Good morning and welcome to today's conference call to discuss Greenlane Holdings Third Quarter 2021 Financial Results. A press release detailing the financial results for the quarter was distributed yesterday afternoon and is available on the Investor Relations section of the Greenlane website at investor.gnln.com. As a reminder, today's conference is being recorded. A replay of this call as well as a copy of the supplemental earnings slide will be archived on the company’s IR website at investor.gnln.com. On the call today are Nick Kovacevich, Chief Executive Officer; and Bill Mote, Chief Financial Officer. Before we begin, Greenlane would like to remind listeners that today's prepared remarks may contain forward-looking statements and management may make additional forward-looking statements in response to the questions received. These statements do not guarantee future performance and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties and other factors discussed in today's press release. This call also contains time-sensitive information that speaks only as of the date of this live broadcast November 16, 2021. Factors that could cause Greenlane's results to differ materially are set forth in yesterday’s press release and in Greenlane's annual report on Form 10-K and quarterly reports on Form 10-Q filed with the SEC. Any forward-looking statements made today on this call are based on assumptions as of today and Greenlane assumes no obligation to update these statements as a result of new information or future events. During today's call, Greenlane management may discuss non-GAAP financial measures including adjusted net loss, adjusted gross profit and adjusted EBITDA. Greenlane has included a reconciliation of these non-GAAP measures in yesterday’s press release, which is available in the Investor Relations section of the company’s website at investor.gnln.com. I would now like to turn the call over to Mr. Kovacevich, Chief Executive Officer of Greenlane. Please go ahead, Nick.

Thank you, operator and good morning, everyone. It's good to be finally speaking with all of you on an earnings call after the merger with KushCo. As this will be my first quarterly call as the CEO of Greenlane, I'd like to thank all of you for joining us today. And I'd like to thank the entire Greenlane team for their incredible work during a truly transformative quarter for the company. We are excited today to share our progress made during Q3 and more importantly, to update you on our integration, growth strategy and near term outlook for a successful future as the industry's leading ancillary cannabis company and house of brands. Our first few months as a combined company had been off to a strong and encouraging start, demonstrated through several realized revenue and cost saving synergies, including the consolidation of certain vendors and infrastructure, as well as the development of go-to-market cross selling strategies across each of our respective platforms. We are extremely pleased with the integration milestones we have achieved thus far, while simultaneously driving meaningful progression in the business. I'll begin my prepared remarks today by providing an in depth overview of our strategy before providing some comments around our outlook, and then finishing off with a quick review of our Q3 highlights. After that, I'll turn the call over to Bill Mote, our Chief Financial Officer for a more comprehensive review of our Q3 financial results before we then open it up for Q&A. So with that, let's jump right into slide three of the supplemental earnings slides, which you can find on our IR website if you haven't downloaded them already. Before we discuss our strategy and outlook going forward, it's important to look at our business in two different complementary lenses, as seen…

Thanks, Nick and hello everyone. We are excited to be reporting our financial results for the first time as a combined company. As a reminder, the results I will be reviewing for you this morning can be found in our earnings release that is available in EDGAR and the Investor Relations section of our website@investor.gnln.com. Turning now to slide 10, net sales of Greenlane brands grew 26% to $8.4 million for the quarter, making up approximately 20.4% of total net sales for Q3, 2021, up 210 basis points from 18.7% of total net sales for Q3 2020. Greenlane brands revenue comprise 29.3% of the total premerger Greenlane revenue up from 25.9% last quarter. As Nick mentioned, we expect Greenlane brands revenue to continue to rise and ultimately make up roughly 22% to 28% of our net sales in 2022. Total revenue grew 16% to $41.3 million in Q3 2021 from $35.8 million in Q3 2020. Our United States segment net sales increased 29.4% to $37.5 million for Q3 2021 from $29.0 million in Q3 2020. The year-over-year increase of $8.4 million or 29.4% was due to a $12.2 million or 304.9% increase in S&P or industrial goods sales driven by KushCo September sales, which mitigated a decline in e-commerce channel in dropship in B2B sales. We, along with many other importers of goods are continuing to experience supply chain issues for both Greenlane brands and other top selling brands due to record shipment backlogs, and container shortages. These challenges have resulted in higher freight costs that we have been absorbing for some time, but are now passing through to our customers through a freight surcharge until there is a normalization of crisis. In addition to impacting our margins, the shipping delays are also impacting revenue to a degree as it…

[Operator Instructions] And our first question today is coming from Vivien Azer at Cowen. Your line is live. You may begin.

Great, thank you. Hi this is [Indiscernible] for Vivien today. So just want to start on the integration. Apologies for the baseball reference here. But what inning do you think you're in in terms of completing the integration and Kush we think about the timing to achieving full -- the full benefits of the merger.

Hi, just before we answer that question, I just want to make everyone aware of a transcription error on our non-GAAP reconciliation tables at the end of our earnings release, which we identified after the release, cross the wires. The correct release was filed on the on our 8-K but incorrectly transcribed when you look at the version on our IR website, and we are working to resolve this as quickly as possible. But to set the matter straight, please view the release in our 8-K, or the PDF version on our website, which reflects the correct adjusted EBITDA number of negative $6.9 million. Now with that, I can answer your question. So integration wise, I, we started this integration six months before the project closed for the deal closed with Kush. I'd say we're in the middle of it. I don't know if it's the fifth inning of six inning, but we're in the middle of the overall integration, we've made good progress. We're close to realizing our 100 day, our 100 day deliverables, and we continue to move forward. As you know, we announced a savings of $15 million to $20 million in a 24-month period. So we did envision that that integration work would take would take some time to wrap up. But the bulk of those savings will be achieved in this first 12 months of that project. So I'd say we're in the middle of it. And we're progressing well. And just about coming up on our 100 day deliverables.

Great. Thank you. And then kind up of following up on that $15 million to $20 million cost savings target just in the early stages have you identified any opportunities for incremental cost savings? And though I know you talked about gross margin increasing from here, though we're also in a pretty, we're in a pretty cost inflationary environment. So can you just kind of talk about the balance between potential incremental cost savings and how you're thinking about gross margin going forward?

Yes, so the gross margin changes come from mix, right. And we continue to increase the overall mix of our branded products. And that will continue. And that's where we believe that the gross margin increases. As we said in our call, we're charging some surcharges for freight to try to offset the impact of the logistic challenges that we're seeing in the marketplace. On a previous call, I'd said that, that logistic challenges in and of itself can be between 200 and 300 basis points weight on margin. So we are doing some things to change freight pricing so we can add the surcharges. And those, those surcharges have already been implemented. So we're doing our best to offset freight related costs, while continuing to change the mix. If you recall on the call, Q2 I think on a premerger basis, our brands were at about 25% of our overall revenue. And now they're about 29% from the premerger Greenlane side. That percentage you'll notice is going to adjust downward given that we're bringing on the revenue streams from Kush, but overall that that revenue number will continue to go up as we continue to transition to branded goods and add companies like DaVinci into the mix.

Understood. Last one from me. Can you maybe you know you’ve talked a lot about the cross selling opportunity just as we think about further revenue opportunities, can you maybe dimensionalize or quantify a little bit further, the opportunity that lies ahead of you in terms of selling across the KushCo legacy platforms and then the Greenlane platforms? Thank you very much.

Sure. I’ll take that one. Yes. Look, I think, this is pretty much the reason we did the merger. One of the main reasons is to leverage the cross selling. We're super excited now that we're developing this house of brands just been underway, but we're putting more of an emphasis on it, that we're going to have a really robust portfolio of company owned brands on the consumer goods side, to offer to the vertically integrated MSOs and single state operators that KushCo and our industrial goods division today is currently catering to. So we haven't had that opportunity before. Typically, with the industrial goods business, it's going to be a little bit more competitive. Selling to CCELL products, the packaging products, the energy products, such as ethanol and butane, margins are going to be lower. These are very large customers. And, it's highly recurring revenue that we can recognize, and obviously gets much bigger over time as these MSOs and FSOs, scale and grow their overall revenue. So that's what we're tapping into here. And we're able to then leverage that business, which is a great business, but it has a negative of being a little bit lower margin. We're able to turn that negative into a positive by cross selling into those retail channels, those same vertically integrated operators, also have their own footprint of retail stores. And by getting our company owned brand consumer goods into those retail stores, we're going to effectively raise the overall gross margin profile of those customers. And it really allows us the opportunity to fill a void in the market. Today, a lot of cannabis retailers have not taken advantage of offering accessories through their retail stores, they'd have consumers walking in every day, some stores are getting hundreds of…

Great, really appreciate it. Thanks for taking the questions. I'll jump back in the queue.

Thank you.

Thank you. Our next question today is coming from Aaron Grey at Alliance Global Partners. Your line is live. You may begin.

Hi, good morning, and thanks for the questions. So first question for me, you just want to go into I know you guys obviously highlighting the own brands and a lot opportunity there. Just on the third party brands, one of your third party brands, Storz and Bickel called out on their public call, via canopy, some supply logistic and challenges that caused global supply difficulties, those down 34% Q-over-Q. So, just want to know if you guys saw any impact there in your business, how much and if you guys are seeing that for other products beyond just Storz and Bickel, that we're dealing with a similar issue and if that had an impact on sales to you guys. Thank you.

Yes, yes, it did…

Go ahead, Bill.

Overall, like Storz & Bickel for the quarter was around $3.8 million in revenue. Previous quarter was $4.4 million. So we did see a decline and we saw similar client on PAX and Grenco products as well. So my perspective is that we're seeing some impacts from the freight and logistics challenges and that's almost spot on consistent with what Storz said in terms of their decline?

Yes, I'll just I'll just add to that. Thanks for the question, Aaron. Look, I think we, it points to, again, why we want to get more vertical with our supply chain, right. We have great partners that we're going to continue to do business with, of course, and expand those relationships, and probably focus a little bit more on our, on our premier partners and probably take on a little bit less as we focus more on our own products, but only in our own supply chain. Right, we've spent now two years almost navigating these supply chain disruptions speaking for myself, going back with KushCo and also the Greenlane team, bringing in these goods, since COVID hit. So we have experience, we have a team in China, that helps with sourcing; we've got great factory partners. So again, being able to own the brand ourselves, and being able to control that supply chain, I think just puts us in a better position to make sure that we're continuing to receive goods and be able to offer and sell goods to our customers during this, this very trying time when it comes to import logistics and freight and all the other challenges.

All right, great, thanks for that color. That's helpful. And then second one for me, just on CCELL. So Smoore filed within the ITC of patent infringement, ITC is now looking and investigating into it. So trying to get some color in terms of maybe potential indirect impacts, you guys are seeing as and it looks like there was a notable amount of your competitors on the CCELL side that were named, within the infringement filing. So are you guys anything indirect whether or not in terms of MSOs, maybe coming to you who had gone towards other competitors? Or had lower price offerings you have spoken to in the past? Or maybe any outcomes you might look to see over the next year or so as the ITC investigates? Thanks.

Yes, look, we're already seeing some positive momentum. I think operators are becoming increasingly aware and concerned about their supply chains, right, given what we were just talking about with all the global headwinds. So this is one more thing to add to the plate, if you're a multistate operator, or single state operator, and you're growing, and this is an important category for you, which is virtually across the board for everybody. You got Chinese New Year, CNY coming up. You’ve got all these Global Freight Challenges, and now you have the IP enforcement actions that include this ITC claim is one of several actions. That's more and us as a partner are taking. So, you just don't want to necessarily enter into that kind of risk with such an important part of your supply chain. And so we're seeing conversations happening from folks that were previously more concerned about price, are becoming now less concerned about price and more concerned about reliability, which is exactly what we've been able to offer with what we're doing with CCELL over the last several years, a trusted solution, best-in-class quality. So those conversations are underway, I think people will still continue to take advantage of maybe some of the lower priced options until those options are completely shut off, which we believe will happen if the ITC review is successful in our favor. So I think it's going to be slow progress. But definitely some progress and some upside for us here in the near term. And then certainly significant, very meaningful upside in the long term as we get the infringing products off the market, hopefully and we're able to be able to provide the best in class CCELL solutions across the board.

Alright, great. And if you look at a proxy with the rental, Philip Morris, similar filing looks promising for you guys. Thanks for the color there and I'll go and jump back in the queue.

Thank you.

Thanks so much Aaron.

Thank you. Our next question today is coming from Scott Fortune at ROTH Capital. Your line is live. You may begin.

Hey, good morning. This is Nick on for Scott. First question from me. I'm just looking for some color on the product uptake side. You took that impairment as you work to realize efficiencies on the inventory side. But can you call out any skews of emphasis that have seen good consumer and B2B uptake here, and kind of how that's influenced future product rollouts? Thanks.

Yes, I mean, I think we'll get at a high level. This is a company getting more focused. We'd love to be everything to be everything to everyone. But given the current capital environment, we realized that we need to be a little bit more focused in what we do. And so moving to company owned brands is certainly the right strategy. If you think about what we laid out, the ability to organically grow to 70 million next year, potentially, with 45%, gross margin, I mean, that portion of our business, which we said is only going to be 22% to 28%. But that portion of our business alone, arguably and you got you are the analyst, that’s right, but arguably could be worth more than our entire market cap today, right. So given the pressures that the whole sector is faced and the pressures that the Greenlane stock has faced, it just doesn't make sense to continue to invest in a lot of things that are on the periphery, all right, partner brands, that we're selling that, maybe we don't see long term viability, maybe the margin profile isn't where it needs to be, maybe the demand for the product has slowed down considerably. So those are the good that we decided to discontinue, they just didn't fit in our strategic plan going forward. And ultimately, that's going to free up cash to be able to invest in the goods that do fit into our strategic plan, namely the company owned consumer brands. And we'll be able to then ensure that we have product, I think we're just talking about the supply chain issues. We're going to have to outlay more capital to ensure that we have the product to build our own brands, as we embark down the strategy. We don't want to be in a situation where we're outlaying significant investment in terms of marketing and sales, and then only to fall short because we don't have the supply. So getting more focused, buying the right goods, find the -- the highest margin, highest value goods, is all part of this, this change in our business. And so we did take the one-time charge, which we think will be ultimately, in the long term in the best interest of the company and of everybody involved as we strategically make this pivot toward a much more valuable business.

Okay, that's great. I appreciate that color. And then just turning to the e-commerce side, you operate several different platforms servicing different segments here. I was just wondering how you look at potentially consolidating those that may have some overlap, just kind of how you look at your e-com footprint from the efficiency standpoint, moving forward here.

Yes, great question. We have a very robust e-com plan through 2022. That is going to be one of the areas that we are going to be making additional investment as we as we pull back on some of the other areas that I just said. So we as we have a much stronger house of brands portfolio, especially with the DaVinci acquisition coming into the fold here in the near future, we want to make sure we're investing in our direct-to-consumer relationships via e-commerce and sort of, we have right now, a few sites that are more robust in terms of the offering like vapor.com. And so we want to maybe consolidate those down into one, a very robust e-commerce site. And then separately have direct-to-consumer purchasing available through the individual brand websites. So we need to build brand content. And we need to offer the loyal consumers that have identified with that brand the opportunity to buy direct from the company. So that's kind of at a very high level, our strategy for e-com but yes, it is going to involve, definitely optimizing, streamlining and reducing the amount of e-commerce properties, but becoming very good and very effective at managing likely one B2C larger website and individual brand websites that can offer that DSE [Ph] experience that we're seeing, trending across all consumer segments here today in the country.

Great. That’s it from me. Appreciate the color.

Thanks for the question.

Thank you. Our next question is coming from Derek [Indiscernible] at Jefferies. Your line is live. You may begin.

Hi, thanks for taking my question guys, congrats on the merger. Just for me related to the DaVinci acquisition, this kind of new focus on the higher margin proprietary brands. I guess sourcing these types of different brands, where are you guys looking to see that, either through your existing distribution relationships, or looking outside. And then I guess the continuation of your distribution relationships with third party brands. I think that was probably a good pipeline for you guys, but to define these proprietary brands that you want to bring under your Greenlane brand umbrella. So a little color on that would be would be helpful.

Yes, great question. Thanks for asking. Look, I think we have factor relationships already. I mean, these brands that we already own, we've been producing product. We're going to expand and fortify that. We think there's opportunity for cost decrease. We think there's opportunity for quality increase. We think there's opportunity to potentially migrate some of the production out of, high tariff, difficult logistic regions, like China, for example. Depending on the product set, so we want to make sure we have redundancy, we want to make sure we have a clear path to being able to scale the production in the manner needed, as you see our aggressive growth plan of these brands going from estimated 45 million today up to 70, and then up over 120, 23. So we have to prepare for that from a from a supply chain standpoint. Luckily, we have a world class sourcing team, as I mentioned, with team members in China. We've done a good job of that historically, at both companies. But as we come together here, again, part of the benefits getting more focused, is we're going to be able to really put our energy and resources behind the supply chain, specifically more for these company owned brands. Yes, that does come with a reduction of sort of the broad assortment of brands that we've historically carried. And we're going to be much more opportunistic about which brands we decide to do business with. And again, we're probably going to look to do more business with a fewer subset of brand partners than we have historically. Look, I think that that could be more permanent, that could be something that we ended up shifting back towards as sort of the capital markets improved for cannabis and for Greenlane. And so…

Awesome, thanks for the color on that. Appreciate that. And then just the final question from me, just touching on Canada, massive declines, that makes sense the shifting away from low margin nicotine sales. But is there anything else that's driving that decline in Canada? And I guess, is there another is there a strategy going forward and how to recoup that lost sales from the low margin nicotine?

Hey, look, we've had our, to be honest, we've had some internal issues, right. So some of this is stuff that we can just do better as a company and we intend to. So I think naturally we'll be able to win back business in that market. It is a tough market. We're seeing it, especially on the industrial goods side. We're seeing some of the larger Canadian LPs report. So I mean we are seeing the same data, right. On the consumer good side, it's a little bit different. You mentioned that the move away from nicotine, that certainly was a big driver of growth for Greenlane, historically in Canada, and [Indiscernible] being an extremely popular product in its heyday that, that's shifted as well. So we have to re-evaluate our strategy a little bit. We've got to execute better in Canada. Again, as we move to more focus on our company own brands, Canada's a wide space for us. We don't sell a lot of our own branded products in Canada. So there's some strategies that we're looking to be able to help accelerate that. We have our footprint in Europe as well, which we see as the sort of next great cannabis frontier. But also, as we get more focused, there's plenty of opportunity right here in our backyard here in the U.S. So we have to balance how much energy effort and resources we spend in these international markets, when we're sitting right here and the largest cannabis market in the world in the U.S. And then we have relationships with the biggest players and we have opportunity to cross sell all of our products. So that's going to be a little bit of a dance we do. And again, going to continue to be influenced by capital and access to capital. We want to be very mindful, the cost of making those types of investments and make sure that if we're going to take on that cost, that we can fund it with the working capital we have or leveraging, some less diluted measures in terms of accessing data or other things like that. Unless the opportunity and risk reward is there, right? And then we may make those investments ourselves.

Alright, thanks so much, Nick. And yes, I’ll jump back in the queue?

Thank you so much.

Thank you. We have no further questions in the queue at this time. I will now turn the floor back over to Nick for any closing remarks.

Okay, great. Well, thank you again, for joining Greenlane's conference call today. I would also like to sincerely thank our team, for all their dedicated hard work, going through a merger like we have sort of refocusing our strategic goal for our business. And there's been a lot of change at Greenlane. Our team's done a phenomenal job, embracing the change, getting excited about the future. We're certainly more excited than ever. I was honored to be able to deliver the first conference call as CEO of Greenlane. And I look forward to many more. Thank you guys for tuning in, look forward to updating you on our progress and giving you the results on our next earnings call. Thanks and have a great rest of your week.

Thanks, everyone.

Thank you ladies and gentlemen, this concludes today's event. You may disconnect at this time and have a wonderful day. We thank you for your participation.