Planet 13 Holdings Inc. (CSE: PLTH) is showing the cannabis industry both the strengths and weaknesses of putting all your buds in one basket.
The Nevada-based company, which operates the world’s biggest cannabis dispensary, reported this week its fourth quarter revenue nearly doubled to US$16.5 million from a year ago.
The weed retailer said 2019 sales at its SuperStore, located on the Las Vegas Strip, accounted for 9.1 per cent of Nevada’s entire legal market.
For more context, the single store sold more weed than Canada’s top revenue-generating pure play cannabis retailer, Fire & Flower (TSX: FAF). The Alberta-based company recorded $13.7 million (US$9.7 million) in its last quarter with 34 stores in operation.
But the COVID-19 pandemic has ground tourism to a halt in Sin City, and Nevada state authorities have ordered all dispensaries to close, a situation which Planet 13 said could hamper sales.
Co-CEO Larry Scheffler said the U.S. pot firm has had to quickly adjust to the new reality, and its done so by ramping up delivery — the only legal way to sell weed in Nevada during the pandemic.
“When cannabis dispensaries in Nevada were told to close, we pivoted to focus on our delivery business, and in only 25 days we’ve ramped our delivery service from five to 28 vehicles and have shifted our customer mix from 15 per cent local area residents, to 100 per cent,” he said in a statement.
When it comes to getting you the products you need, we've got all hands on deck.
Our team at #Planet13 makes the delivery process easy from the moment you visit our website.
Keep out of reach of children. For use only by adults 21 years of age and older. pic.twitter.com/L6JEogyBP5
— Planet 13 Las Vegas (@Planet13lv) April 14, 2020
While tourism is the company’s bread and butter, Scheffler said the crisis presents an opportunity to build up a local consumer base.
Planet 13 said not only does it have the largest weed delivery platform in Nevada, but it also offers its store-to-door service 24 hours a day, seven days a week.
In the fourth quarter, the company also notched a positive adjusted earnings before interest, taxes, depreciation, and amortization of US$2.5 million, compared to an adjusted EBITDA loss of $1.5 million in the year-ago quarter.
Planet 13 ended the year with US$12.8 million in cash while liabilities jumped nearly three-fold to US$21.6 million.
The company reported a net loss of US$2.6 million, with operating expenses totaling US$7.1 million.
Scheffler said adding a pizzeria, cafe and interactive art installment to the SuperStore during Q4 has increased foot traffic, despite it being a seasonally slow period for Las Vegas. Fourth quarter revenue contracted US$200K from Q3, which occurred during the height of the city’s tourism season.
During Q1 of 2020, the co-CEO said the added entertainment has helped revenues increase 20 per cent to US$16.6 million, despite the effects of COVID-19 starting mid-March.
Shares of Planet 13 are up 4.9 per cent this week as of the time of publication.
Top image via Planet 13 Holdings Inc.