4 Reasons This Cannabis Company’s Supermarket Model Will Drive Long-Term Growth

In this clip from Motley Fool Live, recorded on December 9Motley Fool contributors Matt Frankel, Jason Hall and Marc Rapport analyze how the experiential brick-and-mortar element of a cannabis business gives it a huge advantage.

Matt Frankel: The hogfather says on Planet 13 (OTC: PLNH.F), “Do you think it’s a real advantage to have the supermarket?” I would also like to have your point of view on this subject. You two. “I would consider it a handicap to have such a large location with high overhead and reinvestment requirements when you can sell a ton of jar in small stores instead,” his words are not mine. widely distributed “. We say cannabis on this show. I would say I think the hypermarket could be a handicap except for two things. Firstly, it is a tourist attraction depending on where it is located. It’s in Las Vegas. It’s very close to the Strip. People are not going to get in a cab and go to a little neighborhood store to buy marijuana in Las Vegas. They’ll just buy from whoever sells it on the Strip. It’s a tourist attraction, one. Second, it gives them space to actually manufacture their product. In fact, they manufacture their products in the establishment. In this way, it also serves as a warehouse / production facility in addition to a dispensary.

Jason Hall: It’s not an industry where you can necessarily centralize your growth and distribution. If you grow in California, you don’t want to ship to Florida across states where it’s illegal, do you?

Frankel: To the right.

Room: There are federal restrictions. These operations must be decentralized.

Marc Report: This is a real problem. I don’t mean to be flippant but I have a son-in-law who is a police officer in a state where it is not legal. He’s in a big college town. He only had to confiscate small amounts and then send them to prison. He must have explained to them that it is not legal here. There is a misunderstanding. Familiarity with a large setup like this would add a lot to the familiarity factor.

Room: Yeah.

Report: One thing about this planet 13, I don’t think they would be as affected as my big favorite Innovative industrial properties (NYSE: IIPR) if and when it’s legalized federally because they already do retail. Their business model does not appear to be focused on providing buildings and capital to producers and distributors. They do it themselves. Am I right, Matt?

Frankel: It’s like their model is to have a big box and then a network of smaller stores around them, but in every state where it’s legalized.

Room: True.

Frankel: As Jason just mentioned, you can’t even transport it across a state where it’s illegal. It gives them a production facility and then they can have a neighborhood store network, but those hypermarkets add value to the business, I think.

Room: I promise you there are millions of people, millions of Americans, who would never go to their local dispensary. But they’ll absolutely see a planet 13 and it’s that big and the lights are bright and it’s well lit inside and it’s well displayed and, they look at their spouse and say, “Let’s go see this.” I’m telling you that it normalizes things and it makes them much more comfortable. I think there is a lot of value in what they do.

Report: Yeah. Is it their business model that is moving forward in Florida. Do you know, Matt?

Frankel: Well they have the unlimited license in Florida, but they really want to look into those neighborhood markets. Like I said, they want a hypermarket in any city that could accommodate a professional sports team. In Florida, there are quite a few. You have Miami. You have Orlando. You have Tampa. You have Jacksonville. They would theoretically put superstores in those areas and then put smaller stores scattered across the state in markets that aren’t as big for people who know the brand from their superstores but want a local place to go. Like Jason said, people wouldn’t just be going to XYZ Dispensary, but they will be going to Planet 13, because that makes it an experience.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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