Who Will Lead The Resurgence Of The Las Vegas Cannabis Market Post Covid-19?

Who Will Lead The Resurgence Of The Las Vegas Cannabis Market Post Covid-19?

With Las Vegas set to re-open, we are highly focused on companies that are levered to this burgeoning cannabis market. Nevada was one of the hardest hit markets by COVID-19 as the tourism market dried up and this is a trend that is quickly changing.

Las Vegas officials have reported a substantial increase in the number of tourists that plan to visit in the near future and this is a trend that we are bullish on. Cannabis companies in Las Vegas are expected to substantially benefit from the return of tourism and we have been working to identify businesses that should benefit from this.

Planet 13 Reports Blowout First Quarter Financial Results

Last week, Planet 13 Holdings Inc. (PLTH.CN) (PLNHF) reported impressive first quarter financial results and the market responded favorably to these numbers. The quarter ended on March 31st which includes a few weeks of numbers that were impacted by COVID.

During the pandemic, the Las Vegas cannabis retailer benefited from being able to quickly pivot to a delivery-based model. Which quickly picked up the slack of the business that was put on pause at brick and mortar retail due to the pandemic.

Planet 13’s one location in Las Vegas accounted for more than 10% of all retail cannabis sales in the state in the quarter. This represents a record amount of market share for the company in the Nevada market and believe that our readers need to be aware of this. Over the long-term, we expect the company to benefit from its ability to stay operational during the COVID pandemic and are bullish on the growth prospects that are associated with the operation.

One of the reasons we are excited about Planet 13 is due to the strength of the management team. During the pandemic, the management team laid out strategic objectives that were centered around maintaining a solid balance sheet, strengthening and growing its local customer base, expanding alternative sales channels, and positioning the business for long-term growth.

During the quarter, Planet 13 generated $16.8 million of revenue which represent a more than 20% increase over the prior quarter. We are bullish on these results and expect the company to continue to record strong growth as Las Vegas cannabis retailers work to become operational. Planet 13 has a strong balance sheet and we believe that this will play an important role in the success of the business.

We believe that Planet 13 has substantial potential catalysts for growth and are bullish on this aspect of the story. Following the acquisition of a dispensary license and the closing of the Santa Ana acquisition, the company is positioned to capitalize on the California cannabis market and this is an opportunity that we are excited about.

1933 Industries is Seeing Increasing Demand for Products

1933 Industries (TGIF.CN) (TGIFF) was an early mover on the Las Vegas cannabis market and is an opportunity that we continue to be excited about. During the last month, the company has bounced back and the shares have come well off its 2020 lows. We are favorable on the trend reversal and believe that our readers need to put this opportunity on their radar.

During the last year, 1933 Industries has been nothing short of an execution story and believe that it is reaching an inflection point. Two major areas of emphasis for 1933 Industries have been the move into a substantially larger cannabis cultivation facility in Las Vegas and the expansion into California.

Due to 1933 Industries’ leverage to the Las Vegas cannabis market, the business was negatively impacted by COVID and we believe the market overreacted to this. As the city starts to re-open, we expect the cannabis retailer to benefit and will monitor how the business benefits from a rise in tourism.

Going forward, we expect to see an improvement in sentiment as it relates to Las Vegas cannabis businesses and expect this to be a catalyst for companies like 1933 Industries. Now that casinos are re-opening, we expect to see a spike in consumer demand and the business has prepared for this. During the pandemic, 1933 Industries has continued to cultivate, harvest, produce concentrates and are seeing increased demand in the market.

At current levels, we believe that 1933 Industries has a compelling valuation and a favorable risk-reward profile. When compared to other Las Vegas operators, the company is trading at a substantial discount and we find this to be worth highlighting. As 1933 Industries ramps up operations, we expect to see the business to bounce back and believe that it is an opportunity to be aware of.

Share

Share - Facebook


Share - Twitter

Authored By

Anthony Varrell

Anthony Varrell is Managing Director of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

Published at Mon, 08 Jun 2020 11:31:57 +0000

Comments are closed.