Las Vegas vertically integrated cannabis company Planet 13 Holdings has announced their entrance into a definitive license purchase agreement with a subsidiary of multistate cannabis company Harvest Health & Recreation Inc. for $55 million, according to an AccessWire release.
Planet 13 has award-winning cultivation, production and dispensary operations in Las Vegas with additional operations in Orange County, California. The company’s mission is “to build a recognizable global brand known for world-class dispensary operations and a creator of innovative cannabis products.”
As part of the agreement, the newly acquired subsidiary of the company will be renamed Planet 13 Florida and will purchase a license to operate as a Medical Marijuana Treatment Center (MMTC) issued by the Florida Department of Health to the seller, and no other assets or liabilities.
MMTCs are vertically integrated and the sole businesses in Florida authorized to dispense medical cannabis to qualified patients and caregivers. They are authorized to cultivate, process, transport and dispense medical cannabis, and as of August 26, there were 22 companies with MMTC licenses boasting 371 dispensary locations around the state.
Planet 13 Co-CEO Larry Scheffler said the move to Florida has been a long-time coming.
“Florida has long been one of our most coveted markets with over 20 million residents, 130 million annual visitors and incredible consumer demand already demonstrated in the medical program. It was important for us to enter the market prior to a transition to adult-use to put the pieces in place to capitalize on this market in both the short and long term,” Scheffler said.
“We are excited to introduce our best-in-class retail experience and portfolio of popular products to the Florida market and to continue to build the Planet 13 brand across the United States,” he added.
Co-CEO Bob Groesbeck echoed the sentiment, saying their planning has paid off and the time to move ahead has come.
“After a lot of planning on how we wanted to approach this market, now is the time for action,” Groesbeck said. “We are well capitalized to complete the initial buildout of our cultivation and retail plan which includes a network of neighborhood stores in priority metro areas to support future SuperStores in Miami, Orlando, and other tourist destinations.
“We have a successful track record of completing large retail and cultivation build outs on time and on budget. This expertise combined with our differentiated, experience-driven retail and diverse product portfolio gives us confidence moving into the Florida market.”
The payment will occur with an initial deposit of $2 million, to be held by a third party agent upon execution of an escrow agreement as promptly as possible following that date. The transaction is subject to closing conditions, like the successful close of the Trulieve Cannabis Corp./Harvest arrangement transaction (the Florida Department of Health’s Office of Medical Marijuana Use approval for Planet 13 Florida to acquire the license) and other terms.
Florida’s vertical integration model has not always been met with open arms. Just this summer, the state’s Supreme Court was challenged by Florida-based cannabis company Florigrown, claiming that the model for the medical cannabis industry is unconstitutional. The model requires licensed cannabis companies to handle all aspects of a cannabis business themselves (i.e. growing, processing, distribution and selling of cannabis products). The challenge also argued that a cap on the number of available licenses was unconstitutional.
Others said the vertical integration model only allows for businesses with a large financial backing in order to enter the industry. Though the lower courts sided with Florigrown, the Supreme Court reversed the decision and put their rules on hold.
The Florida Supreme Court also recently rejected a proposed amendment that would legalize recreational cannabis in the state, citing the wording of the amendment as misleading to Florida voters.
