Planet 13 Expanding Its California Cannabis Business Presence
As Planet 13 positions itself to purchase Next Green Wave, it plans to grow its Cali cannabis business presence utilizing the cultivation and production operation. This is part of the company’s methodical plan to spread its Superstore model nationwide.
The Street reports that through this acquisition of Next Green Wave (NGW) for $71.8 million, the company has expanded into California. The terms of this deal guarantee NGW shareholders 0.1081 of a common share of Planet 13 and $0.0001 in cash for every NGW share they hold.
With this being the case, the deal is a premium of around 52 percent to the closing price and around 44% to the 10-day VWAP of NGW Shares on the Canadian Securities Exchange, on the day they all agreed to the deal.
At this point, Planet 13 is a public-facing retail operation. However, each store and all accompanying Medizin dispensaries need significant production and cultivation infrastructure. With this deal, Planet 13 plans to increase its capacities without needing to conduct the buildout on its own.
“Today’s announcement is an extension of the strategy we’ve laid out for investors of adding cultivation and production in California to vertically integrate and bring our highly popular brands into the state. We are methodically expanding our footprint to drive topline growth and improved profitability,” explained co-CEO Bob Groesbeck in a press release. “We’ve been incredibly impressed by the Next Green Wave team and their ability to generate revenue and Adjusted EBITDA based on the quality of their cultivation and manufacturing in this very competitive market.”
The idea behind this acquisition is for Planet 13 to “be immediately accretive to 2021 and 2022 EBITDA.” It also plans to retain NGW’s management.
Besides this acquisition, Planet 13 bought a Florida license that will allow it to have multiple locations in the Sunshine State. At this point, Florida only permits medicinal marijuana sold to customers who hold a medical identification card from an approved physician. However, full adult-use legalization is likely to occur in the state eventually, although no immediate regulatory or legislative path has been outlined for this to occur.
“We are excited to get started building out our footprint in Florida. Initially, our focus will be on a network of high-performing neighborhood stores modeled off our successful Medizin dispensary along with cultivation and production to bring our portfolio of top-selling products to Florida,” said Groesbeck. “As Florida gets closer to legalizing adult-use sales, we will start on our world-famous SuperStores in high traffic tourist destinations throughout the state.”
Planet 13 also holds a license to open a superstore in Chicago.
Have you ever visited a Planet 13 superstore? What are your thoughts on the experience and product selection? Let us know in the comments below!