.C. Circuit court, the court upheld the FDA’s authority to regulate ENDS even though they do not actually contain tobacco, and even if the products could be used with nicotine-free e-liquids.
The Tobacco Control Act and FDA’s implementation of regulations require regulatory approvals before certain products may be sold and restrict the way tobacco product manufacturers, retailers, and distributors can advertise and promote tobacco products, including a prohibition against free samples or the use of vending machines, requirements for presentation of warning information, and age verification of purchasers.
Newly-deemed tobacco products are also subject to the other requirements of the Tobacco Control Act, such as that they not be adulterated or misbranded. The FDA has been directed under the Tobacco Control Act to establish specific good manufacturing practice (“GMP”) regulations for tobacco products, and could do so in the future, which could have a material adverse impact on the ability of some of Greenlane’s suppliers to manufacture, and the cost to manufacture, certain of its products. Even in the absence of specific GMP regulations, a facility’s failure to maintain sanitary conditions or to prevent contamination of products could result in the FDA deeming the products produced there adulterated.
The FDA has announced its intention to take enforcement measures related to ENDS products offered for sale after September 9, 2020 for which the manufacturers had not submitted a PMTA. Following that date, the FDA did in fact take actions against certain manufacturers of ENDS products for which a PMTA had not been submitted. Accordingly, and in light of the laws noted above, premarket authorizations will be necessary for Greenlane to continue its distribution of certain vaporizer hardware and accessories that
 
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meet the FDA’s definition of ENDS. While Greenlane does not believe vaporizers intended for use with non-tobacco substances meet the FDA’s definition of ENDS, it is possible that the FDA could require premarket authorization for such products.
Greenlane’s suppliers who make vaporizers subject to FDA regulation must timely file applications for the appropriate authorizations so that Greenlane may continue selling their products in the United States. Greenlane has no control over the content of those applications, and it has no assurances that the outcome of the FDA’s review will result in authorization of the marketing of these products. If the FDA establishes or applies review standards or processes that Greenlane’s suppliers are unable or unwilling to comply with, Greenlane’s business, results of operations, financial condition and prospects would be adversely affected.
The anticipated costs to Greenlane’s suppliers of complying with future FDA regulations will be dependent on the rules issued by the FDA (which have yet to be issued), the timing and clarity of any new rules or guidance documents accompanying these rules, the reliability and simplicity (or complexity) of the electronic systems utilized by the FDA for information and reports to be submitted, and the details required by the FDA for such information and reports with respect to each regulated product. Any failure to comply with existing or new FDA regulatory requirements could result in significant financial penalties to Greenlane or its suppliers, which could ultimately have a material adverse effect on Greenlane’s business, results of operations, financial condition and ability to market and sell its products. Compliance and related costs could be substantial and could significantly increase the costs of operating in the vaporization products and certain other consumption accessories markets.
In addition, failure to comply with the Tobacco Control Act and with FDA regulatory requirements could result in litigation, criminal convictions or significant financial penalties and could impair Greenlane’s ability to market and sell some of its vaporizer products. At present, Greenlane is not able to predict whether the Tobacco Control Act will impact its business to a greater degree than competitors in the industry, thus affecting its competitive position.
Additionally, as discussed elsewhere in these Risk Factors and under the heading Regulatory Developments, the Consolidated Appropriations Act, 2021 expanded the range of products encompassed by the Prevent All Cigarette Trafficking Act to include ENDS. This development could severely restrict Greenlane’s ability to ship many of the products it sells, as well as place costly regulatory burdens on such shipments.
At the state level, over 25 states have implemented statewide regulations that prohibit vaping in public places. As discussed elsewhere in these Risk Factors and under the heading Regulatory Developments, a number of states and cities have also implemented bans or restrictions on the sale of flavored tobacco products, including vaping liquids and menthol cigarettes. There may, in the future, also be increased regulation of additives in smokeless products and internet sales of vaporization products and certain other consumption accessories. The application of either or both of these federal laws, and of any new laws or regulations which may be adopted in the future at a state, provincial or local level, to vaporization products, consumption accessories or such additives could result in additional expenses and require Greenlane to change its advertising and labeling, and methods of marketing and distribution of its products, any of which could have a material adverse effect on its business, results of operations and financial condition.
Canada
On May 23, 2018, the Tobacco and Vaping Products Act (“TVPA”) became effective, and now governs the manufacture, sale, labeling and promotion of vaping products sold in Canada. The TVPA replaced the former Tobacco Act (Canada) and established a legislative framework that applies to vaping products, whether or not they contain nicotine. While the TVPA prescribes high-level requirements in relation to vaping products, the Government of Canada has yet to implement regulations the full set of regulations that will ultimately address the standards, testing methods, reporting requirements, packaging and labeling requirements, and other obligations with which vaping products will be required to comply. Accordingly, absent any such regulations, there is a lack of visibility as to the specific compliance regime that will apply to vaping products in the future. As such, there can be no assurance that Greenlane will initially be in total compliance, remain competitive, or financially able to meet future requirements administered pursuant to the TVPA.
 
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Prior to the TVPA becoming effective, Health Canada had taken the position that electronic smoking products (i.e., electronic products for the vaporization and administration of inhaled doses of nicotine, including electronic cigarettes, cigars, cigarillos and pipes, as well as cartridges of nicotine solutions and related products) fell within the scope of the Food and Drugs Act (Canada) (“Food and Drugs Act”). Vaping products with therapeutic or health-related claims are subject to the Food and Drugs Act and related regulations.
It is not presently clear what implications the enactment of the TVPA will have for Health Canada’s role in authorizing vaping products, or on the degree to which it will remain subject to the provisions of Food and Drugs Act. Until regulations are published and enacted pursuant to the TVPA, a significant degree of uncertainty will remain with respect to compliance landscape for vaping products.
On December 21, 2019, Health Canada issued a Regulatory Impact Analysis Statement titled “Vaping Products Promotion Regulations.” The Impact Analysis addressed two proposed new regulations that would place stricter limits on the advertising and promotion of nicotine vaping products and make health warnings on nicotine vaping products mandatory (the “Proposed Regulations”). The Proposed Regulations would: (1) prohibit the promotion of nicotine vaping products and nicotine vaping product-related brand elements by means of advertising that is done in a manner that can be seen or heard by youth, including the display of nicotine vaping products a points of sale where can be seen by youth; and (2) require that all nicotine vaping advertising convey a health warning about the health hazards of nicotine vaping product use.
In the wake of these proposed regulations and additional pressure in both the United States and Canada, JUUL Labs confirmed on January 14, 2020, that it had sent a letter to Canadian retailers outlining a plan to stop selling its mango, vanilla, fruit, and cucumber pods on a temporary basis while allowing retailers to sell remaining inventory. This hold continues. Greenlane expects that its sales will be adversely impacted by JUUL Lab’s decision regarding the sales of flavored JUUL products.
On July 1, 2020, Health Canada’s “Vaping Products Labeling and Packaging Regulations” ​(the “VPLPR”) came into effect; requiring (1) all vaping products containing nicotine to display a standardized nicotine concentration statement and health warning about the addictiveness of nicotine; (2) products containing nicotine to be packaged in child-resistant containers and display a toxicity warning and first aid treatment statement; and (3) the display of a list of ingredients contained in the vaping substances, regardless of nicotine content. On July 14, 2020, Health Canada issued a guidance document on vaping products titled, “Industry Guide to vaping products subject to the Canada Consumer Product Safety Act” (the “CCPA Guidance”). The CCPA Guidance provided clarity on requirements under the Canada Consumer Product Safety Act (“CCPSA”) for vaping products that are manufactured, imported, advertised, or sold in Canada. The CCPA Guidance provided clarity on the requirements of the VPLPR and the authority of the CCPSA to address safety issues posed by a vaping product not marketed for therapeutic use or by a cannabis accessory (such as a vaporizer represented to be used in the consumption of cannabis) not marketed for a therapeutic use.
In addition to federal regulations, several provinces, including Alberta, British Columbia, Nova Scotia, Ontario, Prince Edward Island (“PEI”), Quebec, and Saskatchewan, have passed regulations fully restricting or limiting the advertising and sales of certain types of nicotine vaping products. Notably, in Prince Edward Island, as of March 1, 2020, the minimum age for purchasing nicotine products increased to age 21, and on August 11, 2020, PEI adopted a regulation to ban the sale of all flavored vaping products, effective March 1, 2021. Other provinces continue to review the prospect of adopting new regulations addressing nicotine vaping products.
In addition to the federal level and provincial regulations noted above, on December 18, 2020, Health Canada proposed regulations that would lower the allowable nicotine concentration in nicotine products from 66mg/ml to 20 mg/ml, mirroring the cap in the European Union. Health Canada provided a 75-day public consultation on the proposed new regulations, which ends on March 4, 2021. In addition, Health Canada continues to consider new rules governing flavored vaping products, which could include restricting the use of flavor in nicotine products. The Council of Chief Medical Officers of Health has also issued a statement supporting federal action to create national consistency and provided recommendations for individual provinces and territories.
 
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These developments, together with the passed and proposed federal and provincial regulations may have a material adverse effect on Greenlane’s business, results of operations, and financial condition.
Europe
Throughout Europe, several countries’ laws implementing the European Union Tobacco Products Directive (“TPD”) impose strict regulations on the approval, sale, and advertising of e-cigarettes. While Greenlane does not sell or market products that it believes fall within the definition of e-cigarettes in Europe, if vaporization products it sells are found to fall within the scope of laws implementing the TPD, it would be unable to continue selling those products in certain countries, which may have a material adverse effect on its business, results of operations, and financial condition.
Greenlane may be unable to identify or contract with new suppliers in the event of a disruption to its supply.
In the event of a disruption to Greenlane’s supply of products, it would have to identify new suppliers that can meet its needs. Such a disruption may occur for many reasons, including but not limited to the current COVID-19 pandemic. Only a limited number of suppliers may have the ability to produce certain products Greenlane sells at the volumes it needs, and it could be costly or time-consuming to locate and approve such alternative sources. Moreover, it may be difficult or costly to find suppliers to produce small volumes of products in the event Greenlane is looking only to supplement its current supply as suppliers may impose minimum order requirements. In addition, Greenlane may be unable to negotiate pricing or other terms with its existing or new suppliers as favorable as those it currently enjoys. Greenlane cannot guarantee that a failure to adequately replace or supplement its existing suppliers would not have a material adverse effect on its business, results of operations and financial condition.
Demand for the products Greenlane distributes could decrease if the trend of its suppliers selling products directly to consumers continues or accelerates.
Retailers and consumers of vaporization products and consumption accessories have historically purchased certain amounts of these products directly from suppliers. Recently, direct to consumer sales of vaporization products and consumption accessories have accelerated, consistent with broader sales trends. If Greenlane’s customers were to increase their purchases of products directly from suppliers, or if suppliers further increase their efforts to sell such products directly to consumers, Greenlane could experience a significant decrease in its business, results of operations and financial condition. These, or other developments that remove Greenlane from, or limit its role in, the distribution chain, may harm its competitive position in the marketplace and reduce its sales and earnings and adversely affect its business.
Greenlane is vulnerable to third-party transportation risks, including governmental laws and common carriers’ policies that prevent the shipment of the types of products it sells.
Greenlane depends on fast and efficient shipping services to distribute its products. Any prolonged disruption of these services may have a material adverse effect on Greenlane’s business, financial condition and results of operations. Rising costs associated with transportation services used by Greenlane to receive or deliver its products, including tariffs, as well as delays as a result of factors outside of its control, including the COVID-19 pandemic, may also have a material adverse effect on its business, financial condition and results of operations.
The Consolidated Appropriations Act, 2021, which was signed into law on December 27, 2020, contains provisions that prohibit the mailing of ENDS through the United States Postal Service (“USPS”) and place certain regulatory requirements on shipment of ENDS through other carriers. Certain private carriers, including UPS and FedEx, also have policies restricting or prohibiting the shipment of many vaporization products Greenlane sells. If a substantial volume of the products Greenlane carries cannot be shipped by the USPS or private carriers, or Greenlane must comply with burdensome policies and regulations, its shipping costs could increase materially and it could lose its ability to deliver products to customers in a timely and economical matter. Additionally, rising costs associated with transportation services used by Greenlane to receive or deliver its products (including tariffs) and prohibitions on the use of certain shipping services for specified products, may also have a material adverse effect on its business, financial condition and results of operations.
 
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Greenlane does not have long-term agreements or guaranteed price or delivery arrangements with most of its suppliers. The loss of a significant supplier would require Greenlane to rely more heavily on its other existing suppliers or to develop relationships with new suppliers. Such a loss may have an adverse effect on Greenlane’s product offerings and its business.
While Greenlane has exclusive, and non-exclusive, long-term distribution agreements with certain of its suppliers, consistent with industry practice, it does not have guaranteed price or delivery arrangements with most of its suppliers. Greenlane generally makes its purchases through purchase orders. As a result, Greenlane has experienced and may in the future experience inventory shortages or price increases on certain products. Furthermore, Greenlane’s industry occasionally experiences significant product supply shortages, and Greenlane sometimes may experience customer order backlogs due to the inability of certain suppliers to make available to it certain products as needed. Greenlane cannot provide assurances that suppliers will maintain an adequate inventory of products to fulfill its orders on a timely basis, or at all, or that it will be able to obtain particular products on favorable terms, or at all. Additionally, Greenlane cannot provide assurances that product lines currently offered by suppliers will continue to be available to it. A decline in the supply or continued availability of the products of Greenlane’s suppliers, or a significant increase in the price of those products, could reduce Greenlane’s sales and negatively affect its operating results.
In addition, some of Greenlane’s suppliers have the ability to terminate their relationships with it at any time, or to decide to sell, or increase their sales of, their products through other resellers or channels. Although Greenlane believes there are numerous suppliers with the capacity to supply the products distributes, the loss of one or more of its major suppliers could have an adverse effect on its product offerings and its business. Such a loss would require Greenlane to rely more heavily on its other existing suppliers, develop relationships with new suppliers or undertake its own manufacturing, which may cause it to pay higher prices for products due to, among other things, a loss of volume discount benefits currently obtained from Greenlane’s major suppliers. Any termination, interruption or adverse modification of Greenlane’s relationship with a key supplier or a significant number of other suppliers would likely adversely affect its operating income, cash flow and future prospects.
If Greenlane fails to maintain proper inventory levels, its business could be harmed.
Greenlane purchases key products from suppliers prior to the time it receives purchase orders from customers. Greenlane does this to minimize purchasing costs, the time necessary to fill customer orders, and the risk of non-delivery. However, Greenlane may be unable to sell the products it has purchased in advance. Inventory levels in excess of customer demand may result in inventory write-downs, and the sale of excess inventory at discounted prices could significantly impair Greenlane’s brand image and have a material adverse effect on its business, results of operations and financial condition. Conversely, if Greenlane underestimates demand for its products or if it fails to acquire the products that it requires at the time it needs them, it may experience inventory shortages. Inventory shortages might delay shipments to customers, reduce revenue, negatively impact customer relationships and diminish brand loyalty, which in turn could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Certain of Greenlane’s suppliers may provide it with incentives and other assistance that reduce its operating costs, and any decline in these incentives and other assistance could materially harm its operating results.
Certain of Greenlane’s suppliers, including PAX Labs and Storz & Bickel, provide it with trade credit or substantial incentives in the form of discounts, credits and cooperative advertising, among other benefits. Greenlane has agreements with many of its suppliers under which they provide it, or they have otherwise consistently provided it, with market price discounts to subsidize portions of its advertising, marketing and distribution costs based upon the amount of coverage it gives to their respective products in its catalogs or other advertising and marketing mediums. Any termination or interruption of Greenlane’s relationships with one or more of these suppliers, or modification of the terms or discontinuance of its agreements or arrangements with these suppliers, could adversely affect Greenlane’s operating income and cash flow. For example, the incentives Greenlane may receive from a particular supplier may be impacted by a number of events outside of its control, including acquisitions, divestitures, management changes or economic pressures affecting such supplier, any of which could materially affect or eliminate the incentives Greenlane receives from such supplier.
 
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Greenlane’s success is dependent in part upon its ability to distribute popular products from new suppliers, as well as the ability of its existing suppliers to develop and market products that meet changes in market demand or regulatory requirements.
Many of the products Greenlane sells are generally subject to rapid changes in marketplace demand and regulatory requirements. For example, recent laws and regulations have prohibited the sale of certain types of ENDS products that Greenlane previously sold. Greenlane’s success is dependent, in part, upon the ability of its suppliers to develop and market products that meet these changes. Greenlane’s success is also dependent on its ability to develop relationships with and sell products from new suppliers that address these changes in market demand or regulatory requirements. To the extent products that address recent changes are not available to Greenlane, or are not available to it in sufficient quantities or on acceptable terms, it could encounter increased competition, which would likely adversely affect its business, results of operations and financial condition.
Greenlane may not be able to maintain existing supplier relationships or exclusive distributor status with its suppliers, which may affect its ability to offer a broad selection of products at competitive prices and negatively impact its results of operations.
Greenlane may purchase products for resale both directly from manufacturers and, on occasion, from other sources, all of whom it considers its suppliers. Greenlane may maintain certain exclusive relationships with several of its suppliers, which could provide it with exclusive rights to distribute their products in certain geographic areas or sales channels, preferred pricing, training, support, preferred access and other significant benefits. In some cases, suppliers may require Greenlane to meet certain minimum standards in order to retain these qualifications and its exclusive distributor status, and in some instances, it may fail to achieve those minimum standards. If Greenlane does not maintain its existing relationships or exclusive distributor status, or if it fails to build new relationships with suppliers on acceptable terms, including its exclusive distribution rights, favorable pricing, manufacturer incentives or reseller qualifications, it may not be able to offer a broad selection of products or continue to offer products from these suppliers at competitive prices, or at all. From time to time, suppliers may be acquired by other companies, terminate Greenlane’s right to sell some or all of their products, modify or terminate its exclusive distributor or qualification status, change the applicable terms and conditions of sale or reduce or discontinue the incentives or supplier consideration that they offer it. Any termination or reduction of Greenlane’s exclusive distributor status with any of its major suppliers, or its failure to build new supplier relationships, could have a negative impact on its operating results. Further, some products may be subject to allocation by the supplier, which could limit the number of units of those products that are available to Greenlane and may adversely affect its operating results.
Greenlane does not have long-term contracts with most of its customers. The agreements that Greenlane does have generally do not commit its customers to any minimum purchase volume. The loss of a significant customer may have a material adverse effect on Greenlane.
Greenlane’s customers generally place orders on an as-needed basis. Consistent with industry practice, Greenlane does not have long-term contracts with most of its customers, other than certain retail chains in Canada and certain state-licensed cannabis businesses in the United States. In addition, Greenlane’s agreements generally do not commit its customers to any minimum purchase volume. Accordingly, Greenlane is exposed to risks from potential adverse financial conditions in the vaporization products and consumption accessories industry, a potentially shifting legal landscape, the general economy, a competitive landscape, a changing technological landscape or changing customer needs or any other change that may affect the demand for its products. Greenlane cannot assure you that its customers will continue to place orders with it in similar volumes, on the same terms, or at all. Greenlane’s customers may terminate their relationships with it or reduce their purchasing volume at any time. Greenlane’s ten largest customers, in the aggregate, represented approximately 9.8% and 17.3% of its net sales for the years ended December 31, 2020 and 2019, respectively. The loss of a significant number of customers, or a substantial decrease in a significant customer’s orders, may have an adverse effect on Greenlane’s revenue.
 
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Changes in Greenlane’s customer, product or competition mix could cause its product margin and results of operations to fluctuate.
From time to time, Greenlane may experience changes in its customer mix, its product mix or its competition mix. Changes in Greenlane customer mix may result from geographic expansion or contractions, legislative, regulatory or enforcement priority changes affecting the products it distributes, selling activities within current geographic markets and targeted selling activities to new customer sectors. Changes in Greenlane’s product mix may result from marketing activities to existing customers, the needs of existing and prospective customers and from regulatory and legislative changes. Changes in Greenlane’s competition mix may result from well-financed competitors entering into its business segment or existing competitors growing their operations. If customer demand for lower-margin products increases and demand for higher-margin products decreases, Greenlane’s business, results of operations and financial condition may suffer.
Because a majority of Greenlane’s revenues are derived from sales to consumers indirectly through third-party retailers who operate traditional brick-and-mortar locations, the shift of sales to more online retail business could harm its market share and its revenues in certain sectors.
Greenlane’s B2B model includes selling its products through third-party retailers. These third-party retailers operate physical brick-and-mortar locations to sell Greenlane’s product to consumers. The current shift in purchasing demographics due to many factors, including the COVID-19 pandemic and the changing preferences of consumers who are moving from in-store purchases to online purchases creates the additional risks of Greenlane’s current revenue streams being impacted negatively and an overall decrease of market share.
Further, laws in some jurisdictions in which Greenlane operates could make collection of receivables difficult, time consuming or expensive. Greenlane generally does not require collateral in support of its trade receivables. While Greenlane maintains reserves for expected credit losses, it cannot assure these reserves will be sufficient to meet write-offs of uncollectible receivables or that its losses from such receivables will be consistent with its historical performance. Significant write-offs may affect Greenlane’s business, results of operations and financial condition. As Greenlane begins selling its products indirectly through large retailers, customer credit risks will expand.
Greenlane’s ability to distribute certain licensed brands and to use or license certain trademarks may be terminated or not renewed.
Greenlane is reliant upon brand recognition in the markets in which it competes, as the industry is characterized by a high degree of brand loyalty and a reluctance of consumers to switch to substitute or unrecognizable brands. Some of the brands Greenlane distributes and the trademarks under which its products are sold are licensed for a fixed period of time with regard to specified markets.
In the event that the licenses to use the brand names and trademarks for the products Greenlane distributes are terminated or are not renewed after the end of the term, there is no guarantee Greenlane or its suppliers will be able to find suitable replacement brands or trademarks, or that if a replacement is found, that it will be on favorable terms. Any loss in brand-name appeal to Greenlane’s existing customers as a result of the lapse or termination of its licenses or the licenses of its suppliers could have a material adverse effect on its business, results of operations and financial condition.
Greenlane may not be successful in maintaining the consumer brand recognition and loyalty of its products.
Greenlane competes in a market that relies on innovation and the ability to react to evolving consumer preferences. The vaporization products and consumption accessories industry, as well as the nicotine industries, are subject to changing consumer trends, demands and preferences. Therefore, products once favored may, over time, become disfavored by consumers or no longer perceived as the best option. Consumers in the vaporizer market have demonstrated a degree of brand loyalty, but suppliers must continue to adapt their products in order to maintain their status among customers as the market evolves. Greenlane’s continued success depends in part on its ability and its supplier’s ability to continue to differentiate the brand names it represents, owns or licenses and maintain similarly high levels of recognition with target consumers. Trends within the vaporization products and consumption accessories industry change often and Greenlane’s
 
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failure to anticipate, identify or react to changes in these trends could, among other things, lead to reduced demand for its products. Factors that have previously and may continue to affect consumer perception of Greenlane’s products include health trends and attention to health concerns associated with tobacco, nicotine, herbs, cannabis or other materials used with vaporizers, price-sensitivity in the presence of competitors’ products or substitute products and trends in favor of new vaporization products or technology consumption accessories products that are currently being researched and produced by participants in its industry. For example, in recent years, there has been a shift in consumer purchases from vaporizers designed for dry herbs to those designed for liquids or wax type concentrates. A failure to react to similar trends in the future could enable Greenlane’s competitors to grow or establish their brands’ market share in these categories before it has a chance to respond.
Regulations have recently been and are likely to continue to be enacted in the future that would make it more difficult to appeal to consumers or to leverage the brands that Greenlane distributes, owns or licenses. Furthermore, even if Greenlane is able to continue to distinguish its products, there can be no assurance that the sales, marketing and distribution efforts of its competitors will not be successful in persuading consumers of its products to switch to their products. Some of Greenlane’s competitors have greater access to resources than it does, which better positions them to conduct market research in relation to branding strategies or costly marketing campaigns. Any loss of consumer brand loyalty to Greenlane’s products or in its ability to effectively brand its products in a recognizable way will have a material effect on its ability to continue to sell its products and maintain its market share, which could have a material adverse effect on its business, results of operations and financial condition.
Greenlane may not be able to establish sustainable relationships with large retailers or regional or national chains.
In connection with efforts to enter new sales channels, including large retailers and chains, Greenlane may have to pay slotting fees based on the number of stores in which its products will be carried. Greenlane may not be able to develop these relationships or continue to maintain relationships with large retailers or national chains. Greenlane’s inability to develop and sustain relationships with large retailers and chains may impede its ability to develop brand and product recognition and increase sales volume and, ultimately, require it to rely on local and more fragmented sales channels, which may have a material adverse effect on its business, results of operations and financial condition. In addition, if Greenlane is unable to develop or maintain relationships with large retailers and national chains and such large retailers or chains take market share from the smaller local and more fragmented sales channels, its business, results of operations and financial condition will be adversely impacted.
New products face intense media attention and public pressure.
Greenlane’s vaporizers and other products are new to the marketplace. Since their introduction, certain members of the media, politicians, government regulators and advocacy groups, including independent doctors, have called for and driven the adoption of stringent regulation of the sale of certain products and in some cases, an outright ban of such products pending increased regulatory review and a further demonstration of safety. For example, local and state governments have banned certain types of vaporization products, such as those containing flavored liquid nicotine and flavored hemp-derived CBD. Additional bans of this type would likely have the effect of terminating Greenlane’s sales and marketing efforts of certain products in jurisdictions in which it may market or have plans to market such products. Such bans would also likely cause public confusion as to which products are the subject of bans, which confusion could also have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Greenlane’s success depends, in part, on the quality and safety of its products, as well as the perception of quality and safety in the vaporization products and consumption accessories industry generally.
Greenlane’s success depends, in part, on the quality and safety of the products it sells, including manufacturing issues, health concerns about the substances consumed using the products it sells, and unforeseen product misuse. Even a single incident of product defect or misuse, whether relating to products sold by Greenlane or just to its industry generally, could result in significant harm to its reputation. For example, incidents of EVALI have, by some metrics, negatively impacted demand for vaporizers. If any of
 
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Greenlane’s products are found to be, or are perceived to be, defective or unsafe, or if they otherwise fail to meet its customers’ standards, its relationship with its customers could suffer, its reputation or the appeal of its brands could be diminished, and it could lose market share and/or become subject to liability claims, any of which could result in a material adverse effect on its business, results of operations and financial condition.
Damage to Greenlane’s reputation, or that of any of its key suppliers or their brands, could affect its business performance.
The success of Greenlane’s business depends in part upon the positive image that consumers have of the third-party brands it distributes. Incidents, publicity or events arising accidentally or through deliberate third-party action that harms the integrity or consumer support of Greenlane’s products could affect the demand for its products. Unfavorable media, whether accurate or not, related to Greenlane’s industry, to it, to its customers, or to the products it sells could negatively affect its corporate reputation, stock price, ability to attract high-quality talent, or the performance of its business. For example, JUUL Labs has been the subject of significant negative publicity. Additional negative publicity or commentary on social media outlets also could cause consumers to react rapidly by avoiding Greenlane’s products and brands or by choosing brands offered by its competitors, which could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Greenlane is subject to substantial and increasing regulation regarding the tobacco industry.
The tobacco industry, of which some of Greenlane’s vaporizer products are deemed to be a part, has been under public scrutiny for many years. Industry critics include special interest groups, and many legislators and regulators at the state, federal and provincial levels. A wide variety of federal, state or provincial and local laws limit the advertising, sale and use of tobacco and these laws have proliferated in recent years. Together with changing public attitudes towards tobacco and nicotine consumption, the constant expansion of regulations has been a major cause of the overall decline in the consumption of tobacco products since the early 1970s. These regulations relate to, among other things, the importation of tobacco products and shipping throughout the North American market, increases in the minimum age to purchase tobacco products, imposition of taxes, sampling and advertising bans or restrictions, flavor bans or restrictions, ingredient and constituent disclosure requirements and media campaigns and restrictions on where tobacco can be consumed. Additional restrictions may be legislatively imposed or agreed to in the future. These limitations may make it difficult for Greenlane to maintain the sales levels of its regulated vaporizer products.
Moreover, the current trend is toward increasing regulation of the tobacco industry, which is likely to differ between the various U.S. states and Canadian provinces in which Greenlane conducts business. The continued promulgation of extensive and inconsistent regulation by multiple states or provinces and at different governmental levels could prove to be particularly disruptive to Greenlane’s business as well, as it may be unable to accommodate such regulations in a cost-effective manner that will allow it to continue to compete in an economically-viable way. Tobacco regulations are often introduced without the tobacco industry’s input and have been a significant reason behind reduced sales volumes and increased illicit trade in the tobacco industry. Such regulations also may impact Greenlane’s sales volumes to the extent they apply to the vaporizer products it sells.
On June 22, 2009, the Family Smoking Prevention and Tobacco Control Act (the “Tobacco Control Act”) amended the FFDCA to authorize the FDA to regulate the tobacco industry and amended the Federal Cigarette Labeling and Advertising Act, which governs how cigarettes can be advertised and marketed. In addition to the FDA, Greenlane is subject to regulation by numerous other federal agencies, including the Federal Trade Commission, the Alcohol and Tobacco Tax and Trade Bureau, the Federal Communications Commission, the U.S. Environmental Protection Agency, the U.S. Department of Agriculture, U.S. Customs and Border Protection and the U.S. Center for Disease Control and Prevention’s Office on Smoking and Health. There have also been adverse legislative and political decisions and other unfavorable developments concerning cigarette smoking and the tobacco industry, which have received widespread public attention. There can be no assurance as to the ultimate content, timing or effect of any regulation of tobacco or nicotine products by governmental bodies, nor can there be any assurance that potential corresponding declines in demand resulting from negative media attention would not have a material adverse effect on Greenlane’s business, results of operations and financial condition.
 
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Some of the products Greenlane sells contain nicotine, which is considered to be a highly-addictive substance, or other chemicals that some jurisdictions have determined to cause cancer and birth defects or other reproductive harm.
Some of Greenlane’s products, like the JUUL nicotine vaporizers, contain nicotine, a chemical that is considered to be highly addictive. The Tobacco Control Act empowers the FDA to regulate the amount of nicotine found in tobacco products (including vaporizers), but not to require the reduction of nicotine yields of a tobacco product to zero; similar legislation in Canada empowers the Canadian government and provincial governments to limit the amount of nicotine in tobacco and vaporizer products. . In addition, the State of California has determined that some chemicals found in certain vaporizers, as well as materials frequently consumed by using vaporizers (such as cannabis), cause cancer and birth defects or other reproductive harm. New federal, state or provincial regulations, whether of nicotine levels or other product attributes, may require Greenlane to recall and/or discontinue certain of the products it sells, which may have a material adverse effect on its ability to market its products and have a material adverse effect on its business, results of operations and financial condition.
Significant increases in state and local regulation of Greenlane’s vaporizer products have been proposed and enacted, and are likely to continue to be proposed and enacted in numerous jurisdictions.
As discussed in the section entitled “Information About Greenlane — Description of the Business” beginning on page 259 of this joint proxy statement/prospectus, there has been increasing activity on the state, provincial and local levels with respect to scrutiny of vaporizer products. State and local governmental bodies across the United States have indicated that vaporization products and certain other consumption accessories may become subject to new laws and regulations at the state and local levels. For example, in January 2015, the California Department of Health declared electronic cigarettes and certain other vaporizer products a health threat that should be strictly regulated like tobacco products. Further, many states and cities have enacted regulations that require retailers to obtain a tobacco retail license in order to sell electronic cigarettes and vaporizer products. Many states, provinces and some cities have passed laws restricting the sale of electronic cigarettes and certain other vaporizer products. If one or more states or provinces from which Greenlane generates or anticipates generating significant sales of vaporizer products bring actions that prevent it from selling certain or all of its vaporizer products, it would be required to cease sales and distribution of certain products to those states, which could have a material adverse effect on its business, results of operations and financial condition. Additionally, if one or more states or provinces from which Greenlane generates or anticipates generating significant sales of vaporizer products bring actions that require it to obtain certain licenses, approvals or permits, and if it is not able to obtain the necessary licenses, approvals or permits for financial reasons or otherwise and/or any such license, approval or permit is determined to be overly burdensome to it, then it may be required to cease sales and distribution of its products to those states, which could have a material adverse effect on its business, results of operations and financial condition.
Certain states, provinces and cities have already restricted the use of electronic cigarettes and vaporizer products in smoke-free venues. Additional city, state, provincial or federal regulators, municipalities, local governments and private industry may enact rules and regulations restricting the use of electronic cigarettes and vaporizer products in those same places where cigarettes cannot be smoked. Because of these restrictions, Greenlane’s customers may reduce or otherwise cease using its vaporization products or certain other consumption accessories, which could have a material adverse effect its business, results of operations and financial condition.
Certain provinces of Canada have passed or propose to pass legislation which will restrict the extent to which e-cigarettes, e-liquid and other vaping products may be displayed or sold. Additionally, Canadian laws require health warnings to be placed on certain vaporizer products, which could reduce the appeal of these products. These regulations and future regulations could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Based on regulations surrounding health-related concerns related to the use of some of Greenlane’s vaporizer products, especially e-cigarettes and those used for tobacco and nicotine intake, possible new or increased taxes by government entities intended to reduce use of its products or to raise revenue, additional governmental regulations concerning the marketing, labeling, packaging or sale of some of its products,
 
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negative publicity resulting from actual or threatened legal actions against it or other companies in its industry, all may reduce demand for, or increase the cost of, certain of its products, which could adversely affect its profitability and ultimate success.
Public health epidemics, pandemics or outbreaks, including the recent COVID-19 pandemic, could materially and adversely affect Greenlane’s business.
Public health epidemics, pandemics or outbreaks, and the resulting business or economic disruptions resulting therefrom, could adversely impact Greenlane’s business as well as its ability to raise capital. In December 2019, COVID-19 was identified in Wuhan, China. The virus has been declared a pandemic by the World Health Organization. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. The extent to which COVID-19 impacts Greenlane’s business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration, spread and intensity of the pandemic, the timing and effectiveness of vaccines and other treatments, possible resurgences in COVID-19 cases, and the duration of government measures to mitigate the pandemic, all of which are uncertain and difficult to predict. COVID-19 has and will likely continue to result in social, economic and labor instability in the countries in which Greenlane or the third parties with whom it engages operate. While Greenlane cannot presently predict the scope and severity of any potential business shutdowns or disruptions, if it or any of the third parties with whom it engages, including the suppliers, manufacturers and other third parties in its global supply chain, were to experience shutdowns or other significant business disruptions, its ability to conduct its business in the manner presently planned could be materially and negatively impacted. For example, Greenlane’s Higher Standards stores in California and New York were closed for several months in 2020 as a result of COVID-19.
The COVID-19 pandemic has also caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. Greenlane cannot assure you that conditions in the bank lending, capital and other financial markets will not deteriorate as a result of the pandemic, or that its access to capital and other sources of funding will not become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings.
Adverse U.S., Canadian and global economic conditions could materially and adversely Greenlane’s business, prospects, results of operations, financial condition or cash flows.
Greenlane’s business and operations are sensitive to global economic conditions. These conditions include interest rates, energy costs, inflation, international trade relationships, recession, fluctuations in debt and equity capital markets and the general condition of the U.S., Canadian and global economy. A material decline in the economic conditions affecting consumers, such as the recent downturn in the global economy due to COVID-19, which cause a reduction in disposable income for the average consumer, may change consumption patterns, and may result in a reduction in spending on vaporization products and consumption accessories or a switch to cheaper products or products obtained through illicit channels. Vaporizer, e-cigarette and e-liquid products are relatively new to the market and may be regarded by consumers as a novelty item and expendable. As such, demand for Greenlane’s vaporizer products may be particularly sensitive to economic conditions such as inflation, recession, high energy costs, unemployment, changes in interest rates and money supply, changes in the political environment and other factors beyond its control, any combination of which could result in a material adverse effect on its business, results of operations and financial condition.
Greenlane’s business depends partly on continued purchases by businesses and individuals selling or using cannabis pursuant to state laws in the United States or Canadian and provincial laws.
Because some of Greenlane’s B2C customers use some of the items that it sells to consume cannabis and some of its B2B customers operate in the legal national and state cannabis industry, Greenlane’s business depends partly on federal, state, provincial and local laws, regulations, guidelines and enforcement pertaining to cannabis. In both the United States and Canada, those factors are in flux.
 
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United States
Currently, in the United States, 38 states and the District of Columbia permit some form of cannabis cultivation, sales, and use for certain medical purposes (“medical states”). Fifteen of those states and the District of Columbia have also legalized cannabis for adults for non-medical purposes (sometimes referred to as recreational use). Several medical states may extend legalization to adult use.
States’ cannabis programs have proliferated and grown even though the cultivation, sale and possession of cannabis is considered illegal under U.S. federal law. Under the CSA, cannabis is a Schedule I drug, meaning that the Drug Enforcement Administration recognizes no accepted medical use for cannabis, and the substance is considered illegal under federal law.
In an effort to provide guidance to U.S. Attorneys’ offices regarding the enforcement priorities associated with cannabis in the United States, the U.S. Department of Justice (the “DOJ”) has issued a series of memoranda detailing its suggested enforcement approach. During the administration of former President Obama, each memorandum acknowledged the DOJ’s authority to enforce the CSA in the face of state laws, but noted that the DOJ was more committed to using its limited investigative and prosecutorial resources to address the most significant threats associated with cannabis in the most effective, consistent, and rational way.
On August 29, 2013, the DOJ issued what came to be called the “Cole Memorandum,” which gave U.S. Attorneys the discretion not to prosecute federal cannabis cases that were otherwise compliant with applicable state law that had legalized medical or adult-use cannabis and that have implemented strong regulatory systems to control the cultivation, production, and distribution of cannabis. The eight federal priorities were preventing:

The distribution of cannabis to minors;

Revenue from the sale of cannabis from going to criminal enterprises, gangs, and cartels;

The diversion of cannabis from states where it is legal under state law in some form to other states;

State-authorized cannabis activities from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity;

Violence and the use of firearms in the cultivation and distribution of cannabis;

Drugged driving and exacerbation of other adverse public health consequences associated with cannabis use;

Growing cannabis on public lands and the attendant public safety and environmental dangers posed by cannabis production on public lands; and

Cannabis possession or use on federal property.
Accordingly, the Cole Memorandum provided lawful cannabis-related enterprises a tacit federal go-ahead in states with legal cannabis programs, provided that the state had adopted and was enforcing strict regulations and oversight of the medical or adult-use cannabis program in accordance with the specific directives of the Cole Memorandum.
On January 4, 2018, Attorney General Jeff Sessions issued a memorandum that rescinded previous DOJ guidance on the state legal cannabis industry, including the Cole Memorandum. Attorney General Sessions wrote that the previous guidance on cannabis law enforcement was unnecessary, given the well-established principles governing federal prosecution that are already in place. As a result, federal prosecutors could and still can use their prosecutorial discretion to decide whether to prosecute even state-legal cannabis activities.
Since the Cole Memorandum was rescinded, however, U.S. Attorneys have refrained from prosecuting state law compliant marijuana businesses. Current Attorney General Merrick Garland during his confirmation hearings expressed that “It does not seem to me useful the use of limited resources that we have to be pursuing prosecutions in states that have legalized and are regulating the use of marijuana, either medically or otherwise.”
 
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Since December 2014, companies that are strictly complying with state medical cannabis laws have been protected against enforcement for that activity by an amendment (originally called the Rohrabacher-Blumenauer Amendment, now called the Joyce Amendment) to the Omnibus Spending Bill, which prevents federal prosecutors from using federal funds to impede the implementation of medical cannabis laws enacted at the state level. Federal courts have interpreted the provision to bar the DOJ from prosecuting any person or entity in strict compliance with state medical cannabis laws.
While the protection of the Joyce Amendment prevents prosecutions of state law compliant medical cannabis activities, it does not make cannabis legal. The protection of the Joyce Amendment depends on its continued inclusion in the federal omnibus spending bill, or in some other legislation, and entities’ strict compliance with the state medical cannabis laws. That protection has been extended through September 30, 2021 through recent appropriations bill. While industry observers expect Congress to extend the protection in future Omnibus Spending Bills, there can be no assurance that it will do so.
Although several cannabis law reform bills are pending in the U.S. Congress, passage of any of them and ultimately the President’s support and approval remain uncertain. Unless and until the U.S. Government changes the law with respect to cannabis, and particularly if Congress does not extend the protection of state medical cannabis programs, there is a risk that federal authorities could enforce current federal cannabis law. An increase in federal enforcement against companies licensed under state cannabis laws would negatively impact the state cannabis industries and, in turn, Greenlane’s revenues, profits, financial condition, and business model.
Canada
On April 13, 2017, the Government of Canada introduced Bill C-45, which proposed the enactment of the Cannabis Act to legalize and regulate access to cannabis. The Cannabis Act proposed a strict legal framework for controlling the production, distribution, sale and possession of medical and recreational adult-use cannabis in Canada. On June 21, 2018, the Government of Canada announced that Bill C-45, received Royal Assent. On July 11, 2018, the Government of Canada published the Cannabis Regulations under the Cannabis Act. The Cannabis Regulations provide more detail on the medical and recreational regulatory regimes for cannabis, including regarding licensing, physical security requirements, product practices, outdoor growing, security, packaging and labelling (including for cannabis accessories), cannabis-containing drugs, document retention requirements, reporting and disclosure requirements, the new access to cannabis for medical purposes regime and industrial hemp. The majority of the Cannabis Act and the Cannabis Regulations came into force on October 17, 2018; additional Cannabis Regulations took effect on October 17, 2017.
While the Cannabis Act provides for the regulation by the federal government of, among other things, the commercial cultivation and processing of cannabis for recreational purposes, it provides the provinces and territories of Canada with the authority to regulate with respect to the other aspects of recreational cannabis, such as distribution, sale, minimum age requirements, places where cannabis can be consumed, and a range of other matters.
The governments of every Canadian province and territory have implemented regulatory regimes for the distribution and sale of cannabis for recreational purposes. In most provinces and territories, the minimum age is 19 years old, except for Québec and Alberta, where the minimum age is 18. Certain provinces, such as Ontario, have legislation in place that restricts the packaging of vapor products and the manner in which vapor products are displayed or promoted in stores.
The Cannabis Act is a relatively new regime that has no close precedent in Canadian law. The effect of relevant governmental authorities’ administration, application and enforcement of their respective regulatory regimes and delays in obtaining, or failure to obtain, applicable regulatory approvals which may be required may significantly delay or impact the development of markets, products and sales initiatives and could have a material adverse effect on Greenlane’s business, financial condition and results of operations.
The federal and state regulatory landscape regarding products containing hemp-derived CBD and other cannabinoids is uncertain and evolving, and new or changing laws or regulations relating to hemp and hemp-derived products could have a material adverse effect on Greenlane’s business, financial condition and results of operations.
In December 2018, the U.S. government changed the legal status of hemp and its derivatives, including hemp-derived CBD and other cannabinoids. The 2018 Farm Bill, which was signed into law by President
 
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Trump on December 20, 2018 (Pub.L. 115-334), established a new framework for the regulation of hemp production (defined in the Farm Bill as Cannabis sativa L. with a THC concentration of not more than 0.3 percent on a dry weight basis) and extracts of hemp, including CBD. The law also removed hemp and extracts of hemp from the federal controlled substances schedules. The section of the Farm Bill establishing a framework for hemp production, however, makes clear explicitly that it does not affect or modify the United States Federal Food, Drug, and Cosmetic Act (the “FDCA”), section 351 of the Public Health Service Act (addressing the regulation of biological products), the authority of the Commissioner of the FDA under those laws, or the Commissioner’s authority to regulate hemp production and sale under those laws.
Since passage of the Farm Bill, the FDA has expressed multiple times its position that any cannabis product, whether derived from hemp or otherwise, marketed with a disease claim (e.g., a claim of therapeutic benefit or disease prevention) must be approved by the FDA for its intended use through one of the drug approval pathways prior to it being introduced into interstate commerce. The FDA has also repeatedly stated its position that introducing food or dietary supplements with added CBD (or THC), regardless of source, into interstate commerce is illegal under the FDCA. Although enforcement under the FDCA may be civil or criminal in nature, the FDA has thus far limited its recent enforcement against companies selling CBD products to warning letters alleging various violations of the FDCA, including that the products bear claims that render the products unapproved and misbranded new drugs, that CBD is excluded from the FDCA’s definition of “dietary supplement,” and that the FDCA prohibits the addition of CBD to food. The FDA also tested some of the products, and found that many did not contain the levels of CBD they claimed to contain, which could be the basis for a separate violation of the FDCA. In addition, some states have taken actions to restrict or prohibit the sale of CBD products under state law. The FDA has signaled that it will likely issue further guidance and/or issue regulations concerning CBD products, although the contents and timing of such guidance and regulations remain unknown.
Greenlane distributed products containing hemp-derived CBD and other cannabinoids. Although the Farm Bill removed hemp and its derivatives from the definition of “marijuana” under the CSA, uncertainties remain regarding the cultivation, sourcing, production and distribution of hemp and products containing hemp derivatives. Certain states prohibit the sale of all or certain types of products containing hemp. The laws and regulations of states that permit the sale of products containing hemp derivatives, such as CBD, impose various requirements, including requirements to obtain certain permits or licenses, related to the marketing, packaging, safety, and sale of products containing hemp derivatives. These laws and regulations are rapidly developing. Greenlane may have to quickly adapt its operations to comply with forthcoming and rapidly-shifting federal and state regulations. These regulations could require significant changes to Greenlane’s business, plans or operations concerning hemp-derived products, and could adversely affect its business, financial condition or results of operations. Additionally, while Greenlane believes its current operations with respect to hemp derived products such as CBD comply with existing federal and state laws relating to hemp and hemp-derived products in all material respects, legal proceedings alleging violations of such laws could have a material adverse effect on its business, financial condition and results of operations.
Greenlane is subject to legislative uncertainty that could slow or halt the legalization and use of cannabis, which could negatively affect its business.
Continued development of the cannabis industry is dependent upon continued legislative authorization of cannabis at the state level, as well as the U.S. government’s continued non-enforcement of federal cannabis laws against state-law-compliant cannabis businesses. Any number of factors could slow or halt progress in this area. Further, progress, while generally expected, is not assured. Well-funded interests, including businesses in the tobacco, alcohol beverage and the pharmaceutical industries, may have a strong economic opposition to the continued legalization of cannabis. The pharmaceutical industry, for example, is well funded with a strong and experienced lobby that eclipses the funding of the cannabis movement. Any inroads legalization opponents could make in halting the impending cannabis industry could have a detrimental impact on Greenlane’s business. While there may be ample public support for legislative action, numerous factors impact the legislative process. Any one of those factors could slow or halt the continued legalization and use of cannabis, which would negatively impact Greenlane’s business.
 
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While Greenlane believes that its 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 its business, financial condition or results of operations.
Under U.S. Code Title 21 Section 863 (the “Federal Paraphernalia Law”), the term “drug paraphernalia” means “any equipment, product or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance.” That law exempts “(1) any person authorized by local, State, or Federal law to manufacture, possess, or distribute such items” and “(2) any item that, in the normal lawful course of business, is imported, exported, transported, or sold through the mail or by any other means, and traditionally intended for use with tobacco products, including any pipe, paper, or accessory.” Any nonexempt drug paraphernalia offered or sold by any person in violation of the Federal Paraphernalia Law can be subject to seizure and forfeiture upon the conviction of such person for such violation, and a convicted person can be subject to fines under the Federal Paraphernalia Law and even imprisonment.
Greenlane believes its sales do not violate the Federal Paraphernalia Law in any material respect. First, Greenlane understands that a substantial majority of the products it offers and sells are not primarily intended or designed for any purpose not permitted by the Federal Paraphernalia Law. Indeed, most of the manufacturers whose products Greenlane sells disclaim that the products are for use with cannabis. Second, Greenlane restricts the sale of certain products — those that may have been primarily intended or designed for use with cannabis — to comply with the Federal Paraphernalia Law’s exemption for sales authorized by state law. In particular, Greenlane (a) does not sell those products at all into the six states that have maintained complete or near complete cannabis prohibition and (b) limits the sale of those products to licensed cannabis businesses, such as dispensaries, cultivators, and manufacturers, in the nine states that authorize sales of cannabis paraphernalia only through state-licensed cannabis businesses. Third, Greenlane has been in business for many years without facing even threatened legal action under the Federal Paraphernalia Law.
While Greenlane believes that its business and sales are legally compliant with the Federal Paraphernalia Law in all material respects, any legal action commenced against it under such law could result in substantial costs and could have an adverse impact on its business, financial condition or results of operations. In addition, changes in cannabis laws or interpretations of such laws are difficult to predict, and could materially and adversely affect Greenlane’s business.
Officials of the U.S. Customs and Border Protection agency (“CBP”) have broad discretion regarding products imported into the United States, and the CBP has on occasion seized imported products on the basis that such products violate the Federal Paraphernalia Law. While Greenlane believes the products that it imports do not violate such law, any such seizure of the products it sells could have a material adverse effect on its business operations or its results of operations.
Officials of the CBP have broad discretion regarding products imported into the United States. Individual shipments of imported products Greenlane distributes, as well as similar products, have been detained or seized by the CBP for a variety of reasons, including because the CBP officials inspecting the goods believed such goods were marketed as drug paraphernalia and therefore violated the Federal Paraphernalia Law. Although suppliers or distributors of such products have at times successfully contested such actions of the CBP, such challenges are costly and time consuming. While Greenlane would disagree with any conclusion of the CBP that its product sales violate the Federal Paraphernalia Law, it cannot give any assurance that the CBP will not seize its imports, or that if the CBP seizes any of its goods that the CBP would not seek to impose penalties related to such imports. Should Greenlane elect to contest any such seizure, the costs of doing so could be substantial and there are no assurances it would prevail in a contested proceeding. Additionally, the cost and/or results of any such contest could adversely impact Greenlane’s business, financial condition or results of operations. Additionally, if the CBP fails to release seized products, Greenlane may no longer be able to ensure a sellable supply of some of its products, which could have a material adverse impact on its business, financial condition and results of operations.
 
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Because Greenlane’s business is dependent, in part, upon continued market acceptance of cannabis by consumers, any negative trends could materially and adversely affect its business, financial conditions or results of operations.
Greenlane is dependent on public support, continued market acceptance and the proliferation of consumers in the legal cannabis markets. While Greenlane believes that the market and opportunity in the space continue to grow, it cannot predict the future growth rate or size of the market. Any downturns in, or negative outlooks on, the cannabis industry may materially and adversely affect Greenlane’s business and financial condition.
Greenlane and its customers may have difficulty accessing the service of banks, which may make it difficult for Greenlane and for them to sell its products.
Financial transactions involving proceeds generated by cannabis-related activities can form the basis for prosecution under the U.S. federal money laundering statutes, unlicensed money transmitter statutes and the U.S. Bank Secrecy Act, as amended (the “Bank Secrecy Act”). Guidance issued by the Financial Crimes Enforcement Network (“FinCen”) clarifies how financial institutions can provide services to cannabis-related businesses consistent with their obligations under the Bank Secrecy Act. Furthermore, since the rescission by U.S. Attorney General Jeff Sessions on January 4, 2018 of the Cole Memorandum, U.S. federal prosecutors have had greater discretion when determining whether to charge institutions or individuals with any of the financial crimes described above based upon cannabis-related activity. As a result, given these risks and their own related disclosure requirements, some banks remain hesitant to offer banking services to cannabis-related businesses. Consequently, those businesses involved in the cannabis industry continue to encounter difficulty establishing banking relationships. Indeed, Greenlane has been asked to close bank accounts due to their activity in the cannabis industry. Greenlane may be unable to maintain stable banking relationships, which could create significant challenges in operating its business, increase its operating costs, pose additional operational, logistical and security challenges, and result in its inability to implement its business plan. Additionally, if Greenlane’s more significant customers are unable maintain their current banking relationships, it might not be able to continue transacting with such customers.
Greenlane’s payment system and the payment systems of its customers depend on third-party providers and are subject to evolving laws and regulations.
Greenlane and its retail customers engage third-party service providers to perform underlying credit and debit card processing, currency exchange, identity verification and fraud analysis services. If these service providers do not perform adequately or if its relationships, or the relationships of Greenlane’s retail customers with these service providers, were to terminate, its ability or the ability of such retail customers to process payments could be adversely affected and Greenlane’s business would be harmed.
The laws and regulations related to payments are complex and are potentially impacted by tensions between federal and state treatment of the vaporization, tobacco, nicotine and cannabis industries. These laws and regulations also vary across different jurisdictions in the United States, Canada and globally. As a result, Greenlane is required to spend significant time and effort to comply with those laws and regulations. Any failure or claim of Greenlane’s failure to comply, or any failure by its third-party service providers to comply, could cost it substantial resources, could result in liabilities, or could force it to stop offering its customers the ability to pay with credit cards, debit cards and bank transfers. As Greenlane expands the availability of these payment methods or offers new payment methods to its customers in the future, it may become subject to additional regulations and compliance requirements.
Further, through Greenlane’s agreements with third-party credit card processors, it is indirectly subject to payment card association operating rules and certification requirements, including restrictions on product mix and the Payment Card Industry Data Security Standard, 02 PCIDSS. Greenlane is also subject to rules governing electronic funds transfers. Any change in these rules and requirements could make it difficult or impossible for Greenlane to comply.
Due to Greenlane’s acceptance of credit cards in its e-commerce business, it is subject to the Payment Card Industry Data Security Standard, designed to protect the information of credit card users. Greenlane had a security incident in the past, which it did not believe reached the level of a breach, that would be
 
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reportable under state laws or other obligations; however there can be no assurance that its determination was correct. In the event Greenlane’s determination is challenged and found to have been incorrect, it may be subject to claims by one or more state attorney generals, federal regulators, or private plaintiffs and it may additionally be subject to claims or fines from credit associations.
Greenlane is subject to certain U.S. federal regulations relating to cash reporting.
The Bank Secrecy Act, enforced by the FinCEN a division of the U.S. Department of the Treasury, requires a party in trade or business to file with the IRS a Form 8300 report within 15 days of receiving a cash payment of over $10,000. While Greenlane receives very few cash payments for the products it sells, if it fails to comply with these laws and regulations, the imposition of a substantial penalty could have a material adverse effect on its business, results of operations and financial condition.
Increases in tobacco-related taxes have been proposed or enacted and are likely to continue to be proposed or enacted in numerous jurisdictions.
Tobacco products, premium cigarette papers and tubes have long been subject to substantial federal, state, provincial and local excise taxes. Such taxes have frequently been increased or proposed to be increased, in some cases significantly, to fund various legislative initiatives or further disincentivize smoking.
In addition to federal excise taxes, every state and certain city and county governments have imposed substantial excise taxes on sales of tobacco products, and many have raised or proposed to raise excise taxes in recent years. Tax increases, depending on their parameters, may result in consumers switching between tobacco products or depress overall tobacco consumption, which is likely to result in declines in overall sales volumes in certain of Greenlane’s products.
Any future enactment of increases in federal, provincial or state excise taxes on Greenlane’s tobacco products or rulings that certain of its products should be categorized differently for excise tax purposes could adversely affect demand for its products and may result in consumers switching between tobacco products or a depression in overall tobacco consumption, which could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
If countries, states, and provinces continue the trend of imposing, expanding, and increasing taxes on vaporizer products, it could materially and adversely affect Greenlane’s business.
Supply to Greenlane’s customers is sensitive to increased sales taxes and economic conditions affecting their disposable income. Discretionary consumer purchases, such as vaporization products and consumption accessories, may decline during recessionary periods or at other times when disposable income is lower and taxes may be higher.
As discussed in the section entitled “Information About Greenlane — Description of the Business” beginning on page 259 of this joint proxy statement/prospectus, the sale of vaporization products and certain other consumption accessories is, in certain jurisdictions, subject to federal, state, provincial and local excise taxes like the sale of conventional cigarettes or other tobacco products, all of which generally have high tax rates and have faced significant increases in the amount of taxes collected on their sales. Other jurisdictions are contemplating similar legislation and other restrictions on electronic cigarettes and certain other vaporizer products. Should federal, state, provincial and local governments and/or other taxing authorities continue to impose excise taxes similar to those levied against conventional cigarettes and tobacco products on vaporization products or consumption accessories, it may have a material adverse effect on the demand for those products, as consumers may be unwilling to pay the increased costs, which in turn could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Greenlane could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs its B2C customers would have to pay for its product offering, which could materially and adversely affect its operating results.
An increasing number of states have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme Court of the United States recently ruled
 
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in South Dakota v. Wayfair, Inc. et al., or Wayfair, that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may adopt, or begin to enforce, laws requiring Greenlane to calculate, collect, and remit taxes on sales in their jurisdictions. A successful assertion by one or more states requiring Greenlane to collect taxes where it presently does not do so, or to collect more taxes in a jurisdiction in which it currently does collect some taxes, could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for Greenlane, put it at a competitive disadvantage if they do not impose similar obligations on its competitors and decrease its future sales, which could have a material adverse impact on its business, financial condition and results of operations.
Greenlane may become involved in regulatory or agency proceedings, investigations, prosecutions, and audits.
Greenlane’s business, and the business of the suppliers from which it acquires the products it sells, requires compliance with many laws and regulations in many jurisdictions globally across multiple product categories and regulatory regimes. Failure to comply with these laws and regulations could subject Greenlane or such suppliers to regulatory or agency proceedings, investigations, or prosecutions, and could also lead to damage awards, fines and penalties. Greenlane or such suppliers may become involved in a number of government proceedings, investigations and audits. The outcome of any government proceedings, investigations, prosecutions, audits, and other contingencies could harm Greenlane’s reputation or the reputations of the brands that it sells, require it to take, or refrain from taking, actions that could harm its operations or require it to pay substantial amounts of money, harming its financial condition. There can be no assurance that any pending or future regulatory or agency proceedings, investigations and audits will not result in substantial costs or a diversion of management’s attention and resources or have a material adverse impact on Greenlane’s business, financial condition and results of operations.
Greenlane is subject to increasing international control and regulation.
The World Health Organization’s Framework Convention on Tobacco Control (“FCTC”) is the first international public health treaty that establishes a global agenda to reduce initiation of tobacco use and regulate tobacco in an effort to encourage tobacco cessation. Over 170 governments worldwide have ratified the FCTC, including Canada. The FCTC has led to increased efforts to reduce the supply of and demand for tobacco products and to encourage governments to further regulate the tobacco industry. The tobacco industry and others expect significant regulatory developments to take place over the next few years, driven principally by the FCTC.
If the United States ratifies the FCTC and/or national laws are enacted in the United States that reflect the major elements of the FCTC, Greenlane’s business, results of operations and financial condition could be materially and adversely affected. In addition, if any of Greenlane’s vaporization products or consumption accessories become subject to one or more of the significant regulatory initiatives proposed under the FCTC or any other international treaty, Greenlane’s business, results of operations and financial condition may also be materially adversely affected.
Greenlane distributes products across Canada and Europe, in addition to distributing products in select international markets. As part of Greenlane’s strategy, it anticipates further international expansions. Future expansions may subject Greenlane to additional or increasing international regulation, either by that country’s legal requirements or through international regulatory regimes, such as the FCTC, to which those countries may be signatories.
Countries’ laws implementing the European Union Tobacco Products Directive (“TPD”) impose strict regulations on the approval, sale, and advertising of e-cigarettes. Although Greenlane does not sell or market any material quantities of products classified as e-cigarettes in Europe, countries could enact new laws implementing the TPD or other laws or regulations that re-classify and/or restrict the products it may sell or market in Europe. Any future measures that limit its ability to market or sell vaporization products or other consumption accessories in Europe may have a material adverse effect on its business, results of operations, and financial condition.
 
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To the extent Greenlane’s existing or future products become subject to international regulatory regimes that it is unable to comply with or fail to comply with, they may have a material adverse effect on its business, results of operations and financial condition.
Greenlane faces intense competition and may fail to compete effectively.
The vaporization products and consumption accessories industry is characterized by brand recognition and loyalty, with product quality features, price, marketing and packaging constituting the primary methods of competition. Substantial marketing support, merchandising display, competitive pricing and other financial incentives generally are required to introduce a new brand or to improve or maintain a brand’s market position. Greenlane’s principal competitors may be significantly larger than it and aggressively seek to limit the distribution or sale of its products.
Competition in the vaporization products and consumption accessories industry is particularly intense, and the market is highly fragmented. In addition, some competitors still have the ability to access sales channels through the mail, which is no longer available to Greenlane and may place it at a competitive disadvantage.
“Big tobacco” and other well-resourced competitors are continuing to establish its presence in the vaporization products and consumption accessories market. There can be no assurance that Greenlane’s products will be able to compete successfully against these companies or any of its other competitors, some of which have far greater resources, capital, experience, market penetration, sales and distribution channels than it. In addition, if large online retailers such as Amazon establish their presence in the vaporization products and consumption accessories market, Greenlane’s sales through both its direct to consumer e-commerce channel and its business-to-business wholesale channel may be harmed. Competitors, including “big tobacco” and large online retailers, may also have more resources than Greenlane for advertising, which could have a material adverse effect on its ability to build and maintain market share, and thus have a material adverse effect on its business, results of operations and financial condition.
Greenlane’s narrow margins may magnify the impact of variations in operating costs and of adverse or unforeseen events on operating results.
Greenlane is subject to intense price competition. Greenlane’s gross and operating margins have historically been narrow, and it expects them to continue to be narrow. Narrow margins magnify the impact of variations in operating costs and of gross margin and of unforeseen adverse events on operating results. Future increases in costs, such as the cost of merchandise, wage levels, shipping rates, import duties and fuel costs, may negatively impact Greenlane’s margins and profitability. Greenlane may not always able to raise the sales price to offset cost increases or to effect increased operating efficiencies in response to increasing costs. If Greenlane is unable to maintain its margins in the future, it could have a material adverse effect on its business, results of operations and financial condition. If Greenlane becomes subject to increased price competition in the future, it cannot assure you that it will not lose market share, that it will not be forced to reduce its prices and further reduce its margins, or that it will be able to compete effectively.
Additionally, promotional activities can significantly increase net sales in the periods in which they are initiated and net sales can be adversely impacted in the periods after a promotion. Accordingly, based upon the timing of Greenlane’s marketing and promotional initiatives, it may experience significant variability in its month-to-month results, which could affect its ability to formulate strategies that allow it to maintain its market presence across volatile months. If Greenlane’s monthly sales fluctuations obscure its ability to track important trends in its key markets, it may have a material adverse effect on its business, results of operations and financial condition.
Greenlane experiences variability in its net sales and net income on a quarterly basis as a result of many factors.
Greenlane experiences variability in its net sales and net income on a quarterly basis as a result of many factors. These factors include:

the relative mix of vaporization products and consumption accessories sold during the period;
 
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the general economic environment and competitive conditions, such as pricing;

the timing of procurement cycles by its customers;

seasonality in customer spending and demand for products it provides;

variability in supplier programs;

the introduction of new and upgraded products;

changes in prices from its suppliers;

trade show attendance;

promotions;

the loss or consolidation of significant suppliers or customers;

its ability to control costs;

the timing of its capital expenditures;

the condition of its industry in general;

regulatory developments that limit or expand the products it may sell, or the manner in which those products may be transported;

any inability on its part to obtain adequate quantities of products;

delays in the release by suppliers of new products and inventory adjustments;

delays in the release of imported products by customs authorities;

its expenditures on new business ventures and acquisitions;

performance of acquired businesses;

adverse weather conditions, natural disasters, pandemics, or other events that affect supply or customer response;

distribution or shipping to its customers; and

geopolitical events.
Greenlane’s planned operating expenditures each quarter are based on sales forecasts for the quarter. If Greenlane’s sales do not meet expectations in any given quarter, its operating results for that quarter may be materially adversely affected. Greenlane’s narrow margins may magnify the impact of these factors on its operating results. Greenlane believes that period-to-period comparisons of its operating results are not necessarily a good indication of its future performance. In addition, Greenlane’s results in any quarterly period are not necessarily indicative of results to be expected for a full fiscal year. In future quarters, Greenlane’s operating results may be below the expectations of public market analysts or investors and, as a result, the market price of Greenlane Class A common stock could be materially adversely affected.
Product defects could increase Greenlane’s expenses, damage its reputation or expose it to liability.
Greenlane may not be able to adequately address product defects. Product defects in vaporizers and other accessories may harm the health or safety of Greenlane’s end-consumers. In addition, remedial efforts could be particularly time-consuming and expensive if product defects are only found after Greenlane has sold the defective product in volume. Any actual or perceived defects in Greenlane’s products could result in unsold inventory, product recalls, repairs or replacements, damage to its reputation, increased customer service costs and other expenses, as well as divert management attention and expose it to liabilities. Furthermore, a product liability claim brought against Greenlane by its customers or end-consumers could be time-consuming and costly to defend and, if successful, could require it to make significant payments.
Contamination of, or damage to, Greenlane’s products could adversely impact sales volume, market share and profitability.
Greenlane’s market position may be affected through the contamination of its products, as well as the material used during the manufacturing processes of the products it sells, or at different points in the entire
 
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supply chain. Greenlane keeps significant amounts of inventory of its products in warehouses and it is possible that this inventory could become contaminated prior to arrival at its premises or during the storage period. If contamination of Greenlane’s inventory or packaged products occurs, whether as a result of a failure in quality control by it or by one of its suppliers, it may incur significant costs in replacing the inventory and recalling products. Greenlane may be unable to meet customer demand and may lose customers who purchase alternative brands or products. In addition, consumers may lose confidence in the affected product.
Under the terms of Greenlane’s contracts, it generally imposes requirements on its suppliers to maintain quality and comply with product specifications and requirements, and with all federal, state and local laws. Greenlane’s suppliers, however, may not continue to produce products that are consistent with its standards or that are in compliance with applicable laws, and Greenlane cannot guarantee that it will be able to identify instances in which its suppliers fail to comply with its standards or applicable laws. A loss of sales volume from a contamination event may occur, and such a loss may affect Greenlane’s ability to supply its current customers and to recapture their business in the event they are forced to switch products or brands, even if on a temporary basis. Greenlane may also be subject to legal action as a result of a contamination, which could result in negative publicity and affect its sales. During this time, Greenlane’s competitors may benefit from an increased market share that could be difficult and costly to regain. Such a contamination event could have a material adverse effect on Greenlane’s business, results of operations and financial condition.
Greenlane may not have adequate insurance for potential liabilities, including liabilities arising from litigation.
In the ordinary course of business, Greenlane may become the subject of various claims, lawsuits and governmental proceedings seeking damages or other remedies concerning its commercial operations, the products it distributes, its employees and other matters, including potential claims by individuals alleging exposure to hazardous materials as a result of the products it distributes. Some of these claims may relate to the activities of businesses that Greenlane has acquired, even though those activities occurred prior to its acquisition of the businesses. The products Greenlane distributes may contain lithium ion or similar type batteries that can explode or release hazardous substances. In addition, defects in the products Greenlane distributes could result in death, personal injury, property damage, pollution, release of hazardous substances or damage to equipment and facilities. Actual or claimed defects in the products Greenlane distributes may give rise to claims against it for losses and expose it to claims for damages.
Greenlane maintains insurance to cover certain of its potential losses, and it is subject to various self-retentions, deductibles and caps under such insurance. Greenlane faces the following risks with respect to its insurance coverage:

it may not be able to continue to obtain insurance on commercially reasonable terms;

it may incur losses from interruption of its business that exceeds its insurance coverage;

it may be faced with types of liabilities that will not be covered adequately or at all by its insurance;

its insurance carriers may not be able to meet their obligations under the policies;

its existing Directors & Officers insurance will not provide coverage for claims against the company or identifiable claims against its officers and directors, including the types of claims asserted against Greenlane in the securities litigation discussed in Item 3 of this Form 10-K; accordingly, Greenlane is required to fund the costs of defending such litigation and the costs of any recovery by the plaintiffs in the event that such litigation is resolved in a manner adverse to Greenlane; or

the dollar amount of any liabilities may exceed its policy limits.
Even a partially uninsured claim, if successful and of significant size, could have a material adverse effect on Greenlane. Finally, even in cases where Greenlane maintains insurance coverage, its insurers may raise various objections and exceptions to coverage that could make uncertain the timing and amount of any possible insurance recovery.
 
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Due to Greenlane’s position in the supply chain of vaporization products and consumption accessories, it could be subject to personal injury, product liability and environmental claims involving allegedly defective products.
Greenlane’s customers may use certain products it distributes in potentially hazardous applications that could result in personal injury, product liability and environmental claims. A catastrophic occurrence at a location at which consumers use the products Greenlane distributes may result in it being named as a defendant in lawsuits asserting potentially large claims, even though it did not manufacture such products or even if such products were not used in the manner recommended by the manufacturer. Applicable law may render Greenlane liable for damages without regard to negligence or fault. Certain of these risks are reduced by the fact that Greenlane is a distributor of products that third-party manufacturers produce, and, thus, in certain circumstances, it may have third-party warranty or other claims against the manufacturer of products alleged to have been defective. However, there is no assurance that these claims could fully protect Greenlane or that the manufacturer would be financially able to provide protection. There is no assurance that Greenlane’s insurance coverage will be adequate to cover the underlying claims. Greenlane’s insurance does not provide coverage for all liabilities (including liability for certain events involving pollution or other environmental claims).
Greenlane may become subject to significant product liability litigation.
The tobacco and e-cigarette industries have experienced and continue to experience significant product liability litigation and other claims, such as those related to marketing of tobacco and e-cigarettes to minors. As a result of their relative novelty, electronic cigarette, vaporizer product and other consumption product manufacturers, suppliers, distributors and sellers have only recently become subject to litigation. While Greenlane has not been a party to any product liability litigation, several lawsuits have been brought against other manufacturers and sellers of smokeless products for injuries to health allegedly caused by use of smokeless products. Greenlane may be subject to similar claims in the future relating to its vaporizer products. Greenlane may also be named as a defendant in product liability litigation against one of its suppliers by association, including in class action lawsuits. In addition, Greenlane may see increasing litigation over its vaporizer products or the regulation of its products as the regulatory regimes surrounding these products develop. For example, California’s Proposition 65 (“Prop 65”) requires the State of California to identify chemicals that could cause cancer, birth defects, or reproductive harm, and businesses selling products in California are then required to warn consumers of any possible exposure to the chemicals on the list. The State of California and private plaintiffs have been active in enforcing Prop 65 against companies in the tobacco, nicotine, cannabis, and vaporization industries. Greenlane may face substantial costs due to increased product liability litigation relating to new regulations or other potential defects associated with its vaporizer and other consumption products, including litigation arising out of faulty devices or improper usage, which could have a material adverse effect on its business, results of operations and financial condition.
There can be no assurances that Greenlane will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of products.
The scientific community has not yet extensively studied the long-term health effects of the use of vaporizers, electronic cigarettes or e-liquids products.
Vaporizers, electronic cigarettes and related products were recently developed and therefore the scientific community has not had a sufficient period of time to study the long-term health effects of their use. Currently, there is no way of knowing whether these products are safe for their intended use. If the scientific community were to determine conclusively that use of any or all of these products poses long-term health risks, market demand for these products and their use could materially decline. Such a determination could also lead to litigation and significant regulation. Loss of demand for Greenlane’s product, product liability claims and increased regulation stemming from unfavorable scientific studies on these products could have a material adverse effect on its business, results of operations and financial condition.
 
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Reliance on information technology means a significant disruption could affect Greenlane’s communications and operations.
Greenlane relies on information technology systems for its internal communications, controls, reporting and relations with customers, vendors and suppliers, and information technology is a significantly important tool for its sales staff. Greenlane’s marketing and distribution strategy is dependent upon its ability to closely monitor consumer and market trends on a highly specified level, for which it is reliant on its sophisticated data tracking systems, which are susceptible to disruption or failure. In addition, Greenlane’s reliance on information technology exposes it to cyber-security risks, which could have a material adverse effect on its ability to compete. Security and privacy breaches may expose it to liability and cause it to lose customers, or may disrupt its relationships and ongoing transactions with other entities with whom it contracts throughout Greenlane’s supply chain. The failure of Greenlane’s information systems to function as intended, or the penetration by outside parties intent on disrupting business processes, could result in significant costs, loss of revenue, assets or personal or other sensitive data and reputational harm.
Internet security poses a risk to Greenlane’s e-commerce sales.
Greenlane generates a portion of its sales through e-commerce sales on its own websites and fulfillment activities through third-party websites. Greenlane manages its websites and e-commerce platform internally and, as a result, any compromise of its security or misappropriation of proprietary information could have a material adverse effect on its business, results of operations and financial condition. Greenlane relies on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure Internet transmission of confidential information, such as credit and other proprietary information. Advances in computer capabilities, new discoveries in the field of cryptography or other events or developments may result in a compromise or breach of the technology used by Greenlane to protect client transaction data. Anyone who is able to circumvent Greenlane’s security measures could misappropriate proprietary information or cause material interruptions in its operations. Greenlane may be required to expend significant capital and other resources to protect against security breaches or to minimize problems caused by security breaches. To the extent that Greenlane’s activities or the activities of others involve the storage and transmission of proprietary information, security breaches could damage its reputation and expose it to a risk of loss and/or litigation. Greenlane’s security measures may not prevent security breaches. Greenlane’s failure to prevent these security breaches may result in consumer distrust and may adversely affect its business, results of operations and financial condition.
Security and privacy breaches may expose Greenlane to liability and cause it to lose customers.
Federal, provincial and state laws require Greenlane to safeguard its customers’ financial information, including credit information, as well as its employees’ information. Although Greenlane has established security procedures to protect against identity theft and the theft of the information of its customers, distributors, consumers, and employees, its security and testing measures may not prevent security breaches and breaches of privacy may occur, which would harm its business. Greenlane relies on encryption and authentication technology licensed from third parties to enhance transmission security of confidential information in relation to financial and other sensitive information that it has on file. Advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology used by Greenlane to protect customer data. Any compromise of Greenlane’s security could harm its reputation or financial condition and therefore, its business. In addition, a party who is able to circumvent Greenlane’s security measures or exploit inadequacies in its security measures, could, among other effects, misappropriate proprietary information, cause interruptions in its operations or expose customers and other entities with which it interacts to computer viruses or other disruptions. Actual or perceived vulnerabilities may lead to claims against Greenlane. To the extent the measures Greenlane has taken prove to be insufficient or inadequate, it may become subject to litigation or administrative sanctions, which could result in significant fines, penalties or damages and harm to its reputation.
If the methodologies of Internet search engines are modified, traffic to Greenlane’s websites and corresponding consumer origination volumes could decline.
Greenlane depends in part on various Internet search engines, including Google® and others to direct a significant amount of traffic to its websites. Greenlane’s ability to maintain the number of visitors directed
 
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to its websites by search engines through which it distributes its content is not entirely within its control. Greenlane’s competitors’ search engine optimization (“SEO”) efforts may result in their websites receiving a higher search result page ranking than Greenlane, or Internet search engines could revise their methodologies, which could adversely affect the placement of its search result page ranking. If search engine companies modify their search algorithms in ways that are detrimental to Greenlane’s consumer growth or in ways that make it harder for its customers to access or use its websites, or if its competitors’ SEO efforts are more successful than Greenlane’s, its consumer engagement and number of consumers could decline. Any reduction in the number of consumers directed to Greenlane’s websites could negatively affect its ability to earn revenue. If traffic on Greenlane’s websites declines, it may need to employ more costly resources to replace lost traffic, and such increased expense could adversely affect its business, results of operations and financial condition.
Greenlane is a holding company and depends upon its subsidiaries for its cash flow.
Greenlane is a holding company. Greenlane’s subsidiaries conduct all of its operations and own substantially all of its tangible assets. Consequently, Greenlane’s cash flow and its ability to meet its obligations or to make other distributions in the future depend upon the cash flow of its subsidiaries and its subsidiaries’ payment of funds to Greenlane in the form of distributions, dividends, tax sharing payments or otherwise.
The ability of Greenlane’s subsidiaries to make any payments to Greenlane depends on their earnings and cash flow, the terms of their current and future indebtedness, tax considerations and legal and contractual restrictions on their ability to make distributions.
Greenlane’s subsidiaries are separate and distinct legal entities. Any right that Greenlane has to receive any assets of or distributions from any of its subsidiaries upon the bankruptcy, dissolution, liquidation or reorganization, or to realize proceeds from the sale of their assets, will be junior to the claims of that subsidiary’s creditors, including trade creditors and holders of debt that the subsidiary issued.
Changes in Greenlane’s credit profile may affect its relationship with its suppliers, which could have a material adverse effect on its liquidity.
Changes in Greenlane’s credit profile may affect the way its suppliers view its ability to make payments and may induce them to shorten the payment terms of their invoices. Given the large dollar amounts and volume of Greenlane’s purchases from suppliers, a change in payment terms may have a material adverse effect on its liquidity and its ability to make payments to its suppliers and, consequently, may have a material adverse effect on Greenlane.
Greenlane’s intellectual property may be infringed.
Greenlane relies on trademark and other intellectual property rights to establish and protect the brand names and logos it owns or licenses on the products it distributes. Third parties have in the past infringed, and may in the future infringe, on these trademarks and Greenlane’s other intellectual property rights. Greenlane’s ability to maintain and further build brand recognition is dependent on the continued use of these trademarks, service marks and other proprietary intellectual property, including the names and logos it owns or licenses. Despite Greenlane’s attempts to ensure these intellectual property rights are protected, third parties may take actions that could materially and adversely affect its rights or the value of this intellectual property. Any litigation concerning Greenlane’s intellectual property rights or the intellectual property rights of its suppliers, whether successful or unsuccessful, could result in substantial costs to Greenlane and diversions of its resources. Expenses related to protecting Greenlane’s intellectual property rights or the intellectual property rights of its suppliers, the loss or compromise of any of these rights or the loss of revenues as a result of infringement could have a material adverse effect on its business, results of operations and financial condition, and may prevent the brands it owns or licenses, or are owned or licensed by its suppliers, from growing or maintaining market share. There can be no assurance that any trademarks or common marks that Greenlane owns or licenses, or are owned or licensed by its suppliers, will not be challenged in the future, invalidated or circumvented or that the rights granted thereunder or under licensing agreements will provide Greenlane or its suppliers’ competitive advantages. Greenlane is dependent
 
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on the validity, integrity and intellectual property of its suppliers and their efforts to appropriately register, maintain and enforce intellectual property in all jurisdictions in which their products are sold.
Greenlane devotes significant resources to the registration and protection of its trademarks and to anti-counterfeiting efforts. Despite these efforts, Greenlane regularly discovers products that infringe on their proprietary rights or that otherwise seek to mimic or leverage their intellectual property or the intellectual property of their suppliers. Counterfeiting and other infringing activities typically increase as brand recognition increases, especially in markets outside the United States and Canada. Counterfeiting and other infringement of Greenlane’s intellectual property could divert away sales, and association of its brands with inferior counterfeit reproductions or third party labels could adversely affect the integrity and reputation of its brands.
Although Greenlane holds a number of patents on its products, it generally relies on patents on the products of its suppliers as well as their efforts in successfully defending third-party challenges to such products. Third parties have in the past infringed, and may in the future infringe, on Greenlane’s patents and its suppliers’ patents. Greenlane’s ability to maintain and enforce its patent rights, and the ability of its suppliers, licensors, collaborators and manufacturers to maintain and enforce their patent rights, against third-party challenges to their validity, scope or enforceability will play an important role in determining Greenlane’s future. There can be no assurances that Greenlane will ever successfully file or receive any patents in the future, and changes in either the patent laws or in interpretations of patent laws in the United States or other countries may diminish the value of the intellectual property rights of the products it distributes, licenses or owns. Accordingly, Greenlane cannot predict with any certainty the range of claims that may be allowed or enforced concerning the products that it sells.
In addition, there can be no assurance that standard intellectual property confidentiality and assignment agreements with employees, consultants and other advisors will not be breached, that Greenlane will have adequate remedies for any breach, or that its trade secrets will not otherwise become known to or independently developed by competitors. Furthermore, there can be no assurance that Greenlane’s efforts to protect its intellectual property will prevent others from unlawfully using its trademarks, trade secrets, copyrights and other intellectual property. Greenlane’s success depends in part, on its ability to maintain its intellectual property and those of its suppliers, and to protect its trade secrets. An inability to continue to preserve and protect Greenlane’s intellectual property would likely have a material adverse effect on its business, results of operations and financial condition.
Greenlane is subject to the risks of exchange rate fluctuations.
Currency movements and suppliers’ price increases relating to currency exchange rates are significant factors that affect Greenlane’s cost of sales. Many of Greenlane’s products are purchased from suppliers located in foreign countries and it makes payments for its products in numerous currencies. Thus, Greenlane bears certain foreign exchange rate risks for certain of its inventory purchases. In addition, Greenlane recently expanded its footprint in Canada and Europe, and as part of its strategy, may undertake further international expansion. As a result, in the future, Greenlane may be more sensitive to the risks of exchange rate fluctuations, which may have a material adverse effect on its business, results of operations and financial condition.
Greenlane may be required to seek additional financing sources, which may not be available to it on attractive terms if at all and could restrict its ability to engage in certain business activities.
Unless and until the market price of Greenlane Class A common stock recovers significantly, it may not be in a position to fund its liquidity needs by accessing the public markets. If Greenlane is not able to fund its operations with cash on hand, it may be required to seek other financing sources, including debt financing, the amount of which may be substantial. Because of the nature of Greenlane’s industry, it may have difficulties establishing relationships with certain financial institutions. As a result, indebtedness or other forms of financing may not be available to Greenlane on attractive terms or at all. Furthermore, Greenlane may have to seek financing from non-traditional sources such as private equity and hedge funds, which may require Greenlane to give up significant governance or other rights or agree to economic and other terms that are not favorable.
 
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In addition, future financing agreements Greenlane may enter into in the future may contain customary negative covenants and other financial and operating covenants that, among other things:

restrict its ability to incur additional indebtedness;

restrict its ability to incur additional liens;

restrict its ability to make certain investments (including capital expenditures);

restrict its ability to merge with another company;

restrict its ability to sell or dispose of assets;

restrict its ability to make distributions to stockholders; and

require it to satisfy minimum financial coverage ratios, minimum net worth requirements and maximum leverage ratios.
Greenlane is required to comply with laws and regulations in other countries and is exposed to business risks associated with its international operations.
For the years ended December 31, 2020 and 2019, Greenlane derived 20.8% and 16.2%, respectively, of its net sales from outside the United States, primarily in Canada and certain European countries. Greenlane intends to increase its international sales, both as to the dollar amount and as a percentage of its net sales and operations in the future. As a result, Greenlane is subject to numerous evolving and complex laws and regulations which apply, among other things, to financial reporting standards, corporate governance, data privacy, tax, trade regulations, export controls, competitive practices, labor, health and safety laws, laws regarding controlled substances, laws regarding drug paraphernalia, and regulations in each jurisdiction in which it operates. Greenlane is also required to obtain permits and other authorizations or licenses from governmental authorities for certain of its operations and it or its suppliers must protect its intellectual property worldwide. In the jurisdictions in which Greenlane operates, it needs to comply with various standards and practices of different regulatory, tax, judicial and administrative bodies.
There are a number of risks associated with international business operations, including political instability (e.g., the threat of war, terrorist attacks or civil unrest), inconsistent regulations across jurisdictions, unanticipated changes in the regulatory environment, and import and export restrictions. Any of these events may affect Greenlane’s employees, reputation, business or financial results as well as its ability to meet its objectives, including the following international business risks:

negative economic developments in economies around the world and the instability of governments, or the downgrades in the debt ratings of certain major economies;

social and political instability;

complex regulations governing certain of its products;

potential terrorist attacks;

adverse changes in governmental policies, especially those affecting trade, tariffs and investment;

foreign currency exchange, particularly with respect to the Canadian Dollar, Euro, British Pound Sterling and Australian Dollar; and

threats that its operations or property could be subject to nationalization and expropriation.
Greenlane may not be in full compliance at all times with the laws and regulations to which it is subject. Likewise, Greenlane may not have obtained or may not be able to obtain the permits and other authorizations or licenses that it needs. If Greenlane violates or fails to comply with laws, regulations, permits, labor, health and safety regulations or other authorizations or licenses, it could be fined or otherwise sanctioned by regulators. In such a case, or if any of these international business risks were to materialize, Greenlane’s business, results of operations and financial condition could be adversely affected.
New tariffs and the evolving trade policy dispute between the United States and China may adversely affect Greenlane’s business.
On August 14, 2017, then President Trump instructed the U.S. Trade Representative (“USTR”) to determine under Section 301 of the U.S. Trade Act of 1974 (the “Trade Act”) whether to investigate China’s
 
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laws, policies, practices or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation or technology development. On March 22, 2018, based upon the results of its investigation, the USTR published a report finding that the acts, policies and practices of the Chinese government are unreasonable or discriminatory and burden or restrict U.S. commerce.
On March 8, 2018, President Trump imposed significant tariffs on steel and aluminum imports from a number of countries, including China. Subsequently, the USTR announced an initial proposed list of 1,300 goods imported from China that could be subject to additional tariffs and initiated a dispute with the World Trade Organization against China for alleged unfair trade practices.
On June 15, 2018, the USTR announced a list of products subject to additional tariffs. The list focused on products from industrial sectors that contribute to or benefit from the “Made in China 2025” industrial policy. The list of products consists of two sets of tariff lines. The first set contains 818 tariff lines for which Customs and Border Protection began collecting the additional duties on July 6, 2018. This list includes some of the products Greenlane distributes. The second set contains 284 proposed tariff lines that remain subject to further review. On July 10, 2018, the USTR announced that, as a result of China’s retaliation and failure to change its practices, President Trump has ordered the USTR to begin the process of imposing tariffs of 10 percent on an additional $200 billion of Chinese imports, and on September 17, 2018, President Trump announced that such tariffs would go into effect on September 24, 2018 and would increase to 25 percent on January 1, 2019. However, in early December 2018, President Trump agreed to leave the tariffs at the 10 percent rate while the United States and China entered into negotiations regarding various trade-related matters.
These new tariffs and the evolving trade policy dispute between the United States and China may have a significant impact on the industries in which Greenlane participates. Many of the products Greenlane sells are subject to the 25 percent tariff and such tariff, along with resultant price increases, may negatively impact its pricing and customer demand for these products. A “trade war” between the United States and China or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact demand for Greenlane’s products, its costs, customers, suppliers and/or the United States economy or certain sectors thereof and, thus, to adversely impact Greenlane’s businesses and results of operations.
Greenlane’s failure to comply with certain environmental, health and safety regulations could materially and adversely affect its business.
The storage, distribution and transportation of some of the products that Greenlane sells are subject to a variety of federal, state, provincial and local environmental regulations. Greenlane is also subject to operational, health and safety laws and regulations. Greenlane’s failure to comply with these laws and regulations could cause a disruption in its business, an inability to maintain its warehousing resources, additional and potentially significant remedial costs and damages, fines, sanctions or other legal consequences that could have a material adverse effect on its business, results of operations and financial condition. In addition, changes in environmental, employee health and safety or other laws, more vigorous enforcement thereof or other unanticipated events could require extensive changes to its operations or give rise to material liabilities, which could have a material adverse effect on its business, financial condition and results of operations.
Greenlane’s business depends substantially on the continued efforts of its executive officers and key employees, and its business may be severely disrupted if it loses their services.
Greenlane’s future success depends substantially on the continued efforts of its executive officers, as well as its key employees.
If one or more of Greenlane’s executive officers or key employees are unable or unwilling to continue in their present positions, it may not be able to replace them in a timely manner, or at all. Greenlane’s business may be severely disrupted, its financial conditions and results of operations may be materially adversely affected and it may incur additional expenses to recruit, train and retain personnel. In addition, if any of Greenlane’s executive officers or key employees join a competitor or form a competing company, it may lose customers, suppliers, know-how, key professionals and staff members.
 
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In the future, Greenlane may pursue selective acquisitions to complement its organic growth, which may not be successful and may divert financial and management resources.
If Greenlane identifies appropriate opportunities, it may acquire or invest in technologies, businesses or assets that are strategically important to its business or form alliances with key participants in the vaporization products and consumption accessories industry to further expand its business. However, Greenlane may not be successful in identifying suitable acquisition opportunities or completing such transactions. Greenlane’s competitors may be more effective in executing and closing acquisitions in competitive auctions than it. Greenlane’s ability to enter into and complete acquisitions may be restricted by, or subject to, various approvals under U.S., Canadian or other applicable law or may not otherwise be possible, may result in a possible dilutive issuance of its securities, or may require it to seek additional financing. Greenlane also may experience difficulties integrating acquired operations, technology, and personnel into its existing business and operations. Completed acquisitions may also expose Greenlane to potential risks, including risks associated with unforeseen or hidden liabilities, impact to its corporate culture, the diversion of resources from its existing business, and the potential loss of, or harm to, relationships with its suppliers, business relationships or employees as a result of its integration of new businesses. In addition, following completion of an acquisition, Greenlane’s management and resources may be diverted from their core business activities due to the integration process, which diversion may harm the effective management of its business. Furthermore, it may not be possible to achieve the expected synergies or the actual cost of delivering such benefits may exceed the anticipated cost. Any of these factors may have an adverse effect on Greenlane’s business, results of operations and financial condition.
Greenlane’s operations are subject to natural disasters, adverse weather conditions, operating hazards, environmental incidents and labor disputes.
Greenlane may experience earthquakes, floods, typhoons, power outages, labor and trade disputes or similar events beyond its control that would affect its warehousing and distribution operations. The occurrences of such events could result in shutdowns or periods of reduced operations, which could significantly disrupt Greenlane’s business operations, cause it to incur additional costs and affect its ability to deliver its products to its customers as scheduled, which may adversely affect its business, results of operations and financial condition. Moreover, such events could result in severe damage to property, personal injuries, fatalities, regulatory enforcement proceedings or in Greenlane being named as a defendant in lawsuits asserting claims for large amounts of damages, which in turn could lead to significant liabilities.
Changes to the base rate on Greenlane’s floating rate indebtedness could increase its borrowing costs.
As of December 31, 2020, approximately $7.8 million of Greenlane’s outstanding indebtedness bears interest at floating rates based on the London interbank offered rate (“LIBOR”) and has maturity dates beyond December 31, 2021. In July 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it will stop compelling banks to submit rates for the calculation of LIBOR after 2021. It is not possible to predict the effect of these changes, other reforms or the establishment of alternative reference rates. The discontinuation or modification of LIBOR could result in interest rate increases on Greenlane’s debt, which could adversely affect its cash flow, operating results and ability to make distributions to its stockholders at expected levels or at all.
Risks Related to Greenlane’s Organizational Structure
Greenlane’s principal asset is its interest in Greenlane Holdings, LLC (the “Operating Company”), and, accordingly, it depends on distributions from The Operating Company to pay Greenlane’s taxes and expenses, including payments under the TRA. The Operating Company’s ability to make such distributions may be subject to various limitations and restrictions.
Greenlane is a holding company and has no material assets other than its ownership of common units of the Operating Company (“Common Units”). As such, Greenlane has no independent means of generating revenue or cash flow. Greenlane’s ability to pay its operating expenses, including taxes and payments under the TRA, or declare and pay dividends in the future, if any, is dependent upon the financial results and cash flows of the Operating Company and its subsidiaries and distributions Greenlane receives from the
 
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Operating Company. There can be no assurance that the Operating Company and its subsidiaries will generate sufficient cash flow to distribute funds to Greenlane or that applicable state law and contractual restrictions, including negative covenants, in any future debt instruments, will permit such distributions. In addition, because Greenlane is a holding company, its stockholders’ claims as a stockholder will be structurally subordinated to all existing and future liabilities and obligations of the Operating Company. Therefore, in the event of Greenlane’s bankruptcy, liquidation or reorganization, its assets and those of the Operating Company and its subsidiaries will be available to satisfy the claims of Greenlane stockholders only after all of its and Greenlane Holdings, LLC’s and its subsidiaries’ liabilities and obligations have been paid in full.
The Operating Company is treated as a partnership for U.S. federal income tax purposes and, as such, is not subject to any entity-level U.S. federal income tax. Instead, taxable income is allocated to holders of Common Units, including Greenlane. Accordingly, Greenlane will incur income taxes on its allocable share of any net taxable income of the Operating Company. Under the terms of the Third Amended and Restated Agreement of the Operating Company (the “Operating Agreement”), the Operating Company will be obligated to make tax distributions to holders of Common Units, including Greenlane. In addition to tax expenses, Greenlane will also incur expenses related to its operations, including payments under the TRA, which it expects could be significant. Greenlane intends, as its manager, to cause the Operating Company to make cash distributions to the owners of Common Units in an amount sufficient to (i) fund their tax obligations in respect of taxable income allocated to them and (ii) cover its operating expenses, including payments under the TRA. However, the Operating Company’s ability to make such distributions may be subject to various limitations and restrictions, such as restrictions on distributions that would either violate any contract or agreement to which the Operating Company is then a party, including debt agreements, or any applicable law, or that would have the effect of rendering the Operating Company insolvent. If Greenlane does not have sufficient funds to pay tax or other liabilities or to fund its operations, it may have to borrow funds, which could materially adversely affect its liquidity and financial condition and subject it to various restrictions imposed by any such lenders. To the extent that Greenlane is unable to make payments under the TRA for any reason, such payments generally will be deferred and will accrue interest until paid; provided, however, that nonpayment for a specified period may constitute a material breach of a material obligation under the TRA and therefore accelerate payments due under the TRA.
The TRA requires Greenlane to make cash payments to them in respect of certain tax benefits to which it may become entitled, and it expects that the payments it will be required to make will be substantial.
Under the TRA Greenlane entered into with the Operating Company and the members, including Mr. LoCascio, its Chief Executive Officer, and Mr. Schoenfeld, its Chief Strategy Officer, Greenlane is required to make cash payments to the members of the Operating Partnership equal to 85% of the tax benefits, if any, that it actually realizes, or in certain circumstances are deemed to realize, as a result of (i) the increases in the tax basis of assets of the Operating Company resulting from any redemptions or exchanges of Common Units from the members and (ii) certain other tax benefits related to Greenlane making payments under the TRA. Although the actual timing and amount of any payments that Greenlane makes to the members under the TRA will vary, it expects those payments will be significant. Any payments made by Greenlane to the members under the TRA may generally reduce the amount of overall cash flow that might have otherwise been available to it. Furthermore, Greenlane’s future obligation to make payments under the TRA could make it a less attractive target for an acquisition, particularly in the case of an acquirer that cannot use some or all of the tax benefits that are the subject of the TRA. Payments under the TRA are not conditioned on any member’s continued ownership of Common Units or Greenlane Class A common stock.
The actual amount and timing of any payments under the TRA will vary depending upon a number of factors, including the timing of redemptions or exchanges by the holders of Common Units, the amount of gain recognized by such holders of Common Units, the amount and timing of the taxable income Greenlane generates in the future, and the federal tax rates then applicable.
 
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Two of Greenlane’s senior executives, Aaron LoCascio and Adam Schoenfeld, have control over all stockholder decisions because collectively they control a substantial majority of the voting power of Greenlane common stock. This will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of Greenlane’s organizational documents and any merger, consolidation, sale of all or substantially all of its assets, or other major corporate transaction requiring stockholder approval.
Greenlane’s Chief Executive Officer, Aaron LoCascio, and its Chief Strategy Officer, Adam Schoenfeld, are senior executives and board members, and they and their affiliates beneficially own 100% of Greenlane Class C common stock and thereby collectively control approximately 79.3% of the voting power of its common stock.
As a result, Messrs. LoCascio and Schoenfeld have the ability to substantially control Greenlane, including the ability to control any action requiring the approval of its stockholders, including, but not limited to, the election of directors, the adoption of amendments to its amended and restated certificate of incorporation and bylaws and the approval of any merger or sale of substantially all of its assets. This concentration of ownership and voting power may also delay, defer or even prevent an acquisition by a third party or other change of control of Greenlane and may make some transactions more difficult or impossible without their support, even if such events are in the best interests of minority stockholders. This concentration of voting power with Messrs. LoCascio and Schoenfeld may have a negative impact on the market price of Greenlane Class A common stock.
As Greenlane’s Chief Executive Officer, Mr. LoCascio has control over Greenlane’s day-to-day management and the implementation of major strategic investments of the company, subject to authorization and oversight by its board of directors. As members of Greenlane’s board of directors, Messrs. LoCascio and Schoenfeld owe fiduciary duties to the company, including those of care and loyalty, and must act in good faith and with a view to the interests of the corporation. However, Delaware law provides that a director or officer shall not be personally liable to a corporation for a breach of fiduciary duty except for an act or omission constituting a breach and which involves intentional misconduct, fraud or a knowing violation of law. In addition, a director or officer is entitled to a presumption that he or she acted in good faith, on an informed basis and with a view to the interests of the corporation, and is not individually liable unless that presumption is found by a trier of fact to have been rebutted. As a stockholder, even a controlling stockholder, each of Messrs. LoCascio and Schoenfeld is entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always be in the interests of Greenlane stockholders generally. Because Messrs. LoCascio and Schoenfeld hold their economic interest in Greenlane’s business through the Operating Company, rather than through the public company, they may have conflicting interests with holders of shares of Greenlane Class A common stock. For example, Messrs. LoCascio and Schoenfeld may have different tax positions from Greenlane, which could influence their decisions regarding whether and when it should dispose of assets or incur new or refinance existing indebtedness, especially in light of the existence of the TRA, and whether and when it should undergo certain changes of control within the meaning of the TRA or terminate the TRA. In addition, the structuring of future transactions may take into consideration these tax or other considerations even where no similar benefit would accrue to Greenlane. In addition, the significant ownership of Messrs. LoCascio and Schoenfeld in Greenlane and their resulting ability to effectively control it may discourage someone from making a significant equity investment in it, or could discourage transactions involving a change in control, including transactions in which you as a holder of shares of Greenlane Class A common stock might otherwise receive a premium for your shares over the then-current market price.
Under certain circumstances, redemptions of Common Units by members will result in dilution to the holders of Greenlane Class A common stock.
Redemptions of Common Units by members in accordance with the terms of Greenlane Holdings, LLC’s operating agreement (the “Greenlane Operating Agreement”) will result in a corresponding increase in Greenlane’s membership interest in the Operating Company, an increase in the number of shares of Greenlane Class A common stock outstanding and a decrease in the number of shares of Greenlane Class B common stock outstanding. In the event that Common Units are exchanged at a time when the Operating Company has made cash distributions to members, including Greenlane, and it has accumulated such distributions and neither reinvested them in the Operating Company in exchange for additional Common
 
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Units nor distributed them as dividends to the holders of Greenlane Class A common stock, the holders of Greenlane Class A common stock would experience dilution with respect to such accumulated distributions.
As of the Greenlane Record Date, Aaron LoCascio, Greenlane’s current Chief Executive Officer, Adam Schoenfeld, Greenlane’s current Chief Strategy Officer, and Jacoby, an affiliated entity of Mr. Schoenfeld and Mr. LoCascio (collectively, the “Greenlane Founder Members”) own [•] shares of Greenlane Class C common stock, which are exchangeable for [•] shares of Greenlane Class A common stock in connection with a redemption of the corresponding Common Units, which would represent approximately [•] of the total outstanding Greenlane Class A common stock if all members exchanged their Common Units for Greenlane Class A common stock, and the members’ corresponding Greenlane Class B common stock and Greenlane Class C common stock were cancelled. In addition, as of the Greenlane Record Date, the Greenlane stockholders other than the Greenlane Founder Members (the “Greenlane Non-Founder Members”) own [•] shares of Greenlane Class B common stock (including [•] shares subject to certain vesting conditions), which are exchangeable for [•] shares of Greenlane Class A common stock in connection with a redemption of the corresponding Common Units, which would represent approximately [•]% of Greenlane’s total outstanding Greenlane Class A common stock, under the same assumptions as described above. Greenlane is party to a registration rights agreement between Greenlane and the members, which requires Greenlane to effect the registration of their shares in certain circumstances.
Furthermore, Greenlane cannot predict the timing of any redemption of Common Units or the effect that such redemptions will have on the market price of Greenlane Class A common stock.
Greenlane’s organizational structure, including the TRA, confers certain benefits upon the members that will not benefit Greenlane Class A common stockholders to the same extent as it will benefit the members.
Greenlane’s organizational structure, including the TRA, confers certain benefits upon the members that will not benefit the holders of Greenlane Class A common stock to the same extent as it will benefit the members. The TRA provides for the payment by Greenlane to the members of 85% of the amount of tax benefits, if any, that it actually realizes, or in some circumstances are deemed to realize, as a result of (1) the increases in the tax basis of assets of the Operating Company resulting from any redemptions or exchanges of Common Units from the members and (2) certain other tax benefits related to Greenlane making payments under the TRA. Although Greenlane will retain 15% of the amount of such tax benefits, this and other aspects of its organizational structure may adversely impact the future trading market for the Greenlane Class A common stock.
In certain cases, payments under the TRA to the members may be accelerated or significantly exceed the actual benefits Greenlane realizes in respect of the tax attributes subject to the TRA.
The TRA provides that upon certain mergers, asset sales, other forms of business combinations or other changes of control or if, at any time, Greenlane elects an early termination of the TRA, then its obligations, or its successor’s obligations, under the TRA to make payments thereunder would be based on certain assumptions, including an assumption that Greenlane would have sufficient taxable income to fully utilize all potential future tax benefits that are subject to the TRA.
As a result of the foregoing, (i) Greenlane could be required to make payments under the TRA that are greater than the specified percentage of the actual benefits it ultimately realizes in respect of the tax benefits that are subject to the TRA, and (ii) if Greenlane elects to terminate the TRA early, it would be required to make an immediate cash payment equal to the present value of the anticipated future tax benefits that are the subject of the TRA, which payment may be made significantly in advance of the actual realization, if any, of such future tax benefits. In these situations, Greenlane’s obligations under the TRA could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. There can be no assurance that Greenlane will be able to fund or finance its obligations under the TRA.
Greenlane will not be reimbursed for any payments made to the members under the TRA in the event that any tax benefits are disallowed.
Payments under the TRA will be based on the tax reporting positions that Greenlane determines, and the IRS or another tax authority may challenge all or part of the tax basis increases, as well as other related
 
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tax positions Greenlane takes, and a court could sustain such challenge. If the outcome of any such challenge would reasonably be expected to materially affect a recipient’s payments under the TRA, then Greenlane will not be permitted to settle or fail to contest such challenge without the consent (not to be unreasonably withheld or delayed) of each member that directly or indirectly owns at least 10% of the outstanding Common Units. Greenlane will not be reimbursed for any cash payments previously made to the members under the TRA in the event that any tax benefits initially claimed by it and for which payment has been made to a member are subsequently challenged by a taxing authority and are ultimately disallowed. Instead, any excess cash payments made by Greenlane to a member will be netted against any future cash payments that it might otherwise be required to make to such member under the terms of the TRA. However, Greenlane might not determine that it has effectively made an excess cash payment to a member for a number of years following the initial time of such payment and, if any of its tax reporting positions are challenged by a taxing authority, it will not be permitted to reduce any future cash payments under the TRA until any such challenge is finally settled or determined. As a result, payments could be made under the TRA in excess of the tax savings that Greenlane realizes in respect of the tax attributes with respect to a member that are the subject of the TRA.
Fluctuations in Greenlane’s tax obligations and effective tax rate and realization of its deferred tax assets may result in volatility of its operating results.
Greenlane is subject to taxes by the U.S. federal, state, local and foreign tax authorities, and its tax liabilities will be affected by the allocation of expenses to differing jurisdictions. Greenlane records tax expense based on its estimates of future earnings, which may include reserves for uncertain tax positions in multiple tax jurisdictions, and valuation allowances related to certain net deferred tax assets. At any one time, many tax years may be subject to audit by various taxing jurisdictions. The results of these audits and negotiations with taxing authorities may affect the ultimate settlement of these matters. Greenlane expects that throughout the year there could be ongoing variability in its quarterly tax rates as events occur and exposures are evaluated. Greenlane’s future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

changes in the valuation of its deferred tax assets and liabilities;

expected timing and amount of the release of any tax valuation allowances;

tax effects of stock-based compensation;

changes in tax laws, regulations or interpretations thereof; or

future earnings being lower than anticipated in countries where it has lower statutory tax rates and higher than anticipated earnings in countries where it has higher statutory tax rates.
In addition, Greenlane’s effective tax rate in a given financial statement period may be materially impacted by a variety of factors including but not limited to changes in the mix and level of earnings, varying tax rates in the different jurisdictions in which it operates, fluctuations in valuation allowances, deductibility of certain items, or by changes to existing accounting rules or regulations. Further, tax legislation may be enacted in the future which could negatively impact Greenlane’s current or future tax structure and effective tax rates. Greenlane may be subject to audits of its income, sales, and other transaction taxes by U.S. federal, state, local, and foreign taxing authorities. Outcomes from these audits could have an adverse effect on Greenlane’s operating results and financial condition.
If Greenlane is deemed to be an investment company under the U.S. Investment Company Act of 1940, as amended (the “1940 Act”), as a result of its ownership of the Operating Company, applicable restrictions could make it impractical for it to continue its business as contemplated and could have a material adverse effect on its business.
Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value
 
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of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Greenlane does not believe that it is an “investment company,” as such term is defined in either of those sections of the 1940 Act.
As the sole manager of the Operating Company, Greenlane controls and operates the Operating Company. On that basis, Greenlane believes that its interest in the Operating Company is not an “investment security” as that term is used in the 1940 Act. However, if Greenlane were to cease participation in the management of the Operating Company, its interest in the Operating Company could be deemed an “investment security” for purposes of the 1940 Act.
Greenlane and the Operating Company intend to continue to conduct its operations so that it will not be deemed an investment company. However, if Greenlane were to be deemed an investment company, restrictions imposed by the 1940 Act, including limitations on its capital structure and its ability to transact with affiliates, could make it impractical for Greenlane to continue its business as contemplated and could have a material adverse effect on its business.
Greenlane is a controlled company within the meaning of the Nasdaq Marketplace Rules, and, as a result, qualifies for, and may avail itself of, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.
The Greenlane Founder Members control more than 50% of Greenlane’s combined voting power. As a result, Greenlane qualifies as a “controlled company” within the meaning of the Nasdaq Marketplace Rules.
As a controlled company, Greenlane is exempt from certain Nasdaq Marketplace Rules, including those that would otherwise require its board of directors to have a majority of independent directors and require that it either establish a Compensation and Nominating and Corporate Governance Committees, each comprised entirely of independent directors, or otherwise ensure that the compensation of its executive officers and nominees for directors are determined or recommended to the board of directors by the independent members of the board of directors. Accordingly, holders of Greenlane Class A common stock will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq Marketplace Rules. As of the date of this filing, Greenlane has not availed itself of the controlled company exemptions.
Greenlane’s failure to meet the continued listing requirements of Nasdaq could result in a de-listing of its common stock.
If Greenlane fails to continue to satisfy the continued listing requirements of Nasdaq, such as the corporate governance requirements or the minimum closing bid price requirement, Nasdaq may take steps to de-list Greenlane Class A common stock. As a result of several factors, including the expanding outbreak of COVID-19, the per share price of Greenlane Class A common stock has declined below the minimum bid price threshold required for continued listing. Such a de-listing would likely have a negative effect on the price of Greenlane Class A common stock and would impair your ability to sell or purchase Greenlane Class A common stock when you wish to do so. In the event of a de-listing, Greenlane would take actions to restore its compliance with Nasdaq Marketplace Rules, but it can provide no assurances that the listing of Greenlane Class A common stock would be restored, that Greenlane Class A common stock will remain above the Nasdaq minimum bid price requirement or that it otherwise will remain in compliance with the Nasdaq Marketplace Rules.
Risks Related to Ownership of Greenlane Class A Common Stock
The market price of Greenlane Class A common stock has been volatile and has declined significantly since its initial public offering and may face more volatility and price declines in the future. As a result, you may not be able to resell your shares at or above the price at which you have acquired or will acquire shares of Greenlane Class A common stock.
The market price of Greenlane Class A common stock has been volatile and has declined significantly since its initial public offering and could face more volatility and price declines in the future as a result of a
 
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number of factors, many of which are beyond its control. Furthermore, volatility in Greenlane’s stock price may occur regardless of its operating performance. As a result, you may not be able to sell your shares at or above the price you paid and you could lose a substantial part or all of your investment in Greenlane Class A common stock. The following factors could affect Greenlane’s stock price:

general market conditions, including conditions that are outside of its control, such as actions or proposed actions of the new U.S. Presidential administration, international trade disputes that disrupt its supply chain and the impact of health and safety concerns, such as the current COVID-19 outbreak;

novel and unforeseen market volatility and trading strategies, such as the massive short squeeze rally caused by retail investors on retail trading platforms;

its operating and financial performance and the performance of other similar companies;

the market perception of its industry;

the impact, or perceived impact, of new regulations applicable to it, its suppliers or its customers;