This Little-Known Pot Stock Owns Largest Dispensary in the World

Planet 13 Stock Deserves Investor Attention

Many people have never heard of Planet 13 Holdings Inc (OTCMKTS:PLNHF, CNSX:PLTH). As a company listed on the Canadian Securities Exchange with a market capitalization that’s under $200.0 million, Planet 13 isn’t really big enough to make headlines often in the financial media.

Still, this little-known pot company actually owns largest cannabis dispensary in the world.

Located just steps away from the Las Vegas Strip, the company’s “Cannabis Entertainment Complex” totals a whopping 16,200 square feet. Since May 2019, the store has been receiving more than 100,000 total visitors per month. (Source: “Corporate Presentation September 2019,” Planet 13 Holdings Inc, last accessed November 5, 2019.)

While this pot stock is listed on a stock exchange north of the border, American investors can still get a piece of the action as Planet 13 stock trades over the counter in the U.S. under the ticker symbol “PLNHF.”

Planet 13 Holdings Inc Runs a Growing Business

Despite not being mentioned in the financial news that often, Planet 13’s business has been booming.

In the second quarter of 2019, the company generated $16.5 million of revenue. Compared to the $4.4 million of sales it earned in the second quarter of 2018, that’s a year-over-year top-line growth rate of 275%! (Source: “Planet 13 Announces Record Second Quarter 2019 Financial Results – Responsible for ~10% of Nevada’s Cannabis Dispensary Sales,” Planet 13 Holdings Inc, August 29, 2019.)

What’s more impressive is that, during the last quarter, the Planet 13 Cannabis Entertainment Complex accounted for 9.5% of all dispensary sales in the state of Nevada. (Source: “Planet 13 Announces Record Second Quarter 2019 Financial Results,” Cision, August 29, 2019.)

The company earned a gross profit before biological adjustments of $9.7 million for the second quarter of 2019, which translated to a gross margin of 58.7%. Again, this marked a huge year-over-year improvement because, in the year-ago period, Planet 13 had a gross profit of $2.2 million and a gross margin of 50.8%.

At the bottom line, Planet 13 reported a net loss of $1.0 million dollars in the second quarter. While this means the company isn’t profitable at the moment, the loss is actually much narrower compared to its $6.9 million net loss incurred in the same quarter a year ago.

A New Catalyst for PLNHF Stock?

While Planet 13 is mostly known for its iconic retail store, it is actually a vertically integrated cannabis company, meaning that, other than running a dispensary, it also has cultivation and production operations.

And on the production side, there has been some good news.

On November 1, the company announced that it has received the final permits to begin production at its 15,000-square-foot customer-facing production facility. (Source: “Planet 13 Production Facility Begins Operations,” Planet 13 Holdings Inc, November 1, 2019.)

This facility is co-located at Planet 13’s Cannabis Entertainment Complex and features 115 feet of windows. The windows allow visitors to see how the company’s products are made, giving Planet 13 a powerful branding opportunity.

Right now, around 15% of the sales at Planet 13’s giant dispensary are of the company’s own brands. With the opening of a customer-facing production facility at the complex, Planet 13 has a chance to increase its own brand’s share of sales.

The new facility will be highly automated. At full capacity, it is expected to process 600 pounds of plant biomass per day, representing a throughput increase of around 1,300% from the company’s current production facility.

“Since we opened the SuperStore and began serving approximately 2,000 customers per day, we haven’t been able to keep our inhouse brands in stock,” said Planet 13’s Co-Chief Executive Officer Bob Groesbeck.

“Our new production facility will increase our production capacity by over ten times and help us to meet the demand.” (Source: Ibid.)

Planet 13 Holdings Inc (OTCMKTS:PLNHF) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Pot stocks are known as some of the most volatile tickers in the market, and Planet 13 stock is no exception. PLNHF stock started the year at $1.11 and soared to $2.60 in April, but then it pared most of those gains and now trades at $1.36.

Business seems to be going well at Planet 13 Holdings Inc’s Cannabis Entertainment Complex. With a new facility starting production, sales of the company’s house-brand cannabis products could get a solid boost.

Bottom line: despite being a relatively small pot stock, Planet 13  is a name worth watching.