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Planet 13 Holdings – A Record 275% year-on-year Growth Provides Impetus to the Company’s Expansion Plans

05 Sep Planet 13 Holdings – A Record 275% year-on-year Growth Provides Impetus to the Company’s Expansion Plans

Planet 13 Holdings (OTCQX: PLNHF), a vertically integrated Cannabis cultivator and dispensary operator, reported a record 275% year-over-year growth in revenues for the second quarter of 2019, which were at $16.5 million as compared to $4.4 million as of June 30, 2018. The company also achieved a positive EBITDA of $2.7 million as compared to adjusted EBITDA of $504,851 for the same period last year. The gross profits before biological adjustments also rose by a whopping 333%, from $2.2 million as of June 30, 2018 to $9.7 million as of June 30, 2019.

Furthermore, the company’s superstore sales grew by 19.4% over Q1, bringing in $2.7 million in EBITDA, a 105% sequential growth over Q1 as per a company Statement. Its dispensary sales accounted for nearly 10 percent of all dispensary sales in Nevada. The stores received over 800,000 visitors since commencing their operations, out of which 80 percent of the customers were from out-of-state. Buoyed by the success of its superstore format, the company is planning to initiate phase II of its expansion, by building a 15,000 sq. ft. customer facing production facility, a first-of-its-kind for the industry.

Planet 13 Holdings (OTCQX: PLNHF)

Market Cap: $254.76M; Current Share Price: 1.924USDChart
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Larry Scheffler, Co-CEO of Planet 13 commented,

We are growing sales on both an absolute basis and as a percentage of the total market. Our Phase II expansion is progressing at full speed with the goal of opening at the end of Q3.

The facility is intended to be a one stop shop for customers to experience and learn about the products production process, effects of the product, thereby empowering them make an informed decision. The facility aims to offer an unparalleled experience to its customer by providing a restaurant, a coffee shop and a space to conduct events.

As Bob Groesbeck, CO-CEO opines

“Our 15,000 sq. ft. customer facing production facility will be unique in the industry as it has been designed to build a personal connection between our customers and our products. Nowhere else will customers be able to see the high-quality ingredients that go into their products, learn about the effects, and purchase all in one place.” 

The Industry
The Global legal marijuana market is likely to reach over USD 66.3 billion by the end of 2025, as per a report by Grand View Research, Inc, growing at a CAGR of 23.9%. There is a growing acceptance of the curative effects of cannabis, with some countries such as Canada and certain states of U.S legalizing the use of Marijuana for medical and recreational use. Research has time and again shown that cannabinoids (CBD), extracted from the cannabis plant, have varied medical uses with minimal side effects, making it a sought after alternative to traditional pharmaceutical options.

Image Source: Unsplash

The U.S, where the use of cannabis has only been legalized in 33 states for medical use and 11 states for recreational use, is one of the largest untapped markets for Marijuana, with an estimated value of over USD 11.9 billion in 2018, which is likely to grow at a CAGR of 24.1% from 2019 to 2025.

This offers a great opportunity for multistate, vertically integrated dispensary operators who hold extensive licenses across multiple states. There have been series of mergers and acquisitions in the Cannabis space, which have seen consolidation of major players such as Aurora Cannabis, Canopy Growth, Curaleaf etc, in the anticipation of legalization of marijuana in the U.S by the end of 2019, with a view to increase their retail presence and expand their operations.

According to an estimate by BDS Analytics, medical and retail dispensaries together contributed to over $10.5 billion in cannabis spending in 2018. Dispensaries also provide a source of employment to about 121,000 full-time, and 50,000 indirect full-time workers, being engaged by the industry in 2018. The sector is likely to provide employment to an estimated 291,500 direct full-time employees by 2021.

These figures point to the fact that Marijuana Dispensaries are now an integral part of the blooming global marijuana market and will experience exponential growth in the coming years.

Company
Planet 13 Holding’s approach is focused on creating a differentiated retail experience for its customers. The company leverages best-in-class technology in cultivation and design to provide customers with novel retail experiences. It holds the distinction of owning the world’s largest cannabis retail store in Las Vega, Nevada. The store showcases branded products such as vapes, edibles, pre-rolls and concentrates.

Image Source: Company

The company is planning a phase II expansion with a new 112,000 square feet superstore which will offer a restaurant, coffee shop, events center and an open customer-facing processing centre. These stores represent a perfect amalgamation of technology integration and retail space management with special focus on high-margin derivative products. The company reported an average of 2,027 customers per day in August 2019, with an average ticket price of $90.25 from its Las Vegas Superstore, against an average of 1,937 customers per day in July 2019, with an average ticket price of $90.41. The company plans to open more such premium dispensaries nationwide to sell their brands Medizin, TRENDI and Leaf and Vine.

Bob Groesbeck, Co-CEO is upbeat as he states

“In the highly competitive Las Vegas market the SuperStore continues to dominate based on the strength of the customer experience and the unique entertainment it offers. Over the rest of the year we will continue to rollout new and exciting restaurants, stores and attractions allowing customers to eat, shop, and play all under one cannabis inspired roof.”

In June 2019, Planet 13 acquired a dispensary license and lease from Newtonian Principles, for opening a 40,000 square foot store in Santa Ana, California, in close proximity to Disneyland. The deal was for a consideration of $6 million in cash and 2.04 million restricted shares of stock, valued at $4 million, based on regulatory approvals.

Planet 13 has a portfolio of brands, in addition to the above, such as PURC, a premium cafe brand and Nature by Nature, a range of full-spectrum and CBD Isolate. The company also has two cultivation and production licenses in Las Vegas and Beatty

Risk Assessment 

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