Las Vegas-based Planet 13 Holdings (CSE: PLTH) (OTCQX: PLNH) has decided to slow its expansion efforts due to several industry challenges. This includes the defeat of recreational marijuana legalization in Florida last November and ongoing price pressures across the cannabis sector, according to company leadership during a recent quarterly earnings call.
Co-CEO Bob Groesbeck indicated that the company would not open as many new stores in 2025 as initially planned. Instead, the focus will be on enhancing productivity, especially in Florida, following their acquisition of VidaCann last year. Groesbeck acknowledged that the coming year presents industry-wide challenges such as competition from the illicit market and the rise of hemp-derived intoxicating products, which are putting pressure on profit margins.
Planet 13 reported a loss of nearly $50 million last year and anticipates that Florida’s medical-only status will hinder revenue growth. Despite plans for additional dispensary openings, Groesbeck stated they would intentionally slow the pace for the remainder of the year. He estimates that the company will still open four to five new dispensaries in Florida, potentially increasing its total retail locations to 38 or 39 across the country from the current 34.
Groesbeck emphasized the importance of focusing on Florida’s market, stating, “We’re disappointed with the vote in November, but we still have close to 1 million cardholders here in Florida.” He acknowledged the challenges in this market and stressed the need to build up store revenues and achieve necessary profit margins.
The company has recently improved its financial standing, as noted by CFO Dennis Logan. This includes recovering $10.5 million from cannabis investment firm Casa Verde and the Orange County Sheriff’s office linked to a lawsuit. Additionally, Planet 13 received $19.3 million in tax refunds from the Internal Revenue Service by filing amended tax returns that claim exemptions under section 280E.
Logan explained that this strategy has been adopted by several multistate operators over the past year, although it remains contingent on federal marijuana rescheduling or the outcome of pending lawsuits. Planet 13 has been retroactively filing these amended returns since 2020 to recover as much in federal taxes as possible.
“Since September of 2023, we have taken a position that 280E does not apply, and we have been making estimated tax payments as such,” Logan stated. He also noted that pending tax cases could clarify their position in the near future, with uncertain tax balances of $19.3 million listed as long-term liabilities on the balance sheet as of December 31, 2024.
