🎙️ Podcast: Planet 13 — Co-CEO, Bob Groesbeck
$55M cash for FL entry as an attractive price, focus on wholesale in additional states, 5/6:1 ratio of Neighborhood:Superstore. Delivery built in-house.
Summarized thoughts from Bob Groesbeck:
Superstore & Neighborhood Stores. Medizin (original store) started as a neighborhood store but given limited medical cardholders in Nevada, they decided to open the superstore concept given two glaring deficiencies—Location (too far from the Strip) and Size (too small). Recognized that they couldn’t be in the gaming overlay district and landed on a large warehouse where the Superstore location sits. Originally they wanted 25,000--30,000 sq ft but given the landlord’s concern with what they’d do with the remaining space, Planet 13 decided to take the entire warehouse. The idea behind Superstore vs. Neighborhood is whether or not a city is affluent enough to support a major sports team (Superstore), otherwise, they want to open a Neighborhood store in strategic markets. The company expects a a 5/6:1 ratio of Neighborhood stores to Superstores. From a revenue standpoint, a Superstore does 5-10x revenue of a normal dispensary.
Market Share. While the Company has 8-10% market share in Nevada, Bob doesn’t put a market share % target on other markets, but expects to be a significant player in every state they enter.
Expansion. California was a logical next state to expand to. Looked at over 100 opportunity before settling on the Orange County Superstore location (opened in July). While the location lacks the same tourist customers that Las Vegas does, the company is confident it’s building up a loyal, local customer base and expects to get customers coming from Disneyland. The company will continue to open additional phases of the lounger. The Company’s next two markets will be Illinois (minority ownership through recent lottery winner) and Florida (M&A). The company is also paying attention to New York, Arizona (Phoenix), Massachusetts (Boston) and Michigan, along with additional stores in California.
M&A. Bob viewed the $55M acquisition of Harvest’s Florida license (no dispensaries included) as very attractive, given the valuations he’s seeing in California and Nevada of $10-15M for non-operational licenses (note: I haven’t seen prices this high). The $55M cash was 40% of the Company’s cash balance at time of announcement, Groesbeck defended the valuation as attractive because it’s an unlimited license (no caps on stores) and they had been actively looking to enter the state. Overall, M&A is focused across the supply-chain as the company expects to be vertically-integrated in every state they operate in.
Brands. Brands are critically important (Planet 13 storefront brand, Medizin strains). The Company doesn’t have capacity to wholesale flower today but is adding additional capacity (adding 25,000 sq ft and up to another 60,000 sq ft to meet demands of Medizin flower). The have done well wholesaling into NV (Ha Ha, Dreamland) and plan to carry the brands into additional states they have entered / will enter. Planet 13 plans to compete on price and quality (consistent quality). Bob has seen products take the NV market by storm, only to lose market share given lack of consistency.
Delivery. Planet 13 is focused on building out its delivery platform. Before COVID, the company only had 3 cars (85-90%+ of customers were non-NV residents), the company pivoted quickly to standing up their delivery business (built delivery platform in a matter of a few weeks), getting up to 30 cars and 1,000+ deliveries shortly after. Planet 13 plans to continue investing in building out software in-house.
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