Exclusive Interview with Planet 13 Co-CEOs Bob Groesbeck and Larry Scheffler
Planet 13 (CSE: PLTH) (OTCQX: PLNHF) Co-CEOs Larry Scheffler and Bob Groesbeck last spoke to New Cannabis Ventures in March. Since then, the company has been navigating the tough economic environment. It has been able to maintain its consumer traffic, much of which is made up of tourists. But inflationary pressure has affected basket size. Scheffler and Groesbeck remain bullish on the company’s future. They shared insight into growth in its four markets, the potential for more M&A and plans to remain debt-free.
Listen to the entire interview or read the summary below:
Planet 13 has operations in four states: Nevada, California, Florida and Illinois. The company has expanded operations in its base state of Nevada and upgraded to vertical integration in California via an acquisition. It is also aggressively pursuing growth in Florida and making progress on its first dispensary in Illinois.
In Nevada, the company approximately doubled the capacity of its cultivation facility. Prior to this expansion, 100 percent of its product was being sold on the shelves of its Medizin retail location and Las Vegas superstore. This additional capacity enables the company to enter the Nevada wholesale market.
The company is also planning to add a consumption lounge to its Las Vegas superstore. The state is expected to start accepting applications soon, and the company is working through the county’s ordinance revisions, according to Groesbeck. He expects to have approvals to move forward by Q1 of next year. The company is planning to convert its restaurant and adjacent event space for on-site consumption, which is still a new concept. That conversion will require minimal capital, and the company will be able to evaluate how consumers respond. If the model is successful, it can be further expanded in the future.
Back in March, Planet 13 closed the acquisition of Next Green Wave, which helped the company to vertically integrate in California. Thus far, the leadership team has been pleased with the quality of the flower coming from that deal. The company has moved into the wholesale market and seen significant traction, according to Groesbeck. The market crash on the supply side was unexpected, but the company has integrated the deal and adapted to the current environment.
In Florida, the company acquired a license from Harvest. Cannabis companies must be vertically integrated in the state, and Planet 13 is making progress on its operations. Thus far, it has announced about six retail locations. It plans to open 15 locations within two years. It is also working on a 23-acre site for its grow and production operations.
In Illinois, the company has spent a considerable amount of time exploring locations. It is making progress on establishing a dispensary in the metro Chicago area, and the company expects to have more announcements about that market soon.
Planet 13 continues to field a significant amount of inbound M&A inquires. But the leadership team maintains a conservative and frugal mindset, according to Scheffler. It is that approach that has helped the company to remain debt-free with a strong cash position. The company has an open mind about potential deals, but any acquisition would need to have the right price, revenue, EBITDA margins and location.
The Planet 13 Balance Sheet
The company aims to remain debt-free, a rather unique characteristic for a publicly-traded MSO. It is also going to preserve as much cash as possible, though it does have capital commitments as it builds out its portfolio in Florida and Illinois, according to Groesbeck. As of Q2, the company has $52.6 million in cash on its balance sheet.
The Future of the Company
In addition to its debt-free status, the company has differentiated itself from other MSOs with its focus on entertainment and experiential facilities. The company reported $28.4 million in Q2 revenue. This year, continued growth will be driven by additional capacity for its flower strains, allowing for entrance into the wholesale market. It will also be looking for ways to continuously drive more traffic to its retail stores.
The company intends to remain lean as more assets come online. It has a strong management team, which has been complemented by the Next Green Wave acquisition, according to Groesbeck. He and Scheffler put $7 million of their own money into the company back in 2014, and they have not sold any stock, other than to pay for taxes for RSUs. They both remain committed to the company and bullish on its future.
To learn more, visit the Planet 13 website. Listen to the entire interview:
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