Bob Groesbeck on the Vegas Retail Rollercoaster of 2020 | #HashtagFinance

CSE's Barrington Miller chats with Bob Groesbeck, Co-CEO of Planet 13 Holdings Inc. (CSE:PLTH) about his company's challenges - and newfound opportunities - serving customers through their Vegas SuperStore during the pandemic:

0:35 - Introducing Planet 13 holdings - an entertainment company
1:35 - Life since MJBiz in Vegas 
4:33 - Having the team to make the transition to delivery possible
7:03 - The Planet 13 product offerings - expansion of the house brand
10:24 - Current tourism trends
12:58 - What the company plans to do with its recently raised funds
14:49 - Post-COVID plans
16:44 - Origin of the Planet 13 name
 
Planet 13 is a vertically integrated cannabis company based in Nevada, with award-winning cultivation, production and dispensary operations in Las Vegas - the entertainment capital of the world. Planet 13’s mission is to build a recognizable global brand known for world-class dispensary operations and a creator of innovative cannabis products. Planet 13’s shares trade on the Canadian Stock Exchange (CSE) under the symbol PLTH and OTCQX under the symbol PLNHF. 

Related links
www.planet13holdings.com
https://thecse.com/en/listings/life-sciences/planet-13-holdings-inc

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Transcript

Speaker 1: 0:00

Hey, it's James here welcoming you to this presentation of the hashtag finance podcast. This is just a reminder that if you like video, all of our CEO and expert interviews are featured on the hashtag finance playlist on CCTV, including the show that you were about to listen to remember that a CSC space TV on YouTube. And finally, this is just a friendly reminder that the views information or opinions expressed during the podcast are solely those of the individuals involved and do not necessarily represent those of the Canadian securities exchange and its employees. So happy listening, and now enjoy the show. This is hashtag find it presented to you by the Canadian securities exchange the exchange for entrepreneurs with your host Barrington Miller.

Speaker 2: 0:52

Hi, welcome to an edition of hashtag finance. I'm your host Barrington Miller. And today I'm here with Robert Groesbeck co CEO of planet 13. Welcome to the show.

Speaker 3: 1:02

Thanks, Brandon. Great to be with you.

Speaker 2: 1:05

First question. How are you doing? How's the family, how's everyone,

Speaker 3: 1:11

You know, like everyone we're trying to navigate this pandemic and trying to figure out, uh, you know, whether there's light at the end of the tunnel, you know, we, we get confident and we think things are moving in the right direction. And then we see blips that tell us otherwise. And, you know, we're just navigating.

Speaker 2: 1:31

Um, I gotta say there's, uh, there was a big difference from, I guess it's now going on nine months from MJ biz. Uh, for those that don't know, MJ biz is, might be North America's largest, uh, cannabis conference, if not the largest and definitely one of the largest, um, the CSE was there with, um, MNP and MGO, ALO as partners, as well as Erin and Burliss and a few of my colleagues, uh, Grayson our CEO, Richard Carlton, had an opportunity to visit, uh, your facility, um, to describe it as a dispensary, not, not accurate at all. It's a, it's a small universe, literally. Um, just, just phenomenal, just, just phenomenal. We fast forward a little bit, and now the business has changed. The world has changed and therefore your business has changed. And how have you had to pivot and how have you been pivoting?

Speaker 3: 2:44

It was, as I said, it was game changing for us. We were operating at a, you know, at then our record levels and I was very excited moving into March. We were looking at it. And the third week we were told by the governor that we were going to shut down in 24 hours. And literally we went from, you know, an open operational dispensary to the world's largest, to a shuttered operation. And we were fortunate in that our governor allowed the industry to operate from a curbside program initially. And, um, but that was new to us. We had no curbside program to speak of really had no delivery system to speak up. So that was obviously a huge and dramatic, um, impact to us and to our employees. And we sat back and made a decision at the executive level that we could either close our doors and try to weather the storm and see what, uh, how things look when we came out of it. Or we could pivot and try to make a go of the curbside program, which we did. And we put considerable resources overnight to a shuttering, the, um, the Superstore and, uh, giving to a delivery program and, uh, curbside initially. And then about a month later, we were able to go into, uh, to the delivery service. And for us, it's actually, it's worked well. It was very stressful, very trying, but, uh, we're very fortunate. We've got an excellent management team, outstanding staff that really stepped up to the challenge and met that head on. And, uh, it's, it's now a revenue stream that we never had before. So from that standpoint, it's been a positive and it's continued as we've now reopened the store. So really excited about that.

Speaker 2: 4:32

So you went from, you went from fully operational 24 hours, 24 hour, notice change your whole business plan one month of curbside change it or extended or alter it to deliver.

Speaker 3: 4:51

That was, it was incredible. I, I sit back and I think about it. Somebody needs to write a book one day because it was, it was a game changer. I mean, we were literally looking at laying off at that time, right. 250 employees, um, and then rehiring them almost all immediately. And now ramping up, you know, as we, uh, as we closed last month, we were close to 400 employees. And, um, so it's again created challenges, but it created opportunities for us as well. And we capitalized on those and, you know, we were very fortunate again, to have a great team that helped make this pivot happen successfully.

Speaker 2: 5:29

How has, how have your competitors been? And, and I, and I say this, I say this sort of loosely, they're not really competitors in the cannabis business per se, because this sector is unlike any sector I've ever witnessed. Like people support each other. You're sort of like frenemies. Um, how well are they?

Speaker 3: 5:53

I think your term freedom is what's a good one. That's interesting business. There are issues that we can come together on, but it's very competitive, very fragmented. Um, some of the operators here in town did well. They've pivoted well, um, in their operations and I've done a good job, others didn't, and it's like every business, you know, there's some that will succeed and, uh, quite a few that will fail. And fortunately for the industry here in Nevada, you know, the governor allowed us to reopen stores if permitted capacity. And for us, that's been a game changer because we are the largest dispensary in the state by a significant margin that allowed us, you know, our, our occupancy had half 50% is still up for it's in the 400 range. So, you know, we have the ability to move a lot of customers through the facility, even at the, a limited threshold. So it's,

Speaker 2: 6:57

Uh, so just for our listeners and her viewers, uh, planet 13, actually, doesn't only sell planet 13, I guess, crops or, or merchandise or, or things. Um, what percentage would you say is from planet 13 and what percentage is from other, uh, other venues and retailers or growers in the, in the state?

Speaker 3: 7:26

Uh, great question. So pre COVID by 90% of our product mix was outside vendors, 10% being in house that is now we're boosting as we grow our in house brands, that's boosted up to right in the 20, 25% range, maybe a little higher and some of the skews, but we're going to continue to grow that. Um, but again, we know given the amount of product we, we moved through the facility, uh, in, in our customer's desires, they want to have variety. They want to have a mix. So we're going to continue obviously to use third party vendors, you know, going forward. But our goal is to try to get, uh, our, our branded products, um, in the store representing 30, maybe 40% of our revenue.

Speaker 2: 8:11

Let's, uh, let's talk more about your in branding, uh, your in house, uh, random products, uh, what is, what are the popular ones or what devices did you find that people are, are gravitating towards and has there been a change, um, in those types since pre COVID?

Speaker 3: 8:30

Well, it's interesting. Yeah, there's been an overall shift in the market, more gravitating back towards flour. So pre, um, you know, we would see probably 70% of our product mix would be non flowered B you know, vapes, um, you know, um, anything that was a non flour product. We've seen the reverse of that now where we're seeing a lot more flour, but on our product lines, our in house brands, our flowers do exception. Well, our medicine branded flowers, we cannot keep in stock. We recently acquired another growth facility to meet that demand so we can expand and meet it

Speaker 2: 9:09

Really only, only at 13, it's actually a quite very,

Speaker 3: 9:14

Yeah. And we're continuing, yeah, we're looking at other opportunities as we speak. But what we did is we rolled out our Hawk, I mean, line initially, and that's, you know, infused gummies and like five flavors. And that immediately grew to one of the top skews, you know, for, for gummies in the state, if not the top and same with in our other. And now we just launched our, it was originally under our LeSean brand. We've rebranded that as a hot beverage line. We just put that out into the market, uh, last week. So, you know, getting back to all, we've been very pleased with that. Um, our, our chocolates, um, have done exceptionally well. Um, dreamland is, um, just sells great in the store, which is unusual in the middle of summer. You're selling chocolate bars. Um, but as we're very excited now we're in 30 States. And, uh, you know, frankly the response from the consumer has been fantastic and we knew it would be, and we're going to continue to grow on that. Our trendy lines are doing exceptionally well, leaf and vine. Um, so we've got, uh, a nice variety of product mix that we're manufacturing in house and selling here and in the wholesale markets around about,

Speaker 2: 10:25

I'm curious, and I kind of want to get into, um, tourism. And like I said, I've traveled to Las Vegas a few times. And, um, yeah, it's a, it's a tourist. Uh, it's a tourist destination. I'm thinking more from California to Nevada and the interstate travel and the effect on business. How has that been? And

Speaker 3: 10:51

Yeah, it's changed dramatically. So, you know, pre COVID, we were seeing four and a half million people a month come through the airport, a drop down as low as a million. We've seen a bounce back. Now, the latest numbers I saw about 1,000,006, I think it was July. So it's trending in the right direction, but it's, you know, it's light years from where it was pre COVID. It's going to take a lot of the California traffic. The road traffic has ticked up considerably. I look at the room occupancy rates and about a daily basis, or I do look at them and, you know, we were seeing occupancy levels, pre COVID in the 80, 90% range routinely. Now, midweek, you're seeing, you know, mid to high teens, low twenties on the weekend, you'll see, you know, they can get upwards of 50 or a hundred percent of their open rooms. We've got a long way to go. It has been very challenging, very difficult. And it wasn't until last week that bars were actually able to open again. Now, with that being said, for us, we've had record traffic and record revenue in June, July, or June, July, August to just it's really come back, um, in a big way for us. So we're, we're very appreciative of that. Very excited to see those numbers and that traffic. And, you know, we think it'll continue. We're really a destination. You, you kind of hit it on the head at the outset of the interview. This is much more dispensary it's entertainment, and it is a destination. And now we've got a fabulous restaurant here in house that is really gaining traction and, um, you know, people love it now, they're coming here for the restaurant too. And you know, so now that things are moving in the right direction, you know, we're taking a real hard look at actually expanding the facility and the dispensary and bringing other amenities in, um, you know, getting them back on track. So we're excited about,

Speaker 2: 12:51

Um, I have a note here, uh, telling me from, uh, from our, uh, from Mark, um, let's talk a little bit about the bought deal and it was like 40 to 50 million in cash afterwards. Why, why did you do this bot deal?

Speaker 3: 13:09

Well, for a couple of reasons, we want to build a war chest to take advantage of, because there are a lot of deals out there and, you know, we're looking to do acquisitions. We're looking to bring, um, uh, creative opportunities in house, you know, into our portfolio and we need to move quickly. And one thing we discovered early on, um, Cassius King, particularly in this market. So it's nice to be well positioned, to take advantage of those opportunities as they present themselves. And we are looking, and they're not withstanding COVID and the travel restrictions, we're spending a lot of time looking at a few key markets that we want to be.

Speaker 2: 13:49

Are you able to tell us which ones,

Speaker 3: 13:51

Well, it's no secret. Yeah. Some of them, you know, we obviously want to look for these coasts really bullish on longterm prospects in Massachusetts. We've taken a hard look at Michigan. We've taken a look at Illinois. So some of those States, you know, have been on our radar for quite some time, you know, with there's no secret there, but it has to be the right opportunity. And for us, we've got a, you know, a checklist that we put together some time ago. And if, uh, if the opportunity can't, you know, we can't check every box and we'll pass on it. And perfect example of that is our Santa Ana expansion. You know, we spent, we looked at probably over a hundred deals or potential deals in California before we landed on that. And, um, it took us a long time, but it was the right location, gave us everything that we need, you know, to build a Superstore type facility in that market. So we're real excited about where that's going to go.

Speaker 2: 14:47

So, uh, covert has forced you and forced the, to, to, to pivot, to change, to broaden with when things were turned back to normal or somewhat normal. Um, do you see yourself keeping this line, this, this new, this new track, or do you see it reverting back to how you were doing business or do you see some sweet combination of the two?

Speaker 3: 15:19

Well, I think it will be a combination. Like I said, the delivery and the curbside programs we have in place. Now, those are, those are entirely new revenue streams for us. It's like having another dispensary actually. Wow. And as we move in, you know, we're working now to reopen our medicine dispensary, which is our original dispensary. We're going through the local government permitting process there. So we hope to have that open, you know, sometime in November of this year. So that'll give us an opportunity to go back in and cater exclusively to the local customer that uses our facility, you know, to and from work. So, and then of course, Santa Ana, as we build that out, you know, we hope to be, um, you know, hope to have that operational, you know, sometime in the first half of next year. And that's going to be a game changer. I mean, it's, the design is probably about 99% complete to be pulling permits here shortly. But again, in California, we want to create a destination. We want to place that, you know, that 50 million plus visitors going to orange County every year that, you know, we can draw from them as well as, you know, the 5 million people right in orange County and the 12 million in the greater Metro area. So we want to create something special that drives traffic. That is a destination. It's more than just a dispenser.

Speaker 2: 16:42

Um, and as we, as we wrap up the name, I mean, I know the story, but the name planet 13,

Speaker 3: 16:48

Right. Well balance. So it was really just a function of sitting around, talking about, you know, what can we do that would show con connotation of being massive, great, huge. And while planet, you know, I, you hear the word or, you know, you hear the word planet, you think massive. So 13 is really simple. That's the 13th letter of the alphabet M for marijuana planet marijuana. And, um, so, you know, we did the same with medicine and it was a, uh, we, we turned the 13 sideways and call it him for medicine, marijuana. We did the same as we morphed this into a larger platform with recreational uses. So find out marijuana

Speaker 2: 17:34

Well, uh, from, from my planet to yours. Um, I just wanted to say, uh, thank you, uh, not only for, uh, for during this interview, but for also being listed on the CSE, being a great advocate of the CSC. Um, we wish you and your family and all your colleagues and everybody, uh, under the planet, 13 banner, and as well as in the state of Nevada, uh, the best of luck, health, wealth, and prosperity going forward. And if there's anything you ever need from us, um, just, just let us know. Well, I want to reciprocate because the CSC has been a fantastic partner for us from day one. And we wouldn't be where we are now as a public company without that vehicle. It means a lot to us. It's our pleasure. And, um, Robert, I just, I just want to say, thank you. This has been your host Barry Miller, another episode of hashtag finance. And today I was here with planet 13. Thank you. Have a good day,

Speaker 1: 18:51

James here reminding you that if you just enjoyed this episode of hashtag finance, there's a lot more, make sure you subscribe to this show available on Apple podcasts, Spotify, SoundCloud, Stitcher, and Google podcast shows coming out at least twice a week. So please do not miss out. Also, if you're on Instagram, please, don't forget to follow us at Canadian exchange. That's all one word Canadian exchange. We're hosting live daily content with great guests, discussing the capital markets, entrepreneurship, investing, and much more, and finally feel like video. Please subscribe to CSC space TV, that CSE space TV on YouTube. You can find more great stuff, including exclusive series content like cannabis month, 2020, and our new series investing in psychedelics as always. Thank you for listening.