Planet 13 Feels Recession Pinch, Pursues Vegas Consumption Lounge

Planet 13 Holdings Inc. (CSE:PLTH) (OTCQX:PLNHF) slumped nearly 5% in early trading on Friday after the company saw continued revenue dips and higher losses, though its balance sheet and cash position served as bright spots.

The Las Vegas-based cannabis company published its financial results for the third quarter ending Sept. 30.

Revenues for the quarter totaled $25.6 million, down 22.2% versus $33 million in the same period last year. Net loss was $6.3 million versus a net loss of $2.7 million a year ago.

“High inflation and interest rates have impacted all areas of the economy, driving down consumer spending, including here in Las Vegas,” co-CEO Larry Scheffler said in a statement. Scheffler touted Planet 13’s 9% retail market share, “despite this economic downturn and an 18% increase in Nevada dispensaries year-over-year.”

Scheffler said that the company anticipated this downturn and took steps to brace for the storm, leaning into fiscal discipline to maintain positive operating cash flow and protect its cash position.

The company reported gross profits of $10.6 million, a 41.2% margin versus a 53.8% margin associated with last year’s $17.7 million. Adjusted EBITDA for the quarter was $400,000 versus an adjusted EBITDA of $2.6 million in 2021.

Planet 13 ended the quarter $50.9 million worth of cash versus $61.6 million in the prior year. The company’s valuation of all of its assets was worth $263.4 million versus $216.8 million last year. Liabilities totaled $35.9 million versus $43.1 million in 2021.

“Through the third quarter, we have focused on effectively balancing capital preservation, profitability, and continuing to execute our future growth initiatives,” co-CEO Bob Groesbeck said. “We’ve signed a conditional location in Illinois, adding a fourth state to our portfolio. In Nevada, we’ve begun harvesting at our premium, indoor cultivation expansion and in Florida continue to progress cultivation forward while exploring ways to reduce CAPEX needs and shorten timelines.”

Additionally, Planet 13 said it had begun drafting an application to add a cannabis consumption lounge to its SuperStore after the Las Vegas City Council in September approved an opt-in to the state cannabis lounge law that the legislature passed in 2021.

The company also bought out its social-equity partner in Illinois in August for $2.9 million.

Groesbeck concluded, “While current retail trends are weak, our focus continues to be on building a stronger, more resilient company that is well positioned to take advantage of future legislative changes.”