Thank you. Good morning, everyone and thanks for joining us today.

Planet 13 Holdings’ fourth quarter and full year 2019 financial results were released today. The press release, financial statements and MD&A are available on SEDAR as well as on our website, planet13holdings.com.

Before I pass the call over to management, we would like to remind listeners that portion of today’s discussion include forward-looking statements. There can be no assurances that such information will prove to be accurate or that management’s expectations or estimates at future developments, circumstances or results will materialize.

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. Risks factors that could affect results are detailed in the company’s public filings that are made available on SEDAR and we encourage listeners to read those statements in conjunction with today’s call.

The forward-looking statements in this conference call are made as of the date of the call. Planet 13 disclaims any intention or obligation to update or revise such information except as required by applicable law and does not assume any liability for disclosure relating to any company mentioned herein.

Planet 13’s financial statements are presented in U.S. dollars and the results discussed during this call are in U.S.

dollars unless otherwise indicated. On today’s call, we have Bob Groesback, Co-Chairman and Co-CEO; Larry Scheffler, Co-Chairman and Co-CEO; and Dennis Logan, CFO.

I will now pass the call over to Larry Scheffler, Co-Chairman and Co Chief Executive Officer of Planet 13 Holdings.

Thanks Mark. Good morning, everyone and thanks for participating in our fourth quarter call.

I want to acknowledge that we are clearly in a time of uncertainty as it relates to COVID-19. I know you have a lot of questions relating to the future and we will try to answer them as best we can.

First, I would like to say thank you to our team members who are doing a great job managing us through this period, the quality of service our employees have demonstrated has been tremendous. They work day and night to ensure our community can have access to cannabis in a safe and responsible manner.

Along with our Q4 and full year results, we have pre-released our Q1 revenue. I will touch on that briefly before spending the majority of my time on the call discussing our response to COVID-19.

The SuperStore generated $63.6 million in revenue and $9.9 million in EBITDA in 2019. For the full year 2019, the SuperStore was responsible for 9.1% on Nevada’s cannabis sales, a tremendous accomplishment that speaks to the quality of our team and the exciting experience they create for everyone who walks through the SuperStore.

We have opened Phase 2 during Q4 and up until March 18 when Las Vegas shut the casinos. Phase 2 was providing the network effect we expected.

Every metric we track was up, number of visitors, visitor to customer conversion rate, average spend and length of time spent in the store. Through March 20, revenue was up 38% year-over-year.

Overall, in Q1, we did $16.6 million in revenue, up 20% over Q1 in 2019. On March 17, 2020, all the casinos in Las Vegas were closed.

On March 20, 2020, Nevada Governor, Steve Sisolak, closed all cannabis dispensaries through an emergency declaration allowing for delivery only. In late September, we stopped using Blackbird and bought our delivery service in-house – bought our delivery service in-house, I should say.

We started building out the back end with a long-term view on how we can diversify our customer base to include more local customers through delivery. In February, we started seeing the international companies like Nike close stores overseas and it changed from a long-term plan to an important contingency plan and done on back of the Governor’s declaration, became priority number one.

And from January to March 30, we increased our fleet of vehicles from 5 to 29 running full-time. It hasn’t been an easy transition and we have overcome several challenges in a very short period of time to evolve with this fluid situation.

Our online ordering system was overwhelmed at times just by the sheer volume of our customers’ demand. We also had to navigate the state rules that make delivery a challenge and logistical problem.

We have retrained our staff to expand their knowledge on to other roles such as customer service, processing, fulfillment and delivery driving. Our team has responded to the challenge and created something we are all very proud of.

They have worked through each new problem with the same positive attitude that has made the SuperStore a success since Day 1. This has been hectic time for our frontline crew.

They have been incredibly patient, helpful and caring on the phone for many long hours each day helping our first-time customers use our online ordering system, all the while ensuring we provide our customers with memorable first-class service. As of April 13, I would say we are past our ramp up period and have overcome many of the early challenges.

We are providing a frictionless virtual shopping experience through an efficient ordering system, reliable 24/7 delivery service, consistent product quality at a competitive price point, and with the facility built to receive through any obstacle. With that said, we still have room to grow.

We are adding additional drivers and opening many more delivery slots, which is our current bottleneck. Consumers are creatures of habit.

They likely go to the same grocery store every time. This is the same for cannabis, except Nevada residents are having their routines changed by force.

As there are many dispensaries in the state, they weren’t prepared or didn’t have the resources to effectively make the online transition. This is an opportunity for us to become a staple in the lives of Las Vegas Valley that will last well beyond this crisis.

Through April, we were generating an average of over $80,000 per day in delivery revenue. We believe that once we have added additional drivers we can move that number easily north of $100,000 per day.

This is new revenue for Planet 13 and on top of the 40%ish revenue growth that was being driven by Phase 2 prior to the shutdown. As everyone knows historically, 50% of our revenues come from locals, 100% of our revenue today is coming from residents of the Greater Las Vegas Valley.

We are optimistic that we can retain many of these new customers even after the dispensaries reopen and life returns to normal. With all that said, I will pass it off to Dennis to discuss our financials and our current daily revenue numbers.

Thanks, Larry. And before I begin, I would just like to remind everyone that all numbers described on today’s call are stated in U.S.

dollars unless specifically stated otherwise. For Q4, it feels like a lifetime ago for most of us and everyone is focused on the current operating environment.

So let me get right into what the picture looks like today. As of March 31, 2020, Planet 13 had approximately $14 in cash.

We are in an enviable position – financial position and are able to withstand any short-term disruption. As Larry mentioned, we are now up to over $80,000 per day in revenue from delivery operation and have been able to maintain our gross margins in excess of 50%.

We have made the appropriate cost reductions in response to the closing of the SuperStore retail dispensary bringing down a variable cost significantly and if we can get to our forecasted number of $100,000 in the daily revenue that we are modeling at least we should be cash flow breakeven for our full 12-month period if the current situation continues. I would like to note that Planet 13 is able to operate both its cultivation and production facilities during this shutdown and we have built up sufficient inventory of our own in-house branded products to meet customer demand.

We have modeled several different scenarios to gauge the COVID related impact on our business and believe we are nimble and have the flexibility to adapt and manage through each scenario accordingly. We have suspended all non-essential capital expenditures until we have clarity on the length of the time our dispensary will be closed and any potential secondary impact the shutdown has on operation.

The biggest project that was underway was our Santa Ana expansion that we have terminated and we have invited the vendor back to the negotiating table to renegotiate a revised agreement in line with the current market environment in California. I will let Bob talk further about this, but for now, we have paired back expenses, reduced our fixed cost and expect that the SuperStore operations will be breakeven or better if the shutdown is extended indefinitely.

I will quickly run through our Q4 results in Q4 2019, we generated $16.5 million in revenue, down slightly from Q3 2019 and a year-over-year increase of 99.8% compared to 2018. As a reminder, Q4 is the seasonally slowest time in Las Vegas.

Adjusted EBITDA during Q4 was $2.5 million. Adjusted EBITDA decreased sequentially due to slightly lower gross profit along with slightly higher SG&A.

Gross margin in the quarter was 57% and it was impacted by the closing of our smaller production facility in October and the open and ramp up of our new production facility on site and our customer-facing production facility in November. The multiple-week shutdown meant that we had less of our own in-house products to sell in the back half of the quarter that impacted our gross margin.

Sales and marketing expense was $1.7 million in the quarter which remained flat as a percentage of revenue compared to the prior quarter. We spent $5.4 million on general and administration expenses in the quarter, up from $4.9 million last quarter.

G&A was elevated due to a $400,000 write-off of bad debt from one of our credit card service providers that we had talked about in the last quarter. We have taken a provision for the entire amount.

We have also pre-released Q1 revenue. Q1 revenue was $16.6 million, that’s the March 31, a 20% increase year-over-year.

As Larry already talked about, this increase would have been even larger if it wasn’t for the mandated shift to delivery only in response to COVID-19. The last two weeks of March revenue was down substantially as we ramped up our delivery activities and pivoted to focus on online ordering and local home delivery.

So with that, I will pass the call over to Bob.

Thank you, Dennis and good afternoon everyone. I would like to echo Larry’s comments earlier just to give a bit shout out to our team.

They have done an extraordinary job pivoting from a retail platform to delivering only literally overnight. And I can’t say enough about them.

And I also want to spend just a moment to thank our local leaders, particularly the Clark County Commission for their help and assistance and also the greater community for supporting and helping each other through this difficult time. In addition to ensuring Last Vegas Valley residents have continued access to cannabis, we are also doing our part as a member of the community by donating 2,800 meals per month from our onsite restaurant, Trece, through Clark County Social Services to assist needy seniors throughout the valley.

We are also providing our employees with a daily free meal during each of their workdays to help them through this difficult time. As a longtime Las Vegas resident, I know that the city takes care of its own, and I know that it remembers those who don’t.

So moving on to Santa Ana, as Dennis indicated and as previously press released, we have terminated our Santa Ana expansion. However, I do want to say that we have actively engaged negotiations with the vendor and it’s our hope that we can come to a revised agreement that better reflects the delays through opening the dispensary and the overall macro environment, particularly associated with COVID-19.

Given the macro backdrop, we believe it is prudent to limit the number of factors outside of our control and the reality is that under the current COVID-19 crisis, it would be imprudent, if not impossible, to undergo the retrofitting and construction of the building and pursue the approvals from the state and local regulatory agencies given the economic uncertainties currently in place. We still view Santa Ana as an attractive option at the right price.

It is exactly the type of expansion we continue to look, a dispensary license and an attractive lease for a property perfectly suited for Planet 13 style type of traction. We are on continuous talks with operators in a variety of states for deals similar to Santa Ana, but are very aware that even the best assets needs to come at a fair market price to be beneficial to Planet 13.

We have also engaged in tuck-in acquisitions in Nevada looking for smaller dispensaries that can benefit from our established infrastructure and buying power. I have said this many times before, but it bears repeating management owns approximately 60% of this company.

We are not managers using someone else’s money to grow the company. We are using our dollars and we are extra careful to allocate in ways that make the company more valuable on a per share basis for all of us.

We have talked about it before about one of our big goals for 2020 is to capture share in the Nevada wholesale market. As part of Phase 2, our customer-facing production facility which opened in November of last year we have been methodically ramping our production in that facility and are now able to continuously supply the SuperStore and a number of other third-party dispensaries in Nevada.

Our branded products are performing quite well. Our in-house brands represented approximately 20% of all products sold in the SuperStore in February.

And the HaHa Gummy line in particular was the second best selling brand over that period in any category. Our edible brands are still new, but they have received a very positive response from the market.

We expect them to continue to grow as they build on our reputation: quality, taste and consistency. Prior to COVID-19, we rolled out our branded products to 7 dispensaries in the Greater Las Vegas area.

As a vertically integrated retailer, we are acutely aware of how important it is to have consistent delivery, abundant supply and numerous other factors, and how they can impact how we supply products, which in turn impacts the quality of shelf space it receives. We want to build up our reserve supply to ensure enough product for both the SuperStore and third-party dispensaries before we roll it out to additional chosen dispensaries throughout the state.

Prior to COVID-19, we are already starting to receive large reorders, which necessarily have been suspended as dispensaries continue to reassess demand. We fully expect a similar order flow once this period of uncertainty passes.

While we don’t know how long COVID-19 will impact our business and our community, we know that it hasn’t changed the long-term profile of this company or what has made it a success. Prior to the shutdown, we were seeing amazing growth at the SuperStore driven by the Phase 2 expansion.

We are running breakeven to slightly cash flow positive of only our delivery business. We have plenty on cash on hand to look at attractive growth opportunities on the back end of the COVID-19 crisis.

We have proven that our retail concept works and that it drives significant revenue and cash flow and now a growing delivery business that is accretive to our bottom line. So with that said, I again like to thank everybody for participating today and I’d now ask the operator to open line for questions.

Hey, guys. Thanks for taking my questions.

So I am just curious you guys obviously are heavily tourist dependent, but there is some folks that are struggling that weren’t as financially sound and prepared to shift to delivery. So if we combine the ramp of your delivery business what you are doing there with maybe some competitors going under, what’s the mix that you think you could ultimately drive to in terms of local customers in your revenue mix longer term and that’s assuming the worst care scenario of maybe some large conventions considering to get cancelled this year and continued pressure on that tourist traffic?

Hi, Bobby. It’s Dennis.

I will take the first part of it and then the other guys can jump in. I go back to what Larry has said, it’s really going to depend on how long the shutdown lasts and how ingrained we become as part of that local customer experience in terms of buying and getting that home delivery.

For our $100,000 a day target that we think we are relatively close to achieving, it will be about 1,000 plus deliveries a day averaging in that sort of $100 plus range and we found that the home delivery model there is definitely a higher dollar value ordering per ticket compared to in the SuperStore. If we can capture and keep half of those people, I think it bumps up our 500 people a day on the 2,000 to 2,500 that we can do in the SuperStore that we were doing in the SuperStore in the kind of January to March 17 period.

It’s a significant chunk of the local traffic. And I think it’s the other dispensaries, some other dispensaries in the Valley go under and people are used to that online ordering where we are delivering 24 hours a day I think we have been able to keep a more than 50% of our customers.

Great. Thanks.

Hey guys. Good afternoon.

Thanks for taking my questions. In terms of delivery would you say that you now have the capacity I guess to satisfy all the order or all the demand that are placed these days with the 29 vehicles, I think you said operating 24/7?

And then I just wanted to touch on has the shutdown impacted your in house brand production in anyway?

Well let me jump in, Greg. Thanks.

This is Bob. So let me address the later part of your questions first.

With respect to production now that has not impacted us in all in fact we were working full shifts to build up the inventory in anticipation of when the crisis lifts and we reopen, but we have been very fortunate that we now we have an opportunity to move those brands to delivery fast platform and they are actually selling quite well. As I indicated earlier, we expect that it will continue of course.

And then Greg on your first part of that question supply demand on the delivery as Larry indicated, we had some challenges in the first couple of days with the system being overwhelmed and that was more to do with the number of vehicles on the road than the system itself, because we just could not get the deliveries out the door. We have 29 vehicles on the road I think we will have them fully on the road by the end of the month.

We are sort of midway probably on the 20 vehicle mark right now. They all have to be retrofitted and pass inspection, etcetera.

So we should be able to meet any demands that we are running 24/7 obviously lower vehicle account in midnight to 7 a.m. slot and picking up in the peak period of time, so taken us a bit to adjust.

And one of the things that we have been fortunate to have is a great workforce who have shifted from being budtenders and being – working in the production facility to the training and driving event. So we are becoming delivery people.

So we have been able to do it and bring everybody back that we originally laid off before we ramped up that number of vehicles. So it’s been interesting to watch, the response of our employees and it’s been fantastic that they have embraced the delivery.

And I think we have got enough supply of vehicles and people to meet the demand that we have right now.

Okay, sure. Yes.

I mean that’s nice to hear that you guys have moved quickly to take advantage of that. And then I just wanted to ask about the Santa Ana acquisition what were the unmet conditions I guess that caused the termination and could you maybe talk a little bit about I guess how has that consideration that you would pay to acquire the dispensary maybe changed or at least pricing negotiations there if this were to go through when would it realistically open given these delays?

Well, this is Bob again, Greg. So as I said in my comments initially we are continuing to have dialogue with the vendor, the transferors in this case and we have productive conversations but again the world changed overnight and as we indicated in our notice of termination I think which was press released, one of the key criteria, of course, is frustration of purpose.

COVID-19 changed the entire market literally overnight and there were some other conditions associated with the transaction including flatting off certain parcels of the property that had not been met. But again our focus is trying to get a deal done but getting a deal done consistent with current values in market and things have changed dramatically, we are seeing that across the board in the sector.

Greg, I don’t think we are going to comment on the consideration change, because we are still in those negotiations and don’t want to prejudice those discussions with anything we say on the call. So I think we reserve judgment until a later date for now.

Sure, fair enough. Great.

And then just to clarify as it was nice that you provided Q1 revenue given some of the impacts later in the month of March, but as we think about April, I think you said you are looking at $80,000 I guess in revenue a day I think you said earlier about 500 people a day did it get to a ticket size of almost 50% higher than what you were seeing in-store I mean that comes like 150 per household?

Yes, yes. And early indications are that the ticket averages anywhere from 30% to 50% higher per order depending on the day of the week and the time.

Similar type I guess weekly trending where the orders on Thursday to Saturday are higher than they are Monday to Wednesday kind of thing. So, we are adapting our marketing and our sort of deals towards those buying patterns to try and drive as much traffic and as much margin as we can part of that order to platform so we can meet that.

So I think we are on track to get to that target of 100,000 and with that 100,000 we will start to see we will be cash positive on that basis alone and I think the more – the bigger the ticket and the more we can deliver, obviously, the better.

Okay. That’s helpful.

Thank you.

Hi, good afternoon everybody. I just want to delve into little bit more on the delivery and maybe what the market share is I think the latest numbers are in Nevada and I don’t have it in front of me.

We are $64 million statewide revenue. And what do you think guys, how much of that would be tourist like how much would that lead to local population and if you are doing the 100,000 a day give or take that’s $3 million what would that translate to a market share?

Doug, it’s Dennis. That’s a tough one to really pin down, because really – I think it’s – our market share is going to be dependent on what the overall size in the market is with kind of 2.3 million to 2.5 million locals compared to the 55 million annual tourists.

I am not really sure what the size of that local market is pick a city of similar size probably and that sort of ballpark of where it’s going to come from the state as a whole. So I think our market share goes up even though we are down, our revenues are down by about half if we get to that 100,000 a day kind of mark, little bit more than half.

So I guess our market share goes up probably 20%.

Because you are going to be delivering most around Nevada, Clark County I am assuming right, so additionally, Clark County has represented I think 80% of the revenue in Nevada. So market share was 9.1% statewide, it’s obviously higher in Clark County, if you are at that 11% and 12% market share out of the 68 dispensaries in and around Clark County, how many you think will survive in a protracted period?

I will leave that. I will turn that one over to Bob or Larry there well plugged into that local scene than I am.

And I will let Bob, this is Larry. I will let Bob talk about some of that also.

I just want to add a little bit that we don’t really know how big we are going to grow this local delivery service. We think this is chance of lifetime to reach out to these locals and give their cell numbers.

So we can market to them. They join our group allowing us to market to them.

Let me just over the last week, we have averaged 300 new people, new customers to Planet 13 that are signing up on our internet platform on our website everyday, 300 per day. If that continues and depending on how long they shutdown continues, you can do the math on that, but we don’t really know I don’t think we can say.

We are being surprised everyday. We are very optimistic about it.

And I agree with Dennis that right now, we are able to hand all of the – pretty much all of the calls that are coming in, but if it continues at 300 a day, we may have to look at something else, maybe look at some new vehicles, depending on again how long this is all going to go on. And I also agree on the buck, if we can keep about 50% and add that back to the visitors that we had and of course you guys know how that was growing, how fast it was growing we can be up 50% higher than we were when we shutdown.

Maybe I can ask another way, the – I just lost my train of thought, the other competitors maybe are using somebody like Blackbird you of your own delivery fleet you produce your own products, I am assuming that local market is more price conscience than say a tourist market was, how much of the price advantage do you have by manufacturing your own products and using your own delivery service versus outsourcing that to a third-party?

Well, I guess this is Dennis I will address the advantage in a slightly different way, Doug than the vertical integration which I think gives us lots of margin to play with. On that front, I mean, we have historically given the 20% discount to the locals.

So the current prices we are selling at is to get to that 100,000 or that 20% less, but we knock off the cab fees that we are paying per drop and we are getting a break – a big break on the lot of the wholesale stuff we are buying, because there is no market for it. So a lot of our competitors that don’t have retail dispensary or have a retail dispensary that don’t have the delivery capabilities are pushing its product and we are getting that 20%, recapturing a lot of that 20% discount were given to the locals on the wholesale purchase.

So our margins – shouldn’t really suffer too much there. As far as Blackbird is concerned, I don’t know enough about what their cost base is.

I mean, Bob and Larry are more in tune with what historically we spent on Blackbird to September at the old store, at the Medizin store when we are delivering, but we didn’t really have a lot of deliveries out of the Planet 13 SuperStore. So maybe, Bob, you want to comment on Blackbird?

Well, yes, thank you Dennis. I really don’t know the numbers off the top of my head.

We can certainly look back to that, Doug and circle back with you. But obviously we are saving that cost and it was not cheap and that was when we exited from the Blackbird platform, it was really twofold, one was obviously cost, but the second most important time was the inability to get deliveries out on time to our customers.

So we thought it makes sense for us to bring it all in-house and then control the entire process. And as Larry mentioned earlier, we are very fortunate in that we started to ramp up fairly early recognizing that the markets are going to get much more difficult.

So moving forward, we think it was a prudent move and we think it’s longer term we are going to capture lot of customers that we simply didn’t reach or didn’t have prior to the crisis.

Right. And one last one for me just on Medizin, you got 29 trucks now delivering from the SuperStore, attacking the local market.

If you were to get Medizin back to license through this prolonged litigation period, do you need it back, I mean or you – can you run everything out of the SuperStore, it doesn’t make sense to take it back? And I will leave it there.

Thanks.

Well, hey, Doug, it’s Bob again. It’s a great question.

We have grappled with that internally quite a bit. We think it makes sense to try to get our hands on the licenses.

We are basically up to the point where this thing will be going to trial once the markets open up and the courts open up. So we have put a lot of time and effort into building a case.

So again, I am confident at the end of the day we will pickup a license and be in a position to reopen that store. And that too will just complement what we are doing in the other platforms.

Okay, great. Thank you guys.

Thank you, Doug.