Planet 13 Exits California, Focusing on Nevada and Florida

LAS VEGAS – Planet 13 Holdings Inc., the vertically integrated Cannabis operator known for its expansive Las Vegas flagship, disclosed plans this week to sell off its sole California retail outlet and shutter its cultivation operation there, signaling a deliberate shift toward its primary strongholds.

The moves involve transferring the company’s Orange County dispensary license to an undisclosed buyer, with the deal poised to finalize in the coming three to four months pending regulatory nods. Meanwhile, the Coalinga grow facility [a 40,000-square-foot site acquired in 2021] will cease activities by year’s end. These California assets, which accounted for less than 5% of Planet 13’s total sales last year, had been draining cash and straying from the company’s profit priorities.

Co-chief executives Bob Groesbeck and Larry Scheffler framed the decisions as essential for reallocating capital to high-return areas. “We’re directing our energy where it counts most,” Groesbeck stated, underscoring a push for tighter operations amid stagnant returns from the Golden State’s oversaturated sector. Scheffler echoed the sentiment, thanking the local staff while noting the pivot would free up resources for broader efficiencies.

This divestment arrives at a moment when California’s Cannabis market grapples with excess supply and punitive taxes that have squeezed margins for even established players. Driven by ambitions, Planet 13 entered the state four years ago, but persistent wholesale price drops [down 25% year-over-year] and licensing hurdles eroded those gains. The Coalinga site, once eyed for scaled production, never ramped up to full capacity, contributing to ongoing losses estimated at $2 million annually.

From a balance-sheet perspective, the financial ripple appears contained. Sale proceeds, though modest at under $1 million, will bolster liquidity without offsetting significant revenue gaps. Analysts tracking the OTCQX-listed PLNH shares [which dipped 2% on the news before stabilizing] view this as a pragmatic trim rather than a distress signal. The company’s Florida portfolio generated over 70% of its 2024 revenue, offering substantial upside capacity in a medical-only market ripe for adult-use reform.

Critically, Planet 13’s course correction highlights a maturing playbook among MSOs: prune underperformers to fuel winners. Unlike flashier expansions that have burdened peers with debt, this step aligns with a sector-wide recalibration. By doubling down on the Silver State, where tourism drives consistent foot traffic, and Sunshine State, where ballot initiatives could unlock recreational sales by 2026, Planet 13 positions itself for steadier compounding.

Yet questions linger on execution. Regulatory delays in Orange County could stretch timelines, and the Coalinga wind-down risks short-term severance costs. Investors will parse these details when Planet 13 reports third-quarter earnings on November 12, a window into how the refocus has already bent cost curves.

For the Cannabis industry at large, Planet 13’s California exit underscores the uneven terrain of state-by-state bets. What works in Nevada’s entertainment hub falters in California’s fragmented wholesale arena. As major players consolidate around defensible turf, the path forward favors those who measure growth in dollars retained, not square footage claimed.