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Edited Transcript of PLTH.CD earnings conference call or presentation 1-Jun-20 9:00pm GMT

Q1 2020 Planet 13 Holdings Inc Earnings Call

Toronto Jun 23, 2020 (Thomson StreetEvents) -- Edited Transcript of Planet 13 Holdings Inc earnings conference call or presentation Monday, June 1, 2020 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Dennis Logan

Planet 13 Holdings Inc. - CFO

* Larry Norman Scheffler

Planet 13 Holdings Inc. - Co-CEO & Co-Chairman

* Robert Allen Groesbeck

Planet 13 Holdings Inc. - Co-CEO & Co-Chairman

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Conference Call Participants

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* Adam Altberg

Bank of Montreal - VP & Portfolio Manager of Nesbitt Burns

* Doug Cooper

Beacon Securities Limited, Research Division - MD and Head of Research

* Gregory Thomas Gibas

Northland Capital Markets, Research Division - VP & Senior Research Analyst

* Robert Joseph Burleson

Canaccord Genuity Corp., Research Division - MD & Analyst

* Mark Kuindersma;LodeRock Advisors Inc.

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Presentation

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Operator [1]

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Hi, everyone. Welcome to Planet 13 Holdings 2020 First Quarter Financial Results Conference Call. As a reminder, this conference call is being recorded on June 1, 2020. (Operator Instructions) And I would like to turn the call over to Mark Kuindersma, Head of Investor Relations for Planet 13. Please go ahead, sir.

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Mark Kuindersma;LodeRock Advisors Inc., [2]

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Thank you. Good afternoon, everyone, and thank you for joining us today. Planet 13 Holdings' first quarter 2020 financial results were released today. The press release, financial statement and MD&A are available on SEDAR as well as on our website, planet13holdings.com.

Before I pass the call over to management, we'd like to remind listeners that portions of today's discussion include forward-looking statements. There can be no assurances that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results of the events predicted in these forward-looking statements may differ materially from actual results or events. Risk factors that could affect results are detailed in the company's public filings that are made available on SEDAR and we encourage listeners to read those statements in conjunction with today's call.

The forward-looking statements in this conference call are made as of the date of this call. Planet 13 disclaims any intention or obligation to update or revise such information except as required by applicable law and does not assume any liability for disclosure relating to any company mentioned herein.

Planet 13's financial statements are presented in U.S. dollars and the results discussed during this call are in U.S. dollars, unless otherwise indicated.

On the call today, we have Bob Groesbeck, Co-Chairman and Co-CEO; Larry Scheffler, Co-Chairman and Co-CEO; and Dennis Logan, CFO.

I will now pass the call over to Larry Scheffler, Co-Chairman and Co-CEO of Planet 13 Holdings Inc.

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [3]

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Thanks, Mark. Good afternoon, everyone, and thank you for participating in our first quarter call. Even in the current environment, Planet 13 has demonstrated in this position as one of the top operators in Nevada. On our last call, we're reacting to daily developments in the fight against COVID-19, and I'd like to commend the Planet 13 team for their hard work and execution on the pivot to a delivery-only model. While we generated almost no revenue in the last 2 weeks of March as all operators were adjusting to the new reality and significant uncertainty, the team quickly turned a negative into both short-term financial results and further long-term competitive advantages. We have strengthened and grown our local customer base, increased the profile of our in-house brands and broadened our delivery capabilities, thereby enhancing the long-term growth profile of the SuperStore. And we achieved this while maintaining balance sheet strength and setting the company, not only for short-term through the phased reopening of the SuperStore alongside all Nevada, but also for future growth in California.

In Q1, the SuperStore generated $16.8 million in revenue and $2.5 million in EBITDA, is responsible for 10.1% of total Nevada retail cannabis sales in the first quarter, our highest ever. In February, we're steadily taking share from our competitors and reached 10.9% of the Nevada cannabis sales, our highest single month. And prior to entering COVID on the back half of March, we were headed for another record month. Since March, we've increased our average daily sales from $10,000 pre-COVID to over $100,000 per day as of the end of April, while shifting to serving only local customers with a complete elimination of tourist traffic in Las Vegas. We've implemented the same-day ordering throughout the Las Vegas Valley and improved our customer experience week-over-week through April and the beginning of May. While that doesn't go all the way to replacing the $200,000 per day we were generating at our peak pre-COVID. It's a fantastic result, and we're already seeing signs of a gradual return to normalized activity.

On May 1, the state implemented curbside pickup, then on the 9th, dispensaries were allowed to have 10 people in the store. And this week, we're seeing some casinos start to reopen. This is a positive sign for the SuperStore, which is really designed to drive consistently high traffic while offering the best cannabis-related experience anywhere in Nevada, and our view, the U.S. In short term, the reopenings have increased competition statewide as smaller dispensaries that couldn't handle logistical problems associated with deliveries when they were allowed to reopen, often offering extremely discounted products.

However, despite this competition, I'm proud to say that we've been able to keep that $100,000 per day run rate and actually increased it even with the stiffer competition and rules that disproportionately hurt the SuperStore. To put it in context, only allowing 10 people to enter the footprint as large as that of the SuperStore, which means more than 1,000 feet between customers. Needless to say, we don't think restrictions such as this will last very long. We expect a more proportional social distancing model like we've seen in other jurisdictions to ultimately prevail. Planet 13 was designed to drive tourist traffic based on a premium experience with corresponding margins.

We've successfully proven our ability to win customers in an environment where the SuperStore's largest strengths, location and experience are completely removed and turned into disadvantages. Customers are choosing Planet 13 daily for our product selection and customer service. And these are aspects that will put us on an even stronger footing moving forward. Not only have we been able to win new customers, we've kept them. We are seeing multiple visits and a strong retention rate for our delivery service, with 40% of our customers choosing delivery today.

I'll let Bob talk a little bit more about Santa Ana. But I'd just say that our experience with delivery will definitely be very useful in California when we open. With that, I'll pass it off to Dennis to discuss our financials.

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Dennis Logan, Planet 13 Holdings Inc. - CFO [4]

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Thanks, Larry. Before I begin, I'll just remind everyone that all numbers discussed today on today's call are in U.S. dollars unless specifically stated otherwise. As Larry mentioned, we've moved our average sales from about $80,000 in April to over $100,000 per day in May with positive momentum in the back half of May. We've been able to maintain our margins in the high 40s while competing for a local customer, who is far more price-sensitive than our usual targeted tourist customers. At these levels, we are near breakeven on a cash flow from operations basis.

As of March 30, 2020, we had $13.9 million in cash, up from $12.8 million as of December 31, 2019. Cash increased as a result of $2.4 million in positive cash flow from operations at about $1 million in warrants that were exercised prior to March 31 closing with an offset of about $2 million in CapEx that was spent as the final payments were made for previous dispensary improvements and the purchase of additional delivery vehicles in the end of March to ramp up our delivery fleet.

Since March 31, we have funded an additional $800,000 on the closing of the Santa Ana acquisition and have received over $2 5 million from warrant exercises. With additional exercises of warrants occurring daily. As of May 31, 2020, there were 6.3 million warrants left to be exercised by June 11, 2020, at a strike price of CAD 1.40. Our balance sheet remains strong with effectively no debt, which allows us to complete the balance of our expansion of Santa Ana location and to weather any potential further impacts from -- that might be caused by a continuation of COVID-19 crisis.

In Q1 2020, as Larry mentioned, we generated $16.8 million in revenue, up from Q4 2019 and year-over-year increase of 21.7%. We generated these strong results despite practically 0 revenue in the last 2 weeks of March as Las Vegas put in place strict measures in response to the COVID-19 crisis.

Adjusted EBITDA for the quarter was $2.5 million and largely flat sequentially. Adjusted EBITDA margins decreased slightly as the company incurred expenses without the corresponding revenue during the last 2 weeks of March.

Gross margin came in at 54% which was slightly lower this quarter than the previous quarter as the company tested at new price points to drive higher overall gross profit dollars. We also did not charge product placement fees for the month of March in the SuperStore as it was effectively closed during the last 2 weeks of March.

Our gross margin in Q2 is expected to be in the high 40s to low 50s, depending on when the tourist traffic comes back in June. And the company traditionally offers a discount to local Nevada residents who made up 100% of our revenue thus far in Q2. As Bob -- sorry, as Larry had stated earlier, the Strip is starting to open and we expect the tourist traffic to start to come back as scheduled sort of June 4 as the date. And so depending on how that traffic goes for the balance of June, that will determine where our margins end up.

We are working with our vendors right now to determine when the correct time to begin charging the product placement fees again and expect that to happen sometime in the back half of June or the first part of Q3. Sales and marketing expense was $1.4 million this quarter, which was down slightly as a percentage of revenue as the company continues to gain traction and refine its marketing efforts. Looking ahead to Q2, sales and marketing expense is expected to be lower than Q1 as the company replaced its traditional marketing aimed at the tourist customer with online text platforms aimed at the local customer to drive that local traffic.

We spent $5.5 million in G&A in the quarter, up from $5.3 million last quarter. And overall, we've done a job of mitigating the effects of COVID-19 and preserving our balance sheet. We're in a good position to build out California and to continue to build out our position in Nevada.

And with that, I'll pass the call over to Bob.

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [5]

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Thank you, Dennis, and good afternoon, everyone. As mentioned earlier, casinos are starting to reopen this week. And while it will take some time before we see the numbers that we saw prior to the crisis, I think it's fair to say we are moving in the right direction. There is significant pent-up demand for entertainment experiences. And given the fact that roughly 3.7 million people fly from California to Vegas each year, with many more making the drive, which overall represents about 20% of Las Vegas' tourist traffic, we could see meaningful traffic come back even if people are staying off of planes.

As dispensaries across the state have started opening over the past few weeks for limited in-store sales, we started to receive wholesale orders that were canceled when COVID began, and we are pleased to announce that we are now in 13 dispensaries statewide.

Our branded products are performing quite well. Our in-house brands represented approximately 20% of all products sold in the SuperStore in February and the HaHa gummy brand was the second best-selling brand over that period in any category.

Since switching to delivery-only, our brands have actually grown making up about 27% of sales in May. So now moving on to Santa Ana. We, again, are very pleased to have closed the transaction and are moving forward with that expansion. We've long believed that Southern California was the natural location for Planet 13 to expand given the volume of visitors Las Vegas receives each year from California. The Planet 13 brand is already known in Southern California, and this store will continue to advance our goal of being a nationwide destination in premium cannabis retail brand.

The location we found in Santa Ana is supported by very similar attributes to the SuperStore location in Las Vegas. It is a large building in a light industrial commercial area. It is close to the prominent tourist destinations, and most importantly, it is on a major thoroughfare and has ample parking. We are excited to be in Santa Ana, specifically. We had a number of city officials travel to Las Vegas to our SuperStore and they were very supportive of the concept. We believe very strongly that once we reach run rate in this location, it will be one of the highest grossing dispensaries in California, similar to what we have demonstrated in Nevada.

By renegotiating the deal, we save $5 million, almost enough to cover the $6 million budget we set aside to renovate the building and bring the dispensary area up to the Planet 13 level of excitement and quality. We've transferred the license and are well underway with the final plan and permitting. I'm not going to give a set opening date as we're all aware of how easily other factors outside of our control can impact the timing, especially now with COVID.

As we mentioned on our last call, we are also engaged with potential counterparties that could represent tuck-in acquisitions in Nevada, where we can increase revenue or margin without the need for any large capital investments or corporate SG&A increases. We believe COVID has created some interesting opportunities in the state and we are evaluating them using our traditional Strip criteria.

While none of us would certainly want to go through COVID-19 again, it was the nearly perfect storm to stress our business model, and we are emerging stronger. Our team has done a great job of making proactive improvements to our operations that have introduced new customers and preserved our cash.

As Las Vegas begins to open and business activities begin to normalize, we believe that we have become stronger, leaner and we'll continue to deliver outstanding long-term value to shareholders with incremental value added by additional local customers and a robust delivery offering.

With that said, I'd like to thank everyone for participating in today's call. And I'd now ask the operator to open the lines for questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question will be from Bobby Burleson at Canaccord.

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Robert Joseph Burleson, Canaccord Genuity Corp., Research Division - MD & Analyst [2]

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So yes, my first question would just be, we've seen some dispensary robberies and burglaries, especially in California. And just wondering kind of what the security situation is at the Las Vegas store and the not-yet-built-out asset in Santa Ana?

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [3]

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Bobby, this is Bob. Yes. We're obviously continuing to monitor that very closely. We're fortunate in that metro -- the Metropolitan Police Department has been very aggressive in monitoring protesters. And they've actually set up a command center here on the Strip that's probably half walk away from us. So they're in very close proximity. We, of course, ramped up our security personnel considerably and we'll continue to monitor the situation as desired. Now so far, we're not aware of anyone in Southern Nevada, from a dispensary standpoint, that's been impacted. But again, given our proximity to the command center and our security force, we feel comfortable that we can keep things under control.

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Robert Joseph Burleson, Canaccord Genuity Corp., Research Division - MD & Analyst [4]

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Okay. That's good to hear. And then in terms of the Nevada expansion, you mentioned that there's some attractive assets, given the pressure some businesses might be under in Nevada that you guys are exploring in terms of maybe expanding in the state. And given your high exposure to tourist dollars at the current location, are you considering maybe diversifying a little bit into operations that have more local customers or in areas outside of Las Vegas?

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [5]

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Well, we're looking at -- of course, we're looking seriously at any type of all the cultivation because we could use 25,000 to 50,000 more square feet just to supply more from -- to the Las Vegas dispensary Planet 13. We currently have 50 vendors we buy from. So our products are the most popular, but we only have 15,000 square feet. So that's a big part of what we're looking at, but we're looking at a deal, and I mean a deal where it's pennies on the dollar.

We think they're out there. We've got some in our sights, we've got some people contacting us. We think we'll get something done and to the benefit of our shareholders and to us. The only, probably, dispensary we've be looking at sale is our license to reopen Medizin. But with that opening, that's another reason why we need more cultivation. So probably on our biggest list right now is the cultivation, the right one, the right equipment and so on.

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Operator [6]

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Next question will be from Adam Altberg at BMO.

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Adam Altberg, Bank of Montreal - VP & Portfolio Manager of Nesbitt Burns [7]

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Wow, great job. Can't believe what you must have gone through, through all of this to get to this point. So congrats to the entire team there and to all the staff, so really good job. I just wanted to say that.

I've got a question. Actually, Larry, you answered my question about license on the Medizin dispensary. But from a broader perspective, what is the status right now? Even if you were able to source a license and purchase it, what is the status in terms of transferability?

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [8]

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Adam, this is Bob. Let me take a stab at this. As far as transferability, the state initially put a hold on transfers and that is still in place. Now it's my understanding that once the Cannabis Control Board is fully constituted, and they are ready to go, which is going to happen this month, they'll revisit walk-in transfers through here in a fairly expeditious manner. So I don't see that being a negative for us if we were to find the right assets. We're confident that we could move that through the regulatory process in a fairly timely fashion.

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Adam Altberg, Bank of Montreal - VP & Portfolio Manager of Nesbitt Burns [9]

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Okay. Great. And secondly, I know that you went out and purchased a whole bunch of trucks and so on for delivery purposes and now things have progressed a little bit as indicated by curbside now and the dispensary pickup. Are all of the delivery trucks being utilized still? And has there been any thought process or any discussions with casinos on the Strip in terms of possibly repurposing some of those vehicles to do client pickups or client shuttles? Because I know that there is a shuttle, but possibly an opportunity to establish some of those relationships or re-up that as an added kind of service for the casinos.

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [10]

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Adam, we have not thought of that. It is very touchy situation. Of course, we can't label the cars. We do a lot of pickups on the Strip only because the casinos -- you're really not supposed to be delivering cannabis on the Strip or anything. They'll let us drop people off from here, which is how we typically use the shuttles, more than we do for pickup that we originally purchased them for. We do, do some pickups where we pick them or when we drop people off. But most of it, the people are asking rides to get back, but they're taking Ubers and Lyfts and taxis to get here. There'd be 10 vehicle -- we probably got about 10 vehicles right now. We're talking about moving down to Santa Ana when we open. We got such a good deal on them and they're paid for right now. So we'll probably put about 10 of them, maybe 8 of them into our storage in here, saving quite a bit on insurance alone and upkeep and drivers and/or shuttle those sparks down to Santa Ana, which we think would be twice as big on delivery as it is here anyway, talking to other dispensaries down there and other consultants in the California area. Delivery is a lot larger than it is here in Las Vegas. Again, really because our customers are mostly tourist customers and we can't deliver to the hotels anyway.

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [11]

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Adam, if I could add to Larry's comments, a number of additional vehicles are going to be repurposed in our distribution arm of the company. So as you know, we've ramped up our wholesale business considerably. So we've got distribution internally. So a number of those vehicles will be used to service those accounts.

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Dennis Logan, Planet 13 Holdings Inc. - CFO [12]

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And then I'd also add, Bob, it's Dennis. I'd also add, like we intend to keep at least 50% of our revenue from locals that we're making right now kind of post-COVID as things normalize. So we will keep a bunch of those vehicles active in the delivery. Even with the current situation of in-store sales and curbside pickup, delivery still makes up a good 1/3 to 40% of that traffic. So there's still some decent demand for delivery, and we think that continues on after COVID from the local customers.

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Operator [13]

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Next question will be from Doug Cooper at Beacon Securities.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [14]

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Most of the stuff has already been covered off. A couple of things. Just to clarify, you said that your branded product represent how much of your total sales in the quarter?

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [15]

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Is that a Dennis question?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [16]

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Yes. I know, it's in Bob's comments, sorry, hang on. It was 27% of sales in May. So as we ramped up through that -- through May in terms of the delivery, et cetera, it went to 27%, probably started -- from prior, it was at 15% to 20% ramping. So in between April, it's somewhere between 15% and 27%.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [17]

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But in Q1. I'm sorry, it was like -- there's ramp up as well…

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Dennis Logan, Planet 13 Holdings Inc. - CFO [18]

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Sorry, Q1. I'm going to have to get that to you, Doug, in terms of Q1. I'll get that to you as soon as the call is over.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [19]

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Okay. $2.1 million CapEx in Q1. What was that for? Was that -- I mean, obviously, you bought a few...

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Dennis Logan, Planet 13 Holdings Inc. - CFO [20]

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Yes. We bought some vehicles. And then if you look at our December statements, we had construction commitments still outstanding at December until the CapEx was just paying off of some of those commitments that were already in place in December that we had -- the work had been completed, but we hadn't paid for it yet until it had been capitalized on to, so it showed up in Q1.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [21]

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And just to confirm, is there anything major left to do at the facility in Las Vegas in terms of CapEx?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [22]

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It's going to really depend on this cannabis commission and whether or not we can build a lounge or the night club.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [23]

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Right. Let's assume no.

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Dennis Logan, Planet 13 Holdings Inc. - CFO [24]

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Yes. So if that assumes no then we do have a couple of third-party operators of related ancillary businesses that are looking at some space. So there may be some small CapEx to finish out the gray shell for 1 or 2 of those, but they're largely done as well. So there's not really any major CapEx left at that SuperStore outside of those 2 night clubs and a lounge.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [25]

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Okay. And Dennis, did you say subsequent to the quarter, you got $2.5 million in from warrant conversion?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [26]

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Yes, the USD 2.5 million from April 1 to May 31. There's still 6.9 million warrants outstanding at $1.40.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [27]

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Do you say 6.9 million or 6.3 million?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [28]

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6.39 million -- sorry, 6.299 million, so 6.3 million. Yes. That's $1.40.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [29]

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Okay. And Bob, I know you said you don't want to be held to an opening. But is there any reason to think that you won't start construction immediately in California once all the planning and all that kind of stuff is done?

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [30]

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Well, Doug, that's our intent. But again, COVID has had a ripple effect throughout the economy and municipal government is not immune to that, just finding the personnel the process, permits and applications in a timely manner, we're finding, could be a problem. But that said, we're moving forward design. We're very confident that once this thing is fully designed and once we engage the contractor, it will move quickly. It's just getting to the right point.

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [31]

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Yes. This is Larry. I'll just add to that. Our intention is to, yes, start as soon as we can. There's no other reason for delay. We're into our third week working with our -- we put our team back together, majority of the team with designers and engineers and so on. They've already made trips down to Santa Ana. We're meeting once or twice a week, designing everything and moving full steam ahead.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [32]

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Okay. Let's assume when you put -- when you finally put the shovel in the ground, how long would the process take assuming it's not interrupted by any extraordinary circumstances. Is this a 6-month build, a 4-month build? Can you give us any indication on that?

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [33]

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I would say, I'd put it in the 6-month range, give or take a month.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [34]

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So we're sitting here at June 1. Is it safe to say you should be open in Q1 2020? Is that -- 2021? Is that -- not to put words in your mouth.

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [35]

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That's a good try, Doug. I'm not going to go there. But we're going to move it as aggressively, as Larry said, as we possibly can.

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Doug Cooper, Beacon Securities Limited, Research Division - MD and Head of Research [36]

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Okay. Maybe you could just give us a bit of color in California market. The market has been a bit in disarray, with one of the leading players are obviously having some significant difficulties.

So in Santa Ana, in and of itself, who do you -- is there any -- who are the strong operators within your sort of drawing range, if I can call it that? And what percentage of your revenue do you think would be derived from walk-in traffic versus delivery?

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [37]

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It's a good -- that's a good question. I would say we were doing 14% here delivery. Our locals, I guess, I should say I would think it would be somewhere between 25% and 40% for delivery. And I think the rest would probably be walk-in, that's our guess right now talking to other dispensary owners. The other dispensaries are really all about the same size between 2,000, 3,000 square feet, very limited on parking. One, we've encountered at 15 parking spaces, another with 125 parking spaces. So we really don't consider really any of them competitors, kind of like we don't consider really anybody in Las Vegas a competitor because we're so different than any other one in town will be so different than any other one in Santa Ana in the area around us. So we don't really think about it that way.

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Operator [38]

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(Operator Instructions) And your next question will be from Greg Gibas at Northland Securities.

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Gregory Thomas Gibas, Northland Capital Markets, Research Division - VP & Senior Research Analyst [39]

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Congrats on the quarter. So we see the pickup in tourists and business travel again. Should we just continue to think about the business generating roughly $100,000 per day? Or are there other levers, I guess, that can take near-term revenues higher? And if you could -- sorry if I missed this on the call, but if you could talk a little bit about how order volume and then average ticket sizes have trended this quarter or Q2? And maybe how does it differ between curbside pickup and delivery?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [40]

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Sure, Greg, this is Dennis. So if COVID were to stay in place, then, yes, like the $100,000 roughly -ish a day. I mean it's peaked at $135,000, $140,000 approaching $150,000 and then it drops down during the week. As the lockdown sort of entered its later stages, the average tickets were falling somewhat from $160,000, $165,000 down to that $110,000 level as people were running out of money. So they were telling our drivers, they wish they could buy more product, but they didn't have enough money this week to do so. So people were hurting. I think it's good that the economy is opening back up, get people back to work and get the cash flowing again into the coffers. But if it was to continue as is, then yes. As Bob mentioned on the call, the other lever that we have to drive revenues is that we have our wholesale products in 13 dispensaries. We expect that to continue to grow as the demand for our products continue.

We will be launching the beverage brands, releasing them on the market in short order. So that's another driver of additional revenue, I think. And if we can continue to get those products into other dispensaries, then I think we'll see the wholesale revenue tick up.

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Gregory Thomas Gibas, Northland Capital Markets, Research Division - VP & Senior Research Analyst [41]

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Okay. Sure. That's helpful. And I guess kind of a follow-up there is the overall impact of the pandemic has had on your wholesale prospects going forward. I think it was Bob had said you're in 13 stores in the state right now. And it sounds like cultivation and production really haven't been affected too much, but maybe how is the storefront shutdown or at least, temporarily, how has that impacted your ability to get into additional stores?

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Dennis Logan, Planet 13 Holdings Inc. - CFO [42]

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Yes. So that shut it off. I mean, when the COVID shutdown happened and all the dispensaries were forced to close and go delivery-only, there were only a handful of us who actually could pivot fast enough to be delivery-only and the balance of the dispensaries in the state shut their doors and so that dried up our wholesale business. We kept producing knowing that we were going to feed our own machine when it reopens and feed our own products as we saw in May, the uptick in the demand for our own products. But more importantly, having inventory on hand, to really aggressively push into that wholesale market once everything opens back up. And we've seen that now that other dispensaries have been allowed to open even under limited conditions like we're currently in with that 10 people or 50% of your far rated capacity, whichever is less. And so that's gotten us into 13 dispensaries. We expect that to just continue to grow as those restrictions ease. So the wholesale business really was just starting to take off when the shutdown happened and we think we can pick back up where we left off.

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Gregory Thomas Gibas, Northland Capital Markets, Research Division - VP & Senior Research Analyst [43]

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Right. Got it. Okay. Great. And if I could just follow-up on the Santa Ana dispensary. The $6 million in CapEx that you've allocated for that opening. Are you already putting that capital to work? Or are you simply waiting for that, like a clear time line like you discussed of when the dispensary can realistically open?

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [44]

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Well, we're spending money now, Greg. So as Larry mentioned earlier, we're in the design phase. So we -- everybody has been engaged, they're moving forward. The green button has been pressed. So we're going to spend money.

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Gregory Thomas Gibas, Northland Capital Markets, Research Division - VP & Senior Research Analyst [45]

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Got it. Just waiting on the open time. Okay.

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Dennis Logan, Planet 13 Holdings Inc. - CFO [46]

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Yes. And Greg, if you look at it like a typical design, like what's designed is 10% to 20% of the overall project cost by the time you factor in all the soft costs around it. So those costs are being spent now. We haven't spent that much of it yet, but as Bob said, the button has been pushed and we're moving ahead.

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Operator [47]

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(Operator Instructions) Thank you. And at this time, gentlemen, we have no other questions. Please proceed.

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Dennis Logan, Planet 13 Holdings Inc. - CFO [48]

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All right. Operator, thank you for having the call. I think we can sign off now.

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Operator [49]

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Thank you very much. Ladies and gentlemen…

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Larry Norman Scheffler, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [50]

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Thank you, everyone.

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Robert Allen Groesbeck, Planet 13 Holdings Inc. - Co-CEO & Co-Chairman [51]

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Thank you, everybody.

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Operator [52]

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This does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.