Greenlane Holdings (GNLN) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01Global economic conditions, including inflation and supply chain disruptions, could materially and adversely our business, prospects, results of operations, financial condition, or cash flows
2. 02If we are required to seek additional financing sources, they may not be available to us on attractive terms if at all and could restrict our ability to engage in certain business activities
3. 03We have failed in the past, and fail in the future to meet the listing standards of Nasdaq, and as a result our Class A common stock could become delisted, which could have a material adverse effect on the liquidity of our Class A common stock
4. 04On May 21, 2024, we received a notice from Nasdaq stating that because we had not yet filed our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2024, we were no longer in compliance with Nasdaq Listing Rule 5250(c)(1). We were notified by Nasdaq that we had regained compliance on July 26, 2024
5. 05On June 26, 2024, we were notified by Nasdaq that a filing extension was granted through July 31, 2024, for our Annual Report on Form 10-K and Quarterly Report on Form 10-Q
6. 06Our narrow margins may magnify the impact of variations in operating costs and of adverse or unforeseen events on operating results
7. 07If we fail to manage our business and growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately
8. 08Management and employee turnover creates uncertainties and could harm our business
9. 09The market for vaporizer products and related items is a niche market, subject to a great deal of uncertainty and is still evolving
10. 10We depend on third-party suppliers for our products and may experience supply shortages which could have a material adverse effect on our business
11. 11We may enter into new markets or lines of business that offer new products and services, or may expand existing lines of business, which may subject us to additional risks
12. 12Failure to successfully manage these risks in the implementation, expansion or operation of new and existing lines of business and markets or the offering of new products or services could have a material adverse effect on our reputation, business, results of operations and financial condition
13. 13We may be unable to identify or contract with new suppliers in the event of a disruption to our supply
14. 14Demand for the products we distribute could decrease if the trend of our suppliers selling products directly to consumers or retailers continues or accelerates
15. 15We are vulnerable to third-party transportation risks, including governmental laws and common carriers’ policies that prevent the shipment of the types of products we sell
16. 16If we fail to maintain proper inventory levels, our business could be harmed
17. 17Our success is dependent in part upon our ability to distribute popular products from new suppliers, as well as the ability of our existing suppliers to develop and market products that meet changes in market demand or regulatory requirements
18. 18Changes in our customer, product or competition mix could cause our product margin and results of operations to fluctuate
19. 19Because a material portion of our 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 our market share and our revenues in certain sectors
20. 20We have experienced and may continue to experience difficulty collecting receivables
21. 21Our ability to distribute certain licensed brands and to use or license certain trademarks may be terminated or not renewed
22. 22We may not be successful in maintaining the consumer brand recognition and loyalty of our products
23. 23We may not be able to establish sustainable relationships with large retailers or regional or national chains
24. 24New products face intense media attention and public pressure
25. 25Our success depends, in part, on the quality and safety of our products, as well as the perception of quality and safety in the vaporization products and consumption accessories industry generally
26. 26Damage to our reputation, or that of any of our key suppliers or their brands, could affect our business performance
27. 27We are subject to substantial and increasing regulation regarding the vaporization industry
28. 28Significant increases in state and local regulation of our vaporizer products have been proposed and enacted, and are likely to continue to be proposed and enacted in numerous jurisdictions
29. 29Our 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
30. 30We are subject to legislative uncertainty that could slow or halt the legalization and use of cannabis, which could materially and adversely affect our business
31. 31While we believe that our business and sales do not violate the Federal Paraphernalia Law, legal proceedings alleging violations of such law or changes in such law or interpretations thereof could materially and adversely affect our business, financial condition or results of operations
32. 32Because our business is dependent, in part, upon continued market acceptance of cannabis by consumers, any negative trends could materially and adversely affect our business, financial conditions or results of operations
33. 33We and our customers may have difficulty accessing the service of banks, which may make it difficult for us and for them to sell our products
34. 34Our payments system and the payment systems of our customers depend on third-party providers and are subject to evolving laws and regulations
35. 35We are subject to certain U.S. federal regulations relating to cash reporting
36. 36If countries, states, and provinces continue the trend of imposing, expanding, and increasing taxes on vaporizer products, it could materially and adversely affect our business
37. 37We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our B2C customers would have to pay for our product offering, which could materially and adversely affect our operating results
38. 38We may become involved in regulatory or agency proceedings, investigations, prosecutions, and audits
39. 39We are subject to increasing international control and regulation
40. 40Changes in our credit profile may affect our relationship with our suppliers, which could have a material adverse effect on our liquidity
41. 41We face intense competition and may fail to compete effectively
42. 42We experience variability in our net sales and net income on a quarterly basis as a result of many factors
43. 43Product defects could increase our expenses, damage our reputation or expose us to liability
44. 44Contamination of, or damage to, our products could adversely impact sales volume, market share and profitability
45. 45We may not have adequate insurance for potential liabilities, including liabilities arising from litigation
46. 46Due to our position in the supply chain of vaporization products and consumption accessories, we are subject to personal injury, product liability and environmental claims involving allegedly defective products
47. 47We may become subject to significant product liability litigation
48. 48The scientific community has not yet extensively studied the long-term health effects of the use of vaporizers, electronic cigarettes or e-liquids products
49. 49Reliance on information technology means a significant disruption could affect our communications and operations
50. 50Internet security poses a risk to our e-commerce sales
51. 51Security and privacy breaches may expose us to liability and cause us to lose customers
52. 52If the methodologies of internet search engines are modified, traffic to our websites and corresponding consumer origination volumes could decline
53. 53We are a holding company and depend upon our subsidiaries for our cash flow
54. 54The ability of our subsidiaries to make any payments to us will depend 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
55. 55Our intellectual property may be infringed and we may be unable to secure or maintain all the intellectual property required to sell all of our offerings
56. 56We are subject to the risks of exchange rate fluctuations
57. 57There are conflicts of interest among certain of our executive officers and our stockholders
58. 58We are required to comply with laws and regulations in other countries and are exposed to business risks associated with our international operations
59. 59New tariffs and the evolving trade policy dispute between the United States, China and other nations may adversely affect our business
60. 60Our failure to comply with certain environmental, health and safety regulations could materially and adversely affect our business
61. 61We are transitioning our business and have engaged, and may continue in engage in, dispositions via sales of our assets or other exit activities and other strategic initiatives and we may face risks related to such transactions
62. 62Our operations are subject to natural disasters, adverse weather conditions, operating hazards, environmental incidents and labor disputes
63. 63We are subject to risks associated with public health crises, such as pandemics and epidemics, which may have a material adverse effect on our business. The nature and extent of future impacts are highly uncertain and unpredictable

Risks Related to Our Organizational Structure

1. 64Our principal asset is our interest in the Operating Company, and, accordingly, we depend on distributions from the Operating Company to pay our taxes and expenses. The Operating Company’s ability to make such distributions may be subject to various limitations and restrictions
2. 65The Tax Receivable Agreement (the “TRA”) may require us to make cash payments to the members of the Operating Company in respect of certain tax benefits to which we may become entitled
3. 66Fluctuations in our tax obligations and effective tax rate and realization of our deferred tax assets may result in volatility of our operating results

Risks Related to Ownership of Our Class A Common Stock

1. 67Your percentage ownership will be diluted in the future
2. 68Future securities issuances could result in significant dilution to our stockholders and impair the market price of our common stock
3. 69Substantial sales and issuances of our Class A common stock have and may continue to occur, or may be anticipated, which have and could continue to cause our stock price to decline
4. 70We have not paid dividends in the past and have no current plans to pay dividends in the future, and any return on investment may be limited to the value of our common stock
5. 71If securities analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline
6. 72We have a large number of authorized but unissued shares of stock, which could negatively impact a potential investor if they purchase our Class A common stock
7. 73Anti-takeover provisions in our certificate of incorporation and amended and restated bylaws and Delaware law could discourage a takeover
8. 74We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our Class A common stock, which could depress the market price of our Class A common stock
9. 75We are a “smaller reporting company” under federal securities laws and we cannot be certain whether the reduced reporting requirements applicable to such companies will make our Class A common stock less attractive to investors