Planet 13 Holdings Inc: World’s Largest Cannabis Dispensary Is a Cash Cow

Planet 13 Holdings Inc World's Largest Dispensary Sets Sales Records
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Planet 13 Holdings Inc: The Walmart for Cannabis Lovers

Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH) is, if financial numbers are important to you, a must-see attraction in Las Vegas. Planet 13 operates the largest cannabis dispensary in America and it’s located just off the Las Vegas Strip.

The company’s “Cannabis Entertainment Complex” is currently 16,200 square feet in size and will, once Phase II is completed later this year, be 112,000 square feet—larger than the average Walmart store.

Not just a one-hit wonder, the Nevada-based Planet 13 is exploring several other ways to generate revenue, through expansion into other geographic regions, as well as distribution. After all, the company’s goal is to operate ultra-high-end dispensaries in tier-one markets across the country.

For cannabis brands facing restrictive advertising rules, Planet 13 is the place for exposure. It’s also an excellent cannabis stock to check out for investors who are tired of reading about the same four marijuana companies.

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Planet 13 Holdings Inc Overview

Planet 13 is a vertically integrated cannabis company that, as mentioned earlier, operates its flagship store in Las Vegas. It’s actually a bit misleading to say it’s the biggest cannabis dispensary in America; it’s the largest on Earth. And would you expect anything else from Las Vegas?

On November 1, 2018, Planet 13 opened Phase I of its facility, its 16,200-square-foot dispensary. This is where customers can find dozens of varieties of cannabis products, including extracts and infused products (gummies, chocolates, beverages, etc.). (Source: “About,” Planet 13 Holdings Inc, last accessed May 21, 2019.)

The dispensary is just the first part of a multi-phase expansion plan. Phase II, which will include a coffee shop, a pizzeria, event space, and a production facility (featuring a 115-foot wall of windows where customers can watch cannabis products being made), is expected to open in the third quarter.

All of this should help drive additional foot traffic, which is already quite impressive. In April, Planet 13 served 1,962 customers per day, with an average purchase of $89.62. This is in line with the company’s aggressive target of 2,000 customers per day, with an average purchase of $75.00.

Its 4/20 “holiday” on April 20 was the single biggest shopping day at the Cannabis Entertainment Complex since it opened. Roughly 3,500 paying customers spent an average of $91.11 each that day.

No other dispensary in the U.S. is churning out these kinds of numbers.

With only 35% of the total square footage in operation, it’s easy to see how lucrative the Cannabis Entertainment Complex will be when the expansion opens. It shows the kind of potential there is for Planet 13 in Las Vegas and, eventually, elsewhere.

In March, Planet 13 announced that it had signed a purchase agreement with Mike Tyson’s cannabis venture, Tyson Ranch, to be the exclusive launch partner of Tyson Ranch products in Nevada. (Source: “Planet 13 Teams-up with Boxing Legend Mike Tyson, Announcing Exclusive Nevada Launch of Tyson Ranch,” Planet 13 Holdings Inc, March 14, 2019.)

Operating the largest dispensary in the world also allows Planet 13 an avenue to sell its own branded products: “TRENDI,” “Medizin,” and “Leaf & Vine.” Planet 13 launched TRENDI in November, and it is already the top-selling concentrate brand in Nevada. Medizin continues to sell out every month. The Leaf & Vine brand was launched in early April. (Source: “About,” Planet 13 Holdings Inc, op cit.)

Planet 13 Stock

PLNHF Stock Information
Market Cap $253.4 Million
Forward Price-to-Earnings 15.9
52-Week High $2.70
52-Week Low $0.50
Shares Outstanding 119.5 Million
Float 51.0 Million
50-Day Moving Average $2.25
200-Day Moving Average $1.67

(Source: “Planet 13 Holdings Inc. (PLNHF),” Yahoo! Finance, last accessed May 21, 2019.)

Q4 Revenue Up 145%, Full-Year Revenue Up 136%

On April 30, Planet 13 announced its financial results for the fourth quarter and year ended December 31, 2018.

Fourth-quarter revenue increased 145% year-over-year from $3.4 to $8.3 million. Gross margin increased 143% from $1.7 to $4.2 million. (Source: “Planet 13 Announces 2018 Financial Results and First 5 Months of Cannabis Entertainment Complex Performance,” Planet 13 Holdings Inc, April 30, 2019.)

Planet 13 reported a fourth-quarter net loss of $4.0 million, versus a net profit of $259,493 in the fourth quarter of 2018. The company reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $1.9 million, versus adjusted EBITDA of $1.0 million in the prior-year period.

The company ended the fourth quarter with cash and cash equivalents of $19.4 million, compared to $500,000 a year earlier. Total assets increased 487% from $7.7 million in Q4 2017 to $44.9 million. Meanwhile, total liabilities improved 35% from $10.8 to $7.0 million.

“In the six months since we opened the doors at the SuperStore, our team has driven solid revenue performance by executing targeted initiatives to steadily grow traffic and average ticket at the site,” said Planet 13 Co-CEO Larry Scheffler.

Full-year revenue increased 136% from $9.0 to $21.2 million. Gross margin increased 134% from $4.6 to $10.9 million.

Planet 13 reported a full-year net loss of $10.7 million, compared to a net loss of $600,000 in the prior year. The company reported an adjusted EBITDA loss of $500,000 in 2018, compared to adjusted EBITDA of $1.3 million in 2017.

Analyst Take

What happens in Vegas usually stays in Vegas, except when it comes to Planet 13 Holdings Inc. The word is out that Planet 13 is the place to go if you want an immersive experience in cannabis culture.

The company has been reporting strong month-over-month customer traffic and spending. Planet 13’s own branded products have been selling well, the company recently signed an exclusive Nevada agreement with Mike Tyson, and it expects to announce new deals in the near term.

Best of all, only 35% of Planet 13’s Cannabis Entertainment Complex is operational; Phase II is opening in the third quarter. The supercenter has proven to be a lucrative venture, and that will only get better once its expansion opens.

The success of Planet 13’s complex in Las Vegas should also help make it easier for the company to open additional centers in key markets across the country.