Planet 13 Holdings Inc. (OTCQX: PLNHF) is expanding beyond its universe of Las vegas Nevada as the company acquires a California dispenary. Planet 13 said it is has closed on its plan to buy Newtonian Principles, Inc. in a stcok and cash deal valued at $4 million.
The acquisition includes the California cannabis sales license held by Newtonian, and a 30-year lease for a dispensary in Santa Ana, California, and certain other assets from Warner Management Group, LLC.
“Closing the Acquisition is a major step towards Planet 13’s first California location. We’ve examined hundreds of locations and are confident in our ability to replicate the SuperStore experience at this location, introducing new customers to the Planet 13 brand,” said Bob Groesbeck Co-CEO of Planet 13. “At this time, due to COVID-19, we are not putting a timeline on the opening of the dispensary. We have budgeted approximately six million dollars in CAPEX for the opening of the Santa Ana dispensary, leaving us plenty of cash on hand to manage any COVID-19 related impacts on the business.”
The price paid was much lower than the originally agreed-upon price of $10 million back in June of 2019. At the time, the company said, “After a thorough and deliberate search, we identified this excellent site located three miles from the South Coast Plaza Mall, which hosts 24 million visitors a year and is just a short ten-minute drive from Disneyland, with 18 million visitors per year.” Then it seemed as if the deal was off when Planet 13 said it had terminated the deal, but the announced that it had renegotiated the terms in April 2020.
Planet 13 had started 2020 off with record sales in historically slow months for tourism, but then the COVID-19 pandemic stopped all tourism as hotels and casinos closed. The company was able to sell to local residents but sorely missed its tourist crowd.
Larry Scheffler, Co-CEO of Planet 13. “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 twenty-eight vehicles and have shifted our customer mix from 15% local area residents, to 100%. While tourism will continue to be a strong driver of our business when things return to normal, this is a unique opportunity for us to build a strong local base and gain lasting market share as we become a fixture in the daily lives of Las Vegas Valley residents.”