Planet 13 (PLNHF) has shown that it can grow its business despite an inconsistent market filled with uncertainty due to the coronavirus pandemic.
The innovative cannabis retailer managed to break even during the period where its core market of Las Vegas was closed to tourists, and it has continued its growth amid the uneven tourism patterns caused by the delta, and now the omicron, variant.
Co-CEO Larry Scheffler laid out his company's most-recent quarter in Planet 13's third-quarter earnings call:
"Q3 was a solid quarter in Nevada; although one marked with some sales headwinds from COVID resurfacing and changes in seasonal trends. Nevertheless, we continue to maintain the market share north of 10% in Nevada. Across Nevada, each aspect of our business performed well. In Q3, we generated $22.6 million from the SuperStore; $2.7 million from curbside and delivery; $3.5 million from Medizin; and $1.6 million from wholesale and other, a 33% increase over Q3 2020."
He noted that September results were slightly impacted by construction at the Las Vegas Superstore. Once that finished, however, sales returned to a growth pattern.
"In October, we had multiple days which exceeded $400,000 in sales, improved customer flow," he said. "[This has meant] we're able to service more customers in a timely manner on those little busy days."
Scheffler expects the true benefit of the floor space expansion to kick in when large conventions return and normal tourism patterns set in during the busy spring season. Las Vegas has been a steady growth story for the company, but Planet 13 investors want to know how its new location near Los Angeles has performed as well as what's next for the company in its slow growth plan to open SuperStores across the United States.
How is Planet 13 Santa Ana Doing?
The Santa Ana, Calif., Planet 13 SuperStore opened on June 24. In the third quarter, it delivered $2.4 million in revenue. That was impacted by a lack of out-of-state tourists due to COVID remaining a concern and flaring up somewhat with the delta and omicron variants. Sales were also hurt by "significant freeway construction in the nearby vicinity," according to Scheffler.
Once that work gets completed, however, he expects a boost for the store because "it will make it significantly easier to get on and off the highway at our location, but currently it's a major obstacle."
The co-CEO explained why sales were lower than expected, but he also saw some positives.
"These numbers have been disappointing to us and while there's some consolation, knowing that our customer reviews are some of the highest in the state and sales are artificially low due to obstacles that are outside of our control, it is one of the key focus areas," he said, "Based on what it cost to acquire and build a store and current run rate, it is approximately 2 times sales. And while this might be in line with the rest of the industry, it is not a number we're happy with."
Scheffler may be disappointed in the short term, but he believes that the Santa Ana location will continue to grow as normal tourism patterns return.
A U.S. Listing for Planet 13?
Planet 13 trades in Canada and has been an over-the-counter stock in the U.S. That's something that CFO Dennis Logan expects to change soon.
"The company is in the process of transitioning to becoming a US domestic corporation and registering with the SEC," he said.
Doing that will require the company changing to U.S. GAAP accounting practices while "implementing Sarbanes-Oxley compliance and becoming an SEC registrant by preparing and filing a Form 10 registration statement," he added. "This sets the company up though for potential uplisting to a recognized U.S. exchange and broadening of our shareholder base."
In addition to moving toward an uplisting, Planet 13 has continued its measured growth plans. Co-CEO Robert Groesbeck detailed those plans, which include a location in Chicago and multiple stores in Florida.
"Q3 was all about setting Planet 13 up for future growth. We won an Illinois dispensary license lottery through a social equity partnership," he said. "Illinois has long been one of our targeted expansion areas. It has a large population, significant tourist counts and a robust adult-use market."
The company expects the license to be issued in the first half of 2022. It has already begun looking for a location for a Chicago Superstore. In addition to Illinois expansion, Planet 13 also has big plans in Florida, a state that only has legal cannabis for medical reasons, not for recreational purposes.
"We've acquired a vertically integrated license in Florida, arguably the best medical market in the nation and one with adult-use upside," Groesbeck said. "Our plan over the next year is to open a network of neighborhood stores modeled off of our highly productive and successful Medizin store supported by cultivation and manufacturing.
Planet 13, its co-CEO added, expects to eventually open two or three SuperStores in the state (likely in Miami and Orlando) when recreational use for adults becomes legal. The company plans to have six of its smaller Medizin dispensaries along with cultivation facilities to support them within the next 12 months.
Shares in the company closed Dec. 3 at $3.29. That's down by more than 50% from its 52-week high of $8.67.