Good afternoon, and welcome to today's conference call to discuss Greenlane Holdings third quarter 2022 financial results. A press release detailing the financial results for the quarter ended September 30, 2022, was distributed earlier this morning 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 slides, will be archived on the company's IR website at investor.gnln.com. On the call today are Nick Kovacevich, Chief Executive Officer, Darsh Dahya, Chief Accounting Officer, and Craig Snyder, President. 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 risk 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 15, 2022. Factors that could cause Greenlane's results to differ materially are set forth in today's press release and in Greenlane's annual report on Form 10-K for the year ended December 31, 2021, and quarterly report on Form 10-Q for the three months ended September 30, 2022, previously 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 gross margin, adjusted SG&A, and adjusted EBITDA.
Greenlane has included a reconciliation of these non-GAAP measures in today'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. Nick Kovacevich, Chief Executive Officer of Greenlane. Please go ahead, Nick.
Hello, everyone, and thank you for attending our third quarter 2022 earnings call. We continue to make great progress on our key initiatives, setting us up for success in 2023 and beyond. However, we believe many of the results from these efforts are lagging indicators and will not be fully represented in our financial results until several quarters down the road.
Today, we will discuss the results of Q3, but more importantly, also discuss some of our recent accomplishments and how those initiatives will benefit Greenlane in the long run. Liquidity is obviously extremely important in today's macro environment, and we continue to make strong progress on our liquidity initiatives. First, we are pleased to update everyone on our previously announced 2022 plan to raise $30 million of non-dilutive capital.
To date, we have brought in over $27 million in accordance with our plan, which includes, one, disposing of non-core assets such as our interest in Vibes, LLC, excess financial assets, the sale of our European Azarius assets, and the sale of our company headquarters building in Boca Raton, Florida. Two, monetizing previously written-off E&O inventory.
Three, securing a $15 million asset-based loan. In addition to the progress on our 2022 plan to raise non-dilutive capital, we recently announced the closing of a public offering for gross proceeds of $7.5 million. Raising capital in this challenging environment is extremely difficult, and so we were encouraged to see strong participation from institutional investors in our recent offering.
Lastly, as the company looks to exit our packaging business and further streamline our remaining industrial businesses, we believe we can free up meaningful working capital throughout Q4 and 2023 by significantly reducing the overall inventory required to run this business.
We believe we can run a profitable, higher margin consumer business with far less inventory on-hand. The success from our previously announced 2022 plan to raise $30 million of non-dilutive capital, the $7.5 million investment from the recent public offering, combined with our plan to significantly reduce our inventory exposure, should position Greenlane to be properly capitalized well into 2023, where we intend to inflect to profitability.
In other words, we believe we have removed the financing overhang, which will now allow management to focus on executing our business plan and driving growth in the right areas. Liquidity has been our number one focus, while right-sizing the business is not far behind.
We were able to make continued progress on cost-cutting in Q3, with a couple notable items being the September reduction in force, which reduces our annual labor expense by approximately $1.8 million, and our exit of the Orange County office lease, which will save the company over $500,000 annually.
Our continuing efforts to completely rationalize every aspect of our operations, including plans to exit our packaging business, will provide a significantly lower cost model for Greenlane in 2023 as we transform to a smaller, more profitable house of brands business. We will continue to remain focused on managing liquidity, reducing our expenses, and expanding our margins. However, by design, we do not expect overall revenue to grow.
In fact, we expect it to decrease in many areas, especially packaging. We, like many others in our industry, are rejecting the revenue at all costs models from the past. We believe our company is not being valued on revenue alone, and more revenue doesn't necessarily help us achieve our profitability and cash flow goals.
Moreover, we are more focused on finding accretive, high margin and sustainable revenues that comport with our strategic plan. What are we looking for? Well, one, consumer revenue, ideally with our own high-margin house brands and also with higher-margin third-party products. Two, automated revenue, either via our new business-to-business portal website at wholesale.greenlane.com, via our e-commerce sites like vapor.com or DTC brand sites, or via Amazon, Walmart, Leaf Trade, and other consumer platform sites. Three, large customer revenue.
Producing revenue from large MSOs who are increasingly adding new cannabis storefronts or large C-store chains with a national presence will move the needle for us in much bigger ways than smaller mom-and-pop smoke shops and head shops can.
In summary, not all revenue is created equal, and as Greenlane continues to work to drive revenue from our more accretive channels, we expect to shed some top-line revenue that is not contributing to our overall strategic goals, the main one being profitability. We are keeping our prepared remarks brief today, as we covered a lot in our most recent Q2 earnings call, and we are actually live in Las Vegas at the largest annual industry conference, MJBizCon.
However, before turning the call over to Dash, I would like to point out that as I look to transition my role as CEO over to Craig Snyder by the end of the year, Greenlane is in fact moving into a strong position to benefit from what looks to be a turning tide in our cannabis industry.
With President Biden's recent cannabis pardon, combined with stellar Democratic midterm performance, which keeps, if not expands, their control over the Senate, the opportunity for federal reform has never felt closer.
Recent positive developments in Maryland and Missouri point to a continued cadence towards federal legality. If our industry can finally garner long overdue federal legislative progress, we believe institutional capital will start to pour back into the sector, and picks and shovels providers like Greenlane will benefit tremendously.
We believe that the work we have done positions Greenlane to be an outsized recipient of any industry windfall due to the strides that we have made with, one, properly capitalizing the business and removing the financing overhang. Two, pivoting into a owned brands consumer model with higher margins and higher value in the form of brand intellectual property.
Three, reducing expenses to allow for a clear path to profitability in 2023. We can only control what we can control, but I am extremely proud of the progress we have made to date, the efforts from our entire Greenlane team, and I remain extremely optimistic for the future of our company under Craig's leadership and for the future of our industry in light of the recent political tailwind. With that, I will now turn the call over to Darsh Dahya, our Chief Accounting Officer, to go through the financial performance of the third quarter.
Thanks, Nick. As we discuss the details of Q3 2022, I wanna echo the statements earlier with regards to the team's efforts to navigate through the challenges we faced in the third quarter of 2022. Despite the decline in revenues, the company managed its liquidity tightly, and during the third quarter, ended with a cash balance, including restricted cash of $10.2 million, a net increase from Q2 2022 of $1.1 million.
This was primarily driven by the company's efforts and its investing activities during the third quarter. Revenues decreased $12.6 million or 31% to $28.7 million during the third quarter 2022 compared with the prior year. Third-party consumer brand sales decreased $14.3 million, and Greenlane brands decreased $3.6 million. This was offset partially by higher Kushco post-merger sales of $20.1 million.
The reduction in third-party sales was due in part to our strategy to focus on proprietary brands and transition away from lower-margin third-party brands. Revenues were down $11.2 million sequentially from Q2 2022 to $28.7 million. Gross margin increased to 17% for the three months ended September 30, 2022, compared to 4% for the same period in 2021.
Excluding write-offs of damaged and obsolete inventory associated with post-merger and ongoing product rationalization efforts, gross margins decreased 1% to 21% versus 22% during the corresponding quarter in 2021. Sequentially, gross margin was 20% in the second quarter of 2022, or 24% excluding inventory write-downs.
Salaries, benefits, and payroll taxes were $7 million during the third quarter, down 21% sequentially from $8.8 million in the second quarter of 2022. General and administrative expenses were $8.5 million during the quarter, including a $2.2 million net gain on assets sold during the quarter. Excluding this gain, G&A expenses were $10.8 million, a sequential 2% increase from the $10.6 million reported in the prior quarter.
As discussed in our October 25th pre-announcement, we recorded a goodwill and intangible asset impairment charge aggregating $66.8 million, reflecting our lower market cap, consistent with reductions that we're seeing across the cannabis industry, as well as our plans to reduce our product offering to new and existing Greenlane brands and a very small but highly accretive subset of our third-party brands portfolio.
Excluding the impairment expenses, operating expenses, including depreciation and amortization, were $17.7 million, down 19% from $21.8 million in the prior quarter. The company's net loss for the third quarter of 2022 was $79.2 million, which included $66.8 million related to the goodwill impairment charge.
The net loss in the third quarter of 2021 was $28.7 million and $14.5 million in the second quarter of 2022. Cash flows used in operating activities for the first nine months of 2022 was $22.5 million versus $32 million in the same period of 2021. Cash flows from investing activities was $12.5 million for the first nine months of 2022 versus an outflow of $14.3 million in 2021 related to acquisitions.
The inflows of $12.5 million in 2022 resulted largely from the disposition of our interest in Vibes and the proceeds from the sale of the company's headquarters in Boca Raton, Florida. Net cash provided by financing activities during the first nine months of 2022 was $7.5 million versus $28.9 million in 2021.
These transactions helped offset cash used in operating activities, resulting in positive cash flow of $1.1 million for the quarter and ending with a cash balance, including restricted cash, of $10.2 million at September 30, 2022. During the quarter, the company completed its efforts towards improving its financial structure by securing an asset-based loan of $15 million, which closed on August 11.
The company also repaid over $8 million owed to its senior secured lender, as well as a $8 million mortgage in connection with the sale of the company's headquarters, as mentioned earlier.
Looking to the company's balance sheet, we saw the company move a significant portion of its inventory in 2022 through to the third quarter of the year with a $19 million decrease in inventory, which was driven by strategic initiatives designed to deplete third-party low-margin products, as well as lower purchases of inventory during the quarter as a result of the decrease in revenues. The company's Adjusted EBITDA loss for Q3 2022 was $11.2 million versus $6.9 million for the third quarter of 2021.
The company's Adjusted EBITDA loss for the nine months ended September 30, 2022 was $24.6 million versus $15.8 million in the same period of 2021. I'd like to turn the call back over to the operator for Q&A. Thanks everyone for joining the call.
Thank you, ladies and gentlemen. The floor is open for questions. If you have any questions or comments, please press star one on your touchtone phone at this time. Pressing star two will remove you from the queue should your question be answered.
Lastly, while posing your question, please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Once again, that's star one if you have a question or a comment. Okay, it looks like our first question is coming from Aaron Grey with Alliance Global Partners. Aaron, your line is live.
On for Aaron Gray. Thank you for the questions. My first question is with the cost savings initiatives that you spoke about, with the SG&A levels, the $1.8 from September and then the $500K from the office. What SG&A levels do you expect to be at once all those savings are realized? And what sales mark do you believe you'll need to hit to reach profitability, and what GMs would you associate with that?
Hey, thanks for the question. This is Nick speaking. Craig is on the line as well, and we have Dash here as well. You know, look, I think cost reduction is obviously key. We're working as hard as we can to reduce those costs. When we look out into 2023, that's when we really start to see you know, some serious reductions.
That's gonna be driven by the sale of the packaging business. 'Cause packaging, even though it makes up 20% of our revenue, let's just say, approximately, we take about 55% of our storage space to store those bulky jars, right? Upon exiting that business, we're gonna be able to reduce significantly in terms of warehouse footprint.
We're gonna be able to consolidate down into one warehouse. We think we'll save another $5 million-plus annually with those moves. Yeah, the RIF, you know, provided almost $2 million in annual savings, just getting out of Cypress.
Office space was another $500K. But there's much bigger savings coming with that final consolidation upon selling packaging and then moving into the consumer business. We haven't put a target out there in terms of, you know, what we expect it to be when. But we will see sort of the full results of that.
Kicking in the back half of 2023. I don't know if my colleagues have anything else to add on that question, if Craig has anything. You know, hopefully we can provide more color specifically. As of now, we're unable to do that, just guiding to those reductions that we put out and, you know, sort of back half of the year for them to be fully recognized.
Yeah, Aaron, this is Craig. I think the way we try to align it is, you know, one, work through our gross margin net of any E&O, which Nick just talked through. You know, the packaging business will certainly help that be more precise. Then build SG&A and cost of labor to make sure that we're reaching profitability.
Our goal is to try to do that by the midpoint of next year. We've tried to work through where we think we're gonna be revenue-wise, gross margin-wise, net of any E&O, and then also work with the SG&A and the labor with the divestiture as well to try to do that. The other things that are in there that are unique is the business itself went through a number of things.
It went through two acquisitions with Eyce and DaVinci, in a complementary way before the merger, and it also acquired a European entity. Many of those entities required integration, and as you probably know, integration is a pretty expensive proposition to take place, especially if you're a public company.
We've worked through what I'll call the largest part of that integration, the move to D365, the move to one system, whether it be accounting or inventory management. I'd say we're 80% of the way through those systems, and that's where a lot of the expense is related to, some of the consulting fees and the services we needed from a technical perspective. 'Cause the traditional businesses didn't have the IT chops to make sure that those alignments and transitions went quickly.
The good news there too is there's some hidden things like that on the integration side that are largely completed and then we feel are gonna accelerate our case to profitability through the second half of next year.
Very helpful. My second question regarding the consumer brands business. Can you speak to the margin outlook there, and maybe break that out between your own brand and the third-party brands? Are there any supply chain issues that are making it difficult to keep the business attractive on the margin side with the third-party brands, or is that more due to the use of sub-distributors and giving up some margin there?
I'll take the first part of it, Nick. You hit on a good point. When you're looking at margin, as you know, sometimes it's not only the margin, but you have to talk about the channel in which you're selling the product. The margins can be very different whether you sell it in sub-distribution or sell it in the retail segment. In some cases, the gross margin can be 5-7x difference, depending on how you sell it. I would say in our house products, any product we try to develop, we expect to have close to or in excess of a 40% margin on an aggregate basis.
That's been our goal, and so far, we haven't seen anything being sourced or manufactured that's gonna prevent us from hitting that goal. Of course, there's a little bit of tailwind in the logistics side as well, where some of the pressure from previous logistic costs have dropped. That's our goal there.
On the other side, I think you're seeing this move to a more, what I'll call, normalized consumer goods market where, you know, companies will be incentivized for their sales in the third party space. You'll see things like rebates, returns, and MDF funds continue to flow into the market. We're seeing that now, and we think that's a net benefit. You know, our goal next year is to get margins on an aggregate basis, you know, upwards of 25%-30%.
That's our goal in this marketplace, and we think we can, and we can do that, combining both segments of that business. Also working on and making sure that, the channels in which we're selling it at are performing well as well.
Okay. The next question is coming from Scott Fortune with Roth Capital Partners. Scott, please proceed.
Yeah, good afternoon. Thanks for the questions. Real quick, where are you at with the product rationalization? You've been working on that for a little while here. And with that in mind, kind of talking about inventory, you mentioned getting inventory down and working out. How much more do you have to work through kind of old inventory to get that down to a level that, you know, you're at about $19 million, but get that down to a level that you like going forward here into 2023?
Yeah, I can start with that. This is Nick Kovacevich. Scott, thanks for the question. I'll let Craig give his commentary after mine, but I think, you know, look, this is gonna be part of our liquidity plan. You know, we talked about in the prepared remarks. You know, being able to raise the capital that we did, in a very difficult climate, you know, speaks volumes for what we were able to do as a team and attract institutional capital. But that's obviously not the preferred way to fund the company going forward, you know, because of the dilution.
What we really would like to do, and we're gonna do is we're gonna have several initiatives that help us really consolidate our inventory down to that core consumer base. You know, that's gonna be somewhere, you know, around literally half of what we have today. I mean, I think we can run our consumer business with maybe $20 million in total inventory, right?
We're at, you know, we're significantly higher than that today. Now, we have packaging inventory, that's gonna obviously go with the sale of the packaging business, right? That's a big reduction there. We're looking at smarter ways to run our lower margin industrial business, which would be the C-CELL business and the energy business, right?
Really, if we get down to the consumer business 'cause the margins are much higher, obviously we'd like to grow that business and if you grow the business, you're gonna need more inventory. You know, at our current levels, you know, we can run this business with far less inventory and produce the same, if not, you know, even more sales than we're producing today, with that higher margin.
That's really where we're gonna get our working capital. That's why we're pretty confident to say, you know, that we feel like there's been a financing overhang on the stock for quite some time and, you know, people know that we've needed more money.
If we were to try to keep our entire business together and keep managing this business with, you know, $55 million-$60 million of inventory, then yeah, we are gonna need to raise more capital. We're not doing that.
We're divesting our packaging business. We're going to reduce the overall amount of inventory that we carry, and what that should lead to is cash coming back into working capital. That's gonna play out over the course of 2023. We were able to secure the funds we did with the public offering. Now we're able to see some of the fruits of those efforts come into play, where we're gonna watch inventory sort of reduce naturally under these initiatives.
That's gonna bring money back into working capital, and it's gonna fuel us to run the business and invest in the new product areas that, you know, I'll turn it over to Craig, that Craig is leading today. It's gonna put us in a very good position to be able to get this business back to profitability, which we intend to do in the back half of 2023. That's my two cents. Again, I'll let Craig comment as he's, you know, taking the helm and gonna be leading that 2023 plan.
Great question, and thank you. You asked about the brand rationalization. The business had about 173 brands it was working with at the beginning of the year. That number is down to about 25. Even with that rationalization, we retained 95% of the revenue that we had previously. It's been a matter of focus.
You should assume that the SKUs probably decreased by about 60%-70% during that process. I think we'll even go through another SKU rationalization based on colors and variations of that sort. The set list, if you will, or our catalog, if you will, has gotten much tighter and much more focused.
In terms of new products, we've got roughly almost 36 new products set to come out between Q4 and the end of next year. The vast majority of those are proprietary products, probably mid-20s that we'll launch. You know, part of the goal there too is a kind of twofold.
We've always been a very good leader in the high end of the marketplace, where we reach the connoisseur. They're very high-end products, and they're priced accordingly. I think you'll see us move into the mid-segment and even the approachable segment at the beginner part of the marketplace, but not sacrifice that for what I'll call the high utility of the products.
The reason for that is many of the people that were the founders at Eyce and DaVinci that developed these very high-end products that meet the connoisseur market, we're just taking a lot of the technology and the learnings down to each segment, so we can bring, you know, products into each segment of the market that are very approachable, very affordable, and therefore we'll have, you know, products that are in the beginner segment, in the mid-tier segment, in the advanced segment as well.
Twofold, really making the brand rationalization come down so we have much better focus internally. Then for the new products, you know, making sure they're focused on higher margins, one, but not only that, two, that they're hitting in the right segments as well, so we're not concentrated in one segment or the other.
Got it. I appreciate the color. Then real quick, one more for me. Can you provide kind of an update on the e-commerce discussions you're having or kind of moving that way? It seems, you know, legislation movement could be opening up here. We're seeing a lot more strategic partners come on board in the cannabis space. Just kind of your, you know, discussions here going, moving down the e-commerce side of things, that'd be helpful. Thanks.
Sure. I think what you see here is, one, that the Europeans are probably a little bit ahead of us in their acceptance of the product set. We've been able to advance there. You know, looking at the partners there, Amazon continues to be kind of the lead driver.
There are also other players around the world, like Flipkart, and Mercado Libre that play a significant role. We have eBay and Walmart, of course. I think, you know, as my parish priest says, we pray in our time and God answers in His. It's the same way with government regulatory legislation. We are prepared, and we are putting all the pieces in place so that we are ready to go with all our products.
To give you an example of that, one of the things we've done with Amazon is apply for our transparency program, which really allows for brand protection around our products. It requires a labeling or a stickering of the product, in which case we own the buy box, in which case we'd be able to own all the advertising that goes in there, and it helps drive the BSR score down, which is a good thing, because we own that particular segment.
We've put a tremendous amount of energy into our e-commerce assets, not only the e-commerce platforms, but we also vapor.com, PuffItUp and VapoShop are going through and have gone through revamps, both from an SEO perspective and are going through a targeting perspective now from an SEM perspective.
You start to see that hit in the fourth quarter, where we're hoping to drive a nice revenue on ad spend. That will start to kick in probably the end of Q4. Each of the brand sites, whether it's DaVinci or Eyce or others, has gone through their site improvements and metrics. There's been a lot of kind of foundational groundwork done, so that we can do some of the acceleration here in the early part of next year.
That is one of the things related to Aaron's question earlier that's really important because you know, if the product is sold on one of our websites, whether it be a brand site, whether it be one of our aggregator sites, or whether it be on one of the third-party aggregators, the margins there are in much better stead than doing kind of distribution or sub-distribution. That's why also we wanna have nice balance across kind of those segments of the marketplace. They're very important to us. Hope that's helpful.
No, I appreciate it. Thanks. I'll jump back in the queue.
Once again.
Thanks, Scott.
If there are any remaining questions, please press star one on your touch tone phone. Once again, star one to ask a question or a comment. The next question is coming from Andrew Bond with Jefferies. Your line is live.
Hey, Andrew Bond on the line for Owen Bennett. Thanks for taking our question. Going back to working with some of the MSOs, can you give a little more detail on that initiative for the consumer segment?
Have you seen the number of MSO customers or number of MSO doors increase, maybe just in terms of your own brands in the last quarter or two? Not sure if you can give any exact metrics on that, just how that's initiative's tracking or just general thoughts, especially now given cannabis retailers might be looking for more ways to capture additional sales or margin amid industry pressures. Thank you.
Great question, Andrew. Thanks for taking the time to join, too. We appreciate it. I'll start with that one. You know, look, as you know, the MSOs have been very busy. Everybody's, you know, triaging, trying to absorb the shocks we've been feeling in the market, right? The MSOs are no different.
They're pretty busy doing M&A and integrations and things like that. They all recognize simultaneously that the consumer products is a bit of a problem for them and also a huge opportunity, as you pointed out. You know, what's happening today, generally across the board with the MSOs is sort of a smorgasbord of different, you know, purchasing routes, right?
You'll have, in some instances, right, where, you know, store managers are procuring online through, you know, Leaf Trade or through, you know, wholesale.greenlane.com or, you know, through other sites that are out there. You'll have store managers that are, you know, pulling petty cash out of the register and telling the budtender to go down to the local cash and carry, glass district and buy, you know, some of these accessories.
Or you'll have folks that do have some enterprise type of relationships, but it's really kind of spread out. It's scattered. These MSOs are not benefiting from their scale, right, to get the price breaks that they deserve at the larger scale. They're also not creating a uniform, consistent customer experience across their ever-growing retail footprints.
They recognize that they don't have the visibility, right? That's the other thing where, you know, if you have a bunch of different people purchasing, you just don't have visibility into, you know, what their spend is. That's the problem that we come in and we're having conversations.
We're here live in Las Vegas, having those conversations with MSOs about solving that problem for them. It's very well received. Is it the highest thing on their list? No, but they recognize that it is a problem and they recognize that Greenlane has a wonderful solution. That's extremely promising for us. Those conversations are going well.
We're actually, you know, on the precipice of rolling out some comprehensive programs for some of these customers, and we'll hopefully be able to announce that when we do. Are the MSOs ordering from us today? Sure, right? Are we getting all of their business? Generally, no, right?
Because of the dynamics I just spelled out. We're getting some of that business. You know, in terms of the specific MSOs, we don't report on that, but it's pretty broad, as we've said in the past, we work with most of them in various capacities, but it could be really small. It could not be too meaningful. This program that I'm talking about, this is resonating really well, and again, we're on the precipice of landing.
That's where we're focused. Then as you mentioned, right, it's an opportunity, and that's one of the reasons that Greenlane is, you know, strategically pivoting into that consumer business. We always saw that opportunity, obviously, starting our own brands, and that's been underway for quite a while.
Just in this climate, you have MSOs that are under significant pressure. Everybody that's not, you know, one of the larger publicly traded MSOs, they're under even more pressure generally, right? You know, when you come to the cost side of the business, that's the industrial products, right? That's the packaging, the C sale products, the energy products. That's all under pressure, right?
What a perfect time for Greenlane to be pivoting more into our consumer business, which is an opportunity, as you mentioned, right? When these MSOs are seeing margin compression in markets like Illinois now, which was just a very strong market not too long ago, and markets like Massachusetts, right? They're actually getting better margins on the accessories, on the consumer products that Greenlane offers.
We're gonna see them lean in. I mean, we saw this happen in Canada, right? We know the market in Canada got eroded much more quickly on the retail side, and they've really leaned into consumer products. Greenlane doesn't have a huge presence in Canada, so we're gonna take advantage of that effect when it comes here to the U.S., and it's coming.
I think moving the business right now from a part of the supply chain that's gonna be coming under more and more increasing price pressure, and that's on the industrial side, into the consumer side, which becomes a more accretive revenue and margin opportunity as these current climate dynamics play out, is a really smart move on our part, right? We're prepared for that.
Things don't happen fast with especially with large MSOs, but it's all in the works. It's all underway. Again, we're in a very, very good position. Who else is positioned like Greenlane to be able to offer the comprehensive solution that we just discussed, be able to do it at the scale, have the relationships already in play, right? We're in a phenomenal position.
Do we wish it happened, you know, two months ago? Sure. But we can't control the timing, right? These things take a little bit of time, but we know what the result at the end is gonna look like, and it's gonna be extremely beneficial to Greenlane and our financials, but also to our customers, right? And that's ultimately what is gonna lead to a long-term successful business is making sure you're adding value.
And I think the program and the offering and the solution that I just laid out is extremely valuable to those MSOs, and that gives us a lot of promise in the future of our business, especially in those channels. I know I talked a little lot there, but Craig, I don't know if you have anything to add. I think it just speaks to the passion and excitement we have for that opportunity, and how we're gonna capitalize on it over the coming months and quarters.
Yeah. I think it's an opportunity that contemporarily has come up quite a bit. You know, the MSOs, you're well aware, have been engaged in a lot of M&A and rolling up a number of brands. Now they're really working hard to decide how they're gonna run the retail stores.
Even though the end commodity is cannabis, I think they realize that the goal of each of the stores is, you know, driving revenue per square foot, driving average order value, driving attachment rates. All what I'll consider you know, fundamental or, you know, old school type, fundamental store metrics. Some of the things that we work with them on are things like merchandising and placement, very closely.
If you know, we're at the show this week, you'll see a lot of work that we've done in the last six months in preparation, specifically on merchandising. I think that's what you see them all moving towards, is a model where they have a more consistent look and feel, whether it's one brand or multiple brands. That driving revenue per square foot is an important part of that metric, and we play a role there because we're one of the few that can have this, the scale and scope of products along with the merchandising to help them out.
Yeah. Very helpful detail and insights, gents. Thanks for laying all of that out, and I'll pass it on.
Thanks, Andrew. Appreciate it.
Are there any final questions? Please indicate so now by pressing star one on your touch tone phone. Okay, we have no further questions in queue. I'd like to turn the floor back to management for any closing remarks.
Thank you. And thank you all for dialing in. I know you know, we're here live in Las Vegas, as I mentioned, at the MJBizCon. I know a lot of analysts are here or traveling and you know, appreciate you guys making the time. Obviously, 2022 has been a rough year for the cannabis industry.
Greenlane's been making our adjustments, setting us up for success in 2023. We appreciate everybody bearing with us as we're doing that. Again, as I mentioned, I think our platform is still unrivaled, right? It's nobody's really out there doing what we're doing and offering it at scale like we are. Is this industry going away? Absolutely not. More people are consuming cannabis every year than the year prior.
The future's bright in that respect. We're positioning the business to get through these tough times and then to be able to capitalize on those future opportunities. We feel very good about that. Again, appreciate everybody hanging with us through that. You know, this is actually bittersweet for me because it's gonna be my last earnings call as CEO.
When I step down at the end of the year and transition to Craig, it'll be exactly seven years of running a publicly traded company in the cannabis industry. You know, that involves you know, us being really back at Kush Bottles, the first company to ever have research coverage from analysts.
I think it was Aaron Grey was around at that time and Vivien. Thinking back, you know, 2016, what a ride it's been. I'm not done, right? I'm staying on here at Greenlane. I believe in Craig. His leadership and his vision for the company and where the company's going really aligns well with his skill set. I'm gonna stay in a corporate development role, and I'll still be involved in these calls.
You know, just as my last call here as CEO, I want to just issue a very warm thank you to the analysts and investor community that supported me and supported Kush Bottles and supported Greenlane. Really appreciate it.
It means the world to me, and I look forward to seeing some of you guys here in Las Vegas. I do appreciate you guys continuing to support the company as we transition to our new model, as we transition to new leadership. The future is very bright. We're excited. Again, we're happy to be here telling the story, and hope to see some of you guys around. Hope everyone has a great rest of your week. Stay safe, good holiday season, and we'll talk to everybody soon. Thank you.
Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day.