A recent equity research report by Pablo Zuanic from Zuanic & Associates highlights the substantial potential of Planet 13 Holdings (PLNH) in the Florida cannabis market following its acquisition of VidaCann. The report underscores Planet 13’s strategic focus on growth in the Sunshine State, particularly in anticipation of potential recreational cannabis legalization by mid-2026. Zuanic states, “PLNH is up 26% in the last 30 days as investors begin to appreciate the stock’s FL upside. We see room for the stock to continue to outperform.” The report cites the upcoming Florida cannabis legalization initiative, known as Amendment 3, which will appear on the November 2024 ballot, as a key driver of this potential growth.
The acquisition of VidaCann for $63.4 million on May 10, 2024, has enabled Planet 13 to expand its presence in Florida. The company plans to open six additional stores by the end of 2024, with three already slated to open shortly, including one in Ocala. Zuanic notes that the rebranding of all VidaCann stores under the Planet 13 banner and the introduction of new product lines, such as HaHa edibles, are central to this expansion strategy.
In the second quarter of 2024, VidaCann stores sold an average of 1.86K ounces of flowers per store, signifying a 120% year-over-year increase. However, these figures are currently below the state average of 2.34K ounces. Similarly, extract volumes per store grew by over 30% year-over-year to 3.26 million milligrams, though this also falls short of the state average of 7.06 million milligrams. Zuanic estimates that by year-end, the 32 Florida stores could generate a combined annualized revenue of over $70 million, assuming the current performance gap relative to the state average is closed.
Zuanic’s report posits that Florida could become a significant driver of both revenue and profitability for Planet 13. The company’s gross margins in Florida currently stand at approximately 50%, with expectations for improvement through enhanced operational efficiencies. The report suggests that if Florida transitions to recreational sales by July 2026, Planet 13 could achieve an annual sales run rate of $225 million by the end of 2026. This projection, based on a 20% EBITDA margin and a 10x EBITDA multiple, could result in an enterprise value of $450 million, potentially translating to a share price of $1.30, exceeding the current level by more than double.
The potential growth of the Florida cannabis market and Planet 13’s strategic position within it present a compelling investment opportunity for investors seeking exposure to the burgeoning cannabis industry. The legalization of recreational cannabis in Florida, coupled with Planet 13’s expansion plans and operational efficiencies, could drive significant value creation for the company and its shareholders.
