Planet 13 has a methodical plan to bring its Superstore model around the country.
The cannabis retailer has a very successful flagship location in Las Vegas and it has added a second one in Santa Ana, Calif., just outside of Los Angeles.
Now, the company has tentatively expanded its California footprint by reaching a deal to purchase Next Green Wave (NGW) for C$91 million ($71.8 million). Under the terms of the deal, NGW shareholders will receive 0.1081 of a common share of Planet 13 and $0.0001 in cash, for each NGW Share held.
That’s a premium of approximately 52% to the closing price and 44% to the 10-day VWAP of NGW Shares on the Canadian Securities Exchange, on the day the deal was agreed to.
What Is Planet 13 Buying?
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While the Superstore sits as the public-facing retail piece of the Planet 13 equation, each store and any accompanying Medizin dispensaries (the company’s smaller, local retail model), each location requires significant production and cultivation infrastructure. This deal helps Planet 13 ramp up those capacities without having to build them from scratch.
“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,” said 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.”
Planet 13 expects the transaction to “be immediately accretive to 2021 and 2022 EBITDA.” The company plans to retain the NGW management team.
What’s Next for Planet 13?
Planet 13 has purchased a license in Florida that paves the way for multiple locations in the state. Florida currently only allows medicinal marijuana sold to customers with a medical identification card approved by a doctor. It’s widely expected that full recreational legalization will happen in the state at some point, but there is no immediate regulatory or legislative path for that to happen.
“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.”
The cannabis retailer also has a license to open a Chicago-area superstore.
This article was originally published by TheStreet.
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