Planet 13 Holdings (OTC:PLNH) Inc. (PLTH), the cannabis company known for its SuperStore in Las Vegas, reported a revenue increase in its third-quarter earnings call for 2024.
The company's revenue rose to $32.2 million, up from $24.8 million in the same quarter last year. This increase is attributed largely to the full consolidation of its Florida operations.
Despite a challenging consumer environment, including a drop in tourism and average spending in Las Vegas, the company managed a sequential retail revenue increase of 5% to $28.7 million. However, adjusted EBITDA fell to $1.3 million from $3.2 million in the previous quarter.
Planet 13 also outlined a multi-pillar growth strategy, aiming to open six new dispensaries by year-end and expanding its wholesale operations, including the launch of its HaHa Gummies in California and upcoming entry into Illinois.
Key Takeaways
- Q3 revenue increased to $32.2 million, with Florida operations contributing $10.5 million.
- Las Vegas SuperStore revenue faced a 3% tourism decline and a 7% drop in average spending.
- Gross profit reached $16.7 million, resulting in a gross margin of 51.9%.
- Adjusted EBITDA decreased to $1.3 million from $3.2 million in Q2.
- Six new dispensaries are planned to open by year-end, enhancing the company's retail footprint.
- The HaHa Gummies brand has been launched in California and will soon enter Illinois.
- The company holds a cash balance of $29.5 million as of September 30, 2024.
Company Outlook
- Planet 13 is focusing on expanding its footprint in Florida and Nevada.
- The company plans to leverage its SuperStore as a lifestyle brand platform.
- A complementary dispensary in Nevada was acquired for $6.9 million.
- The company anticipates continued growth into 2025, with expansion into Illinois and enhanced cultivation facilities.
Bearish Highlights
- The company faces competitive pressures and a seasonal slowdown in Florida.
- California operations saw a quarter-over-quarter revenue drop of $110,000.
- A failed adult-use initiative in Florida poses a hurdle, but the company sees growth potential in the medical sector.
- The company expects a slowdown in competitor expansion.
Bullish Highlights
- Year-over-year revenue increased by 30%.
- Planet 13 holds the third-highest market share in Nevada's branded sales.
- The company is optimistic about growth in Illinois despite challenges in California.
- Management anticipates opportunities arising from a slowdown in the competitive landscape for cannabis storefronts.
Misses
- The SuperStore in Las Vegas underperformed due to a decrease in tourism and spending.
- Adjusted EBITDA saw a significant decrease from the previous quarter.
Q&A Highlights
- The company is focusing its growth initiatives on Florida and Illinois, avoiding other medical-only markets.
- There is a strong balance sheet with approximately $29 million in cash.
- Plans are in place to recover funds from El Capitan and to finalize a settlement agreement in the coming months.
- The company is optimistic about the DEA's rescheduling announcement and potential federal cannabis reform.
Planet 13 continues to navigate the complex cannabis market with a strategic approach to expansion and brand development. The company's efforts in Florida and Illinois signal a commitment to growth despite the challenges faced in other markets. With a solid cash position and a clear growth strategy, Planet 13 aims to capture further market share and enhance profitability in the coming years.
Full transcript - None (PLNHF) Q3 2024:
Operator: Good day, everyone, and welcome to today's Planet 13 Q3 2024 Financial Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions, during the question-and-answer session. Please note, today's call will be recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Mark Kuindersma with Investor Relations for Planet 13. Please go ahead.
Mark Kuindersma: Thank you. Good afternoon, everyone, and thanks for joining us today. Planet 13 Holdings third quarter 2024 financial results were released today. The press release, the company's quarterly report 10-Q and the MD&A and financial statements are available on the SEC website, EDGAR and SEDAR+ as well as on our website, planet13.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. The forward-looking statements in this conference call are made as of the date of this call. There can be no assurances that such information will prove to be accurate that management's expectations or estimates of future developments, circumstances or results will materialize. Risk factors that could affect results are detailed in the company's public filings that are made available to the United States Securities and Exchange Commission and on SEDAR+. We encourage listeners to read those statements in conjunction with today's call. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's press release posted on our website. Planet 13 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 Larry Scheffler, Co-Chairman and Co-CEO; Bob Groesbeck, 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.
Larry Scheffler: Good afternoon, everyone, and thank you for participating in our third quarter call. I will start by discussing the performance in the quarter before turning it over to Dennis to go through our financials, and Bob to discuss our strategic initiatives. Turning to our performance in the quarter, in Q3 2024, the SuperStore generated $13.4 million. Looking at the Las Vegas tourism stats, visitors of the city were down 3% sequentially and average spend was down 7%. This mirrors what was experienced at the SuperStore during the quarter with a consumer under pressure. We're also seeing a lot of competition from Delta 9 and dangerous and toxic gating hemp derivatives that have seen rapid proliferation and our readily available mainstream channels more than ever before. This will continue to be a challenge. They will fend off by differentiating ourselves both from other dispensaries and hemp products through focusing on product quality and entertainment experience. Revenue from our neighborhood SuperStore increased to $15.4 million, a 25% sequential improvement driven by a full quarter of contribution from our Florida operations. During the quarter, we saw a seasonal slowdown from -- a Florida neighborhood network. Historically, VidaCann has experienced weaker Q3 results due to challenging summer growing conditions. As Bob will discuss later, we're already -- we've already implemented measures to address this for the future, including upgrades and improvements in their cultivation facility. This, combined with traditional seasonality for snowbirds contributed to a softer quarter, softer than we expected from our Florida operations going forward. Outside of Florida, our operations in Illinois continued to mature and grow. They were up 6% sequentially. We saw small markets related declines in Nevada and California neighborhood stores retail mainly driven by weaker consumer behavior in both markets. Between the SuperStore and our neighborhood network, we generated total retail revenue of $28.7 million compared to $27.4 million, a 5% sequential increase. We generated $3.4 million from wholesale, lifestyle and other. According to BBSA, we moved up to the third most branded sales of any company in Nevada during Q3, up from fifth and ranked second edibles portfolio sales that were led by our HaHa Gummies. This demonstrates that despite the slightly lower wholesale revenue, we've been successful in moving more of our brands through our own shelves. This trend should only improve as we closed the acquisition on additional dispensaries in Nevada. With that, I'll pass it over to Dennis to discuss our financials.
Dennis Logan: Thank you, Larry. Before I begin, I'd like to remind everyone that all the numbers on today's call are in U.S. dollars unless specifically stated otherwise. In Q3 2024, Planet 13 generated $32.2 million in revenue compared to $31.1 million in Q2 and $24.8 million in Q3 2023. The sequential and year-over-year growth was driven by the full consolidation of Florida for the quarter. For context, Florida contributed $7.2 million to our consolidated financials revenue line in Q2 2024 compared to $10.5 million this quarter. This additional contribution from Florida was partially offset by some consumer market pressure mainly in their Nevada operations that experienced the declines. Larry mentioned in his comments, lower traffic numbers and lower average ticket SuperStore were the primary drivers of the decline in our operations outside of Florida. In Q4, we anticipate revenue to be flat or slightly down in all markets with the exception of Florida. In Florida, we expect revenue will improve as we put the product quality issues we experienced over the summer months behind us. This improvement will be muted somewhat due to the closure of several stores in our Florida network for several days during the quarter due to the impacts of Hurricane Helene and Milton. In Nevada, the seasonally slower fourth quarter is expected to modestly impact top line performance in that state. Gross profit was $16.7 million in Q3 2024 compared to $15.8 million in Q2 2024. This translates into a gross margin of 51.9% in the quarter compared to 50.1% in Q2. Since Q4 of 2023, we've improved gross margin by over 400 basis points through 3 main drivers: first, by increasing the percentage of our own branded products that we're selling through our own stores. You can see that interplay in our improvement in branded product market share in Nevada and the purposeful decline in wholesale revenue in that state; second, the team has done a tremendous job across our facilities and improving yields and potency. Bob will talk about more about these improvements, specifically in Florida, which should have a meaningful impact on future quarters; and third, the inclusion of a fully vertical and higher-margin Florida revenue has also had a positive impact on overall gross margin. We are dealing with the reality of continued pricing pressure across all of our markets and are working diligently to maintain gross margins in the 50% range through continued efficiency improvements that are expected to offset pricing pressures. Sales and marketing expense was $1.6 million during the quarter, up from $1.5 million in Q2 2024. As a percentage of revenue, sales and marketing was consistent at 5% of revenue. We are comfortable maintaining this level of sales and marketing expenditure, deploying it strategically towards priorities such as wholesale growth, new dispensary openings, brand awareness and general marketing initiatives to drive consumers to our stores. During Q3, the company spent $14.8 million in G&A, up from $12.3 million spent in Q2 2024. This higher spend is directly related to the full quarter of consolidating our Florida operations. We anticipate G&A to level off with only marginal increases as we open new dispensaries both in Nevada and Florida. We generated $1.3 million of adjusted EBITDA in the quarter, compared to $3.2 million in Q2 2024 and $0.2 million in Q3 2023. This quarter's EBITDA margin came in below our projected sustainable levels driven by lower operating leverage in both Florida and Nevada. As we improve our operating leverage, we expect to see meaningful improvements in our adjusted EBITDA margins. As of September 30, 2024, the company had a cash balance of $29.5 million. This includes $2 million of restricted cash related to the El Capitan matter. In the quarter, we generated approximately $2.9 million in operating cash flow, covering the cost of our CapEx, which totaled $2.4 million. The CapEx was directed at high ROI projects to upgrade the quality of our product from our greenhouse facilities in Florida and to open additional dispensaries in that market. Currently, we have between $2 million to $4 million in additional CapEx plans for the next 12 months and $4 million committed to the purchase of the dispensary in Nevada. We look to supplement this CapEx spend to add a component of indoor cultivation and space in Florida and we will update the market once the budget for that initiative is finalized. The company has approximately $3 million in bank debt due in February '25 and $5 million in notes payable under the terms of the VidaCann acquisition due on April 1, 2025. We also have $1.5 million in notes payable at the VidaCann level that mature in 2029. We anticipate cash proceeds from the sale of surplus land and equipment in Florida coupled with positive cash flow from operations and cash on hand as well as potential refinancing initiatives that should be sufficient to fund debt maturities over the next 12 months. And with that, I'll turn the call over to Bob to discuss the execution of our growth plan.
Bob Groesbeck: Thank you, Dennis, and thank you, everyone, for participating today. At the start of the year, we introduced a multi-pillar growth strategy to increase both our wholesale and retail revenue over the next couple of years. Let me review how we are executing against each pillar. The first pillar of our retail growth plan was Florida. When we made the acquisition, we saw the pathway to continued growth in a state regardless of the used question, given the attractive structure in Florida for growth. Unlike most states, we continue to open new stores to drive growth and earn high-margin fully vertical revenue. Subsequent to the quarter, we completed the expansion of upgrades of our Greenhouse facility. As Larry highlighted, this was necessary to improve yield, potency and quality of our power, especially during the difficult summer months. The upgrades we've made increase our square footage of cultivation by 25%, expected yield by up to 40% and improvements in potency and quality. We've begun planning in those rooms, some of them with our proprietary genetics in California and Nevada and expect to see that this will be a meaningful driver of improvement in Q1 and especially in Q3 of next year on a comparative basis. Furthermore, we are working to secure indoor cultivation, which will position us to compete across the entire product portfolio of good, better and best offerings. These improved yields are of paramount importance as we continue to grow our star network. This leads me to the second pillar of retail growth, which is expanding our neighborhood store network. We've opened two additional dispensaries since closing the acquisition and have 6 more in the pipeline, either waiting for final approval from the state for finishing stages of construction. In any event we expect to open by the end of this year. During the quarter, we made significant progress toward our previously stated goal of expanding our dispensary footprint in Nevada, through cost-effective M&A. We have acquired a dispensary that is complementary to our current Nevada operations for $6.9 million, which is accretive on a price to sales basis. This dispensary is a perfect fit for our Nevada footprint, with a separate customer base. We'll be able to move more of our branded products in the new shelves, increasing gross margins and benefiting from operating leverage on other expenses. We are waiting for the final approval of the license transfer from the state to finalize this acquisition. The third pillar of our retail growth plan is continuing to leverage the SuperStore as a one-of-a-kind lifestyle experience and brand building platform. We just announced hiring of Jill and Austin to help spearhead a deeper effort in creating a [indiscernible] one of a kind lifestyle experience, not just with the SuperStore but across our retail footprint and our lifestyle brand. She will also oversee celebrity partnerships and brand launches as we double down on being the platform of choice for launching brands like Lifa Cush, Tyson Ranch and others. The second part of the growth plan is growing our wholesale business. As Larry mentioned, we moved into the third highest market share in the Nevada branded sales and second highest for edibles. We've launched our popular HaHa branded gummies into the California market during Q3 and are on the verge of launching in Illinois now. You can also see how our growing reputation as an entertainment destination intersects with our wholesale growth as we are increasingly being chosen to help celebrities among their brands in the state. This includes the exclusive cultivation and manufacturing and sales agreement of Wiz Khalifa's Khalifa cushion Nevada. At the end of July, we launched our lifestyle brand worldwide. The strategic initiative strengthens our relationships, enables cost-effective advertising and fosters a deeper connection with our customers and fans. As part of this launch, we rolled out our marketing campaign featuring UFC fighters, Chito Vera and Polyana Viana. We are focused on leveraging the Planet 13 brand, our celebrity relationship, the new lifestyle brand payment attraction and innovative ways to drive increased traffic to the SuperStore, our neighborhood location and Planet 13 brands like HaHa Gummies. To conclude, we are continuing to execute on an exciting two pronged growth strategy. We're making significant progress against difficult headwinds. We've increased revenue by 30% year-over-year and are set up for positive growth in 2025. We're innovating as a cannabis entertainment and lifestyle company to create a national brand with substantial underlying value and we're increasing operating leverage to become more profitable and generate more cash. And again, I thank everyone participating and I pass the call back to the operator.
Operator: [Operator Instructions] And we'll take our first question from Doug Cooper with Beacon Securities. Your line is open.
Doug Cooper: Hey. Good evening, guys. Let's just sort of go around the geographies quickly just California, what's the update there in terms of how it performed in the quarter?
Dennis Logan: Hi, Doug. I wasn't expecting you on today, so glad you could make it. Good to hear. So yeah, I'll talk to you about the different geographies as we go through Bob -- and Bob and Larry can update you on the initiatives in that market in terms of how we're trying to turn it around. Just give me a second here to pull up my file. All right, so California, if you look at relatively from a quarter-over-quarter, Q2 to Q3, we're down about $110,000 in revenue there. So it's stabilizing in that market. If I look across from Q3 of '23 to Q3 of '24, we're down about $350,000 in revenue, so some pricing pressure there, that's at the retail level. There's also California wholesale. California wholesale, if I go year-over-year, sort of $2 million to $2.7 million. So there's some pricing pressure on the wholesale front. We are trying to mitigate that. We're changing different strains, providing the market with what it wants. We do continue to sell 100% of the product that we produce out of the Coalinga (ph) cultivation facility and working at mitigating excess costs in the California operation reducing some of the space, trying to find new initiatives to drive additional traffic to that location. And Bob, do you have anything you want to add on California?
Bob Groesbeck: Well, I'd just add that as I mentioned in my comments, with HaHa now entering into the wholesale market, we've seen a really positive reaction to that. We think that that's going to run nicely and again, with trendy already in the market. So as we start to roll brands in on the wholesale side, I do see some upside. At the retail level, it's going to be a continued challenge with that store and increased competition in Orange County. And of course, an illicit market that the government doesn't seem to have any interest in curbing, but that said, it's a nice store. We're looking at some partnering collaborations, potentially developing there. Hopefully, we'll have some news here in Q1 to announce on that. But we still think there's upside. And if we can get on-site smoking approved, we think that will be a very positive moving forward. So we're working diligently to get approvals in that respect.
Doug Beacon: Okay. Illinois quickly, just before we move to Florida?
Dennis Logan: Yeah. So Illinois, if you compare, obviously, we weren't opening in Q3 of '23. Sequentially, we are down -- down about $100,000 -- sorry, up 100,000 in Illinois, my apologies, sequentially 1.5 from 1.4 and then, up from 1.1 in Q1 and $300,000 in Q4 of '23. Illinois seems -- it's continuing to grow, lots of great initiatives happening in that state. And we see some future upside as well as we introduced our wholesale -- we're introducing our wholesale brands into that state. The HaHa line is going in there. I think I'm not sure exactly when it's going to be launched, probably Q1. We may get it launched in Q4 of 2024, but Q1, for sure. So we should see some decent upside there in Illinois, both at the retail level as it continues to perform and continue to build out and as we get those wholesale products introduced.
Doug Beacon: And just again, just before we move to Florida, the Nevada dispensary, you guys are in the process of acquiring. Where is it? And what's the revenue of that dispensary?
Dennis Logan: Yeah. So I guess the timing is the key one there. We've applied for the transfer of interest with the CCB. We're waiting to get a signed. An inspector -- should have an inspector signed sometime in November and probably get on the CCB meeting list, optimistically December realistically, probably January. So I probably -- I would say we would probably close that acquisition sometime towards the end of January. Really not looking at it what its current performance is. It's 100% retail with no vertical integration. We envision turning it into an outlet for some of our flower that we're currently pushing in the wholesale market. So I would say it's more like a Nevada neighborhood store. We'd probably see it generating $2 million to $2.5 million a quarter, similar to what we're getting out of the Medicine store. Location-wide, it's right across in the sand, directly across the street from the sand and it has a drive-through. So while it closes the closes the door for foot traffic and driving traffic, we get drive through all night. So it's sort of [indiscernible] from a night until 04:00 in the morning. So it's a decent location.
Larry Scheffler: Dennis, that is just across from the palm, not the sands.
Dennis Logan: Sorry, the palms not the sands. Sorry, Larry. I get my resorts mixed up here. [Multiple Speakers]
Doug Beacon: Moving to Florida. So obviously disappointment around on the initiative that didn't get voted in, when is the next possible time that, that can be voted on? Is it another four years?
Dennis Logan: Bob, you can take that one?
Bob Groesbeck: Yeah. I think they can do it unless there's a constitutional prohibition. I think they can bring it back for two years.
Larry Scheffler: Right. But I think, Doug, what they could do, and it depends on what happened, I guess, in December when they talk about Schedule 1 to Schedule III, the governors and the legislators can actually still pass the law. They don't have to go through a vote, Truly wanted to go through the vote. So they can do it legislatively whenever they want to.
Doug Beacon: And just remind me, who set the 60% threshold. I think every other day it was 50%?
Larry Scheffler: They voted on last year.
Bob Groesbeck: No, 2006, the legislature voted on a 60% threshold for all public initiatives. And so that's very difficult to get an initiative passed in Florida, and it was done on purpose that way.
Doug Beacon: Yes. So what do you think this means for selling your land and buildings. Is that going to cause an issue like presumably somebody maybe wanted to get in there because of the adult use initiative being passed or if you signed an LOI? Or maybe you could just talk a little bit about that.
Dennis Logan: Yes. On the front, we've got an LOI signed with another potential operator, but that's just for the building piece of it, Doug. I still think that goes through existing operator. And then the land, all those zones, cannabis -- zone for cannabis use and the party we sold our Florida license to is still operating on that property right now. We expect them to be finished probably sometime in November as they move to their own location. And then we'll set a land to whoever. So it's industrial use.
Doug Beacon: So it doesn't happen doesn't have to be cannabis?
Dennis Logan: No, Doug.
Bob Groesbeck: Not at all. In fact, I anticipate it will be a non-cannabis buyer. It's a pretty popular corridor. It's got close proximity to the U.S. 75. It's a nice piece of dirt. It will sell. And there's a lot of activity going over there in the region. I drove the area just last week, lot of growth toward the area.
Doug Beacon: Okay. And maybe my final one, just obviously, there's a lot of potential. If the legislation path to be, I don't use, what do you think happens in terms of the competitive landscape in terms of build-out of storefronts not just you but everybody. Do you think everybody is thinking people slow it down or what happens?
Bob Groesbeck: Yes. No question. We're going to see a significant slowdown. But let me go back to your first question. I'm not optimistic that there's going to be a legislative solution here. Let's just be clear about that, at least mid-session, particularly with a strong governor who came out aggressively against your question, but we're going to continue to pursue that avenue. But let me tell you, Doug, I mean, it's obviously disappointing for all of us that are operating here in the space. But for us, I think it's an opportunity. It allows us -- we're fortunate that we're not late with that. We're still nimble. We've got the opportunity to continue building out the store network. We're going to continue to do that. There are a number of operators down here in the space now that I think we're highly over levered. They're going to have to rein in their expansion plan, and that creates opportunities for us. So I told my team down here that there's nothing but upside for us here on building this network. And I'm confident at some point it will transition to adult use, but there's still the potential to do really well here in the medical market. We just need to take advantage of the opportunity.
Doug Beacon: Yeah. Because I noticed, obviously, one of your peers, publicly traded peers. I think it was down 80% or something after the news. So I think they're fully levered, I think. So I think you're absolutely right about that -- yes, about the balance sheet. Yeah.
Dennis Logan: Yeah. And Doug, just to bring that point home on our existing store network, 27 stores that were growing to 32 by the -- hopefully, by the end of this year, if we can bring those stores up to sort of the state's average revenue per store, we've got double the revenue potential that we currently have. So no, I don't think we'll get there overnight. I think as we improve at these product quality improvements and the CapEx we've put in the greenhouses have started to bear fruit, and we get our Planet 13 strains into those new stores, get the stores branded Planet 13, so we can actually do some coordinated marketing. I think we'll see a big uptick in the Florida revenue as we move forward into 25%.
Doug Beacon: And maybe just my last one just on the regulatory front. A lot of companies have chosen not to start -- to stop paying 280E tax, I think you guys were amongst those. Where -- what is your thought process on where that stands these days? Like the new administration comes in, I don't know if it's going to be a top priority. They have a lot of other things in the agenda these days, I'm assuming -- so just in terms of 280E, what do you think happens there?
Bob Groesbeck: Let me open -- turn my crystal ball back on here. That's a great question, Doug. I think government is going to continue to move to snail’s space at the federal level. But I think at least we saw from both parties and the run up to the last election that they're both supportive of cannabis reform. And it was encouraging to have the President-elect, actually go out publicly and support question 3 in Florida. So I have no reason to think that he's going to deviate from that in DC. So my guess is there will be some movement toward 280 reform rescheduling and potentially even some type of banking catalyst. It's not the President that has me concerned though it's more the Senate, the composition of this Senate. So we're going to have to wait and see how these people respond. But keep in mind, the current administration is here for another until January. So they've got the opportunity with the FDA to make -- continue with these hearings. If they don't pump again, there's an opportunity to actually get some meaningful change on at the administrative level. So we're thinking...
Doug Beacon: And just remind me, where does Kennedy stand on cannabis. If you get control of the FDA and the health, where does he stand?
Bob Groesbeck: Yeah. That's a good question. I don't know where he stands on that. I don't have a real clear sense of what his position is. But what I do know is he's not been rapidly in opposition. And that's encouraging.
Doug Beacon: And I guess just in the short term, I think some of your competitors have run up big bills on the 280E on paid taxes, right?
Dennis Logan: Right.
Doug Beacon: So Dennis, let me just remind me we said your balance sheet was I think $28 million in cash, including all the CapEx that you have plus the notes coming payable in 2025 and if you had to pay the 280E, where do you stand on the balance sheet on the cash side. And then, I’ll leave it there.
Dennis Logan: So I'll give you that like to income taxes payable right now are sitting at about $15 million, $15.5 million on the balance sheet. I think we can refinance the bank debt that's due in February, likely be able to refinance the $5 million note that's due on April 1 as part of the VidaCann acquisition. And then the $4 million in cash we paid out of our cash of, call it, $29 million. We'll pay $4 million on the closing of the Exhale transaction. So really, the tax payable piece is a big nut. We have followed our competitors in refiling amended returns for 2020 to 2023. And if we go according to where they have gone, we should see a $35 million tax refund that the IRS will then fight us for. So it's going to -- it's going to depend on a bunch of different outcomes there, Doug. And especially the DEA, if they follow through and come out early December on the rescheduling front, and we'll have a better idea where that shakes out.
Doug Beacon: Okay. Maybe just a final one. Just El Capitan (ph), where do you think that stands? And how much money can you get anything back? You have some restricted cash, obviously there, but where do we stand now?
Bob Groesbeck: Well, it actually had some – yes, we’ve had some pretty significant negotiations occur over the last 60 days. I’m optimistic that we’re going to be able to claw back a good portion of that here or the over the next two or three months. So we’ve identified potential channels for recovery. We’ve identified actual cash or cash equivalents that we can trace back to our mind. And now it’s just a function of getting the attorneys around the table and trying to look at a settlement agreement.
Doug Beacon: Okay. Great, guys. Appreciate the time. Thanks very much.
Bob Groesbeck: Great. Thanks, Doug. Good to talk you.
Operator: We'll move next to Yewon Kang with Canaccord. Your line is open.
Yewon Kang: Hi. This is Yewon Kang on for Matt Bottomley. Thank you for the question. Just wanted to ask about, you guys obviously have a very strong balance sheet. Now that -- I just wanted to see if you can provide any color on the risk benefit profile of some of the growth initiatives that you guys have outlined as part of your prepared remarks versus perhaps getting into a market that is currently medical only, that is contingent on adult-use regulation in the near term, such as Delaware or Minnesota? Just wanted to see how you guys are thinking about those opportunities. Thank you.
Dennis Logan: Yeah. I'll take a first stab, Bob, and you can jump in, Larry, correct me where I go astray. But we are focused, as Bob mentioned, we're focused on Florida, first and foremost, building out that store network. And then second, we're launching our wholesale brands into Illinois. I don't see us looking at other medical-only markets. None of them seem to be as robust as the Florida opportunity is. So given that we are focused on Florida and our existing markets, I would say you'll see us spend our money in Florida and Illinois and put possibly additional retail in Nevada. So I don't see it's going outside of that. But Bob, you can correct me here if I'm wrong
Bob Groesbeck: No, I agree, and Larry can jump in as well. I don't really see us venturing anywhere into a medical market right now. Our focus is entirely on Florida. And as we've said before, there's a lot of upside here for us. We're still very bullish on the state and the opportunities for the company. So we're going to continue to build out the platform.
Larry Scheffler: Yes, let me just Larry, that even though Minnesota is recreational. Minnesota's laws are screwed up terribly, and I'm from Minnesota. You can't even buy flower. Any normal dispensary have to go to an Indian reservation to buy flower, to buy edibles and non-flower products in a regular dispensary, so different than every other state is kind of really restrictive.
Yewon Kang: All right. Thank you. I’ll pass on the line.
Dennis Logan: Thank you.
Operator: [Operator Instructions] And it does appear that there are no further questions at this time. This does conclude the Q&A portion of the call. Thank you for joining. You may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.