Planet 13: The Dispensary Disruptor

Features - Cover Story

Planet 13 made waves in the industry with its immersive customer experience and superstore scale, and now the multistate operator is working to bring its reimagined retail model to the Florida market.

June 14, 2022

Larry Scheffler, co-CEO, right & Chris Wren, VP of operations. A Vintage bus inside the Planet 13 SuperStore in Las Vegas emits “smoke” with a push of a button. All Photos by Ashley Marie Myers.

Before entering Planet 13’s Las Vegas SuperStore, consumers are greeted by an 18-foot diameter, LED-studded water globe that emits fog and mist, and an array of 15-foot-tall interactive lotus flowers that line the roof of the facility. The flowers—made with metal stems and acrylic leaves—move in a motion as if they are saying hello or greeting individuals entering the store.

The show continues as customers make their way through security and walk across a sensory-activated, interactive LED floor that represents a koi pond, and the fish move accordingly when triggered. There is also an Aerial Orb Show at the top of every hour, which is accompanied by music and fog.

Planet 13 SuperStores are planned and built with customer experience at the forefront, and making a big first impression is the goal. Planet 13’s first Superstore is 112,000 square feet and about two miles from the Las Vegas Strip, and the company dubs it the largest dispensary in the world.

When creating the Planet 13 model, Robert Groesbeck and Larry Scheffler, co-CEOs of Planet 13, explain that they wanted it to be centered around the customer experience and entertainment, and to create a destination for customers—just like Las Vegas has become to millions of tourists each year.

Customers can also get a peek into the production process—similar to one a brewery might offer, as the SuperStore has a 14,000-square-foot, customer-facing production facility where individuals can get a live view of in-house brands being made. The location also includes a café, restaurant and bar, and clothing store. A cannabis museum and cannabis consumption lounge are included in future expansion plans, Groesbeck says.

Planet 13’s second SuperStore located in Santa Ana, Calif., provides customers with that same immersive entertainment experience, as the company strives to design each location with elements that complement the markets they reside.

Both locations also include a vintage bus that can be “hotboxed,” filling with “smoke” with the push of a button. Similar to the Las Vegas koi pond, the company’s Orange County location features an interactive digital floor that represents ocean waves when consumers step on it, and a 16-foot octopus sculpture at the center of the dispensary floor. Planet 13 also has plans to build an in-house consumption lounge at its California location.

“I think the Planet 13 Las Vegas store is very Vegas and has that glitzy glamor, whereas the Orange County location is really indicative of the beach and that lifestyle out there,” says David Farris, Planet 13’s vice president of sales and marketing. “We have a much different palette in Las Vegas versus Orange County, and that’s by design. … I think it’s easy for us to build maybe a big store, but we wanted to build a special store and something that not only had a great selection of products, but a great environment.”

Since Planet 13’s launch in 2018, it has become vertically integrated in the production, cultivation, distribution and retail of medical and adult-use cannabis in Nevada and California, with “the world’s largest cannabis dispensary,” its Las Vegas location, at the center of its operations. And now, the company has its sights set on Florida.

To think it all started when a city councilman and mayor butted heads.

Crossing Orbits

In 1993, Scheffler was serving as a councilman for the city of Henderson, about 16 miles away from Las Vegas, Nev., when Groesbeck was elected as the mayor of Henderson.

“We met, and we fought for the first year, wondering who was really the boss and who was in charge,” Scheffler says with a laugh.

About a year later, Scheffler says the two realized they had a lot in common and became close friends, their terms overlapping for a couple years. (Scheffler served on council until 1995, and Groesbeck was mayor until 1997.) Groesbeck, who has practiced law for over 25 years, became Scheffler’s attorney to represent his different business interests.

Scheffler says that they even ventured into real estate together and now manage entities spanning more than 1,000 acres across three states. From there, their business partnership grew, leading them eventually to take on an even bigger project outside of their wheelhouse: starting a business in Nevada’s medical cannabis market.

With little knowledge of the cannabis industry, the two entered Nevada’s medical cannabis market in 2014 and co-founded MM Development Company Inc. (MMDC). In June 2018, the company underwent a reverse takeover, and the entity was renamed Planet 13 Holdings Inc.

In 2013, former Gov. Brian Sandoval signed Senate Bill 374 into law to expand Nevada’s medical market to allow for commercial distribution.

Scheffler says Groesbeck was sitting at a county commission meeting “kind of bored and dozing off” when he heard the word “marijuana” and realized that Nevada was expanding its medical cannabis program.

Scheffler says they both thought they couldn’t pass up the opportunity to enter the cannabis space. He compares the situation to that of when Nevada legalized gambling in 1931. They figured a business opportunity like this only comes around so often in a lifetime, and they, “were not going to miss this one,” he says.

In March 2014, Scheffler and Groesbeck took a leap of faith, and each invested $7 million in cash to start MMDC, Scheffler says. “We had to build from scratch, our grow and production and a new dispensary, not to mention $750,000 for all our licenses,” he says. “We had more guts than we had brains.”

“It was a steep learning curve. It was new for all of us. It was new for the regulators and new for operators, and it created a host of challenges,” Groesbeck says. “I would say for the first couple years, I don’t think we ever slept, and that’s not much of an exaggeration. It was really that intensive.”

From there, they went on to grow their team. Scheffler says he and Groesbeck had limited knowledge of cannabis cultivation. They knew they had to hire a cultivation expert to make the operation successful.

Scheffler says they interviewed a handful of individuals for the job and had no luck until his son-in-law, Bob, who worked as a general manager for an asphalt company, recommended his colleague, Chris Wren, who worked as a technician in the company’s laboratory.

Scheffler explains that during the interview, Wren pulled out a glass jar filled with cannabis that he was growing. “It just filled the house with the scent of marijuana,” Scheffler says, adding that Wren then explained his background in cannabis cultivation.

Wren’s expertise dates back to 2001, when Nevada legalized medical use with the passage of Assembly Bill 345, which allowed people to grow a limited number of plants in their individual gardens for medical use.

Throughout Wren’s early years in cannabis cultivation, he notes many cultivators from Nevada would travel to surrounding states, such as California and Colorado, to better their craft. He adds that the internet also played a big role in the early years of cannabis legalization as it helped connect cultivators and gave them a place to share their knowledge and experiences with each other.

Wren adds that when S.B. 374 was signed into law in Nevada, he was looking for the right partners to work with in the industry. He was then later connected with Scheffler and Groesbeck.

Scheffler says that aside from Wren’s knowledge in cannabis cultivation, his demeanor, determination, and confidence made him an attractive asset to the team. “We gave him 6% of the company. We could not afford to lose him,” Scheffler says.

Wren now acts as Planet 13’s vice president of operations, where he oversees the company’s grow operations and production facilities, and is an essential part of day-to-day operations, Groesbeck says.

Building the Business

In April 2016, they opened a roughly 2,300-square-foot medical cannabis dispensary under the name Medizin on Sunset Road, in Las Vegas, about five miles from the Strip. Medizin operated as medical-only until Nevada voters approved a ballot initiative in 2016 to legalize adult-use cannabis. In 2017, Medizin acquired a dual license to operate in the adult-use and medical industries.

Scheffler says the company generated roughly $18 million within the first ten months of operating under the adult-use market—and that their leap of faith was now paying off.

When the company transitioned operations under the name Planet 13 in 2018, the Medizin dispensary closed in October of that year, and the company transferred the licenses to open the Planet 13 SuperStore in Las Vegas.

In December 2018, Planet 13 applied for six additional licenses in Nevada but was not awarded any by the state. The company then filed a lawsuit against the state to overturn the licensing process and was successful in its litigation. It received one additional adult-use license to operate in Clark County, Nev. The company used the license to reopen Medizin in November 2020.

In addition to the company’s Nevada retail locations, Planet 13 holds six cultivation licenses operating jointly under an adult-use and medical license at three locations—a 16,100-square-foot facility in Clark County, a 25,000-square-foot facility, which is undergoing expansion to 45,000 square feet in Clark County, and a 500-square-foot research and development and genetic testing location in Nye County.

The company also holds six production licenses in Nevada, which operate under an adult-use and medical license at three locations—the 14,000-square-foot, customer facing production facility inside the Planet 13 SuperStore in Las Vegas, a facility located at the Nye County cultivation location, and one co-located in the 25,000-square-foot cultivation facility in Clark County.

Amid the company’s Nevada market growth, Planet 13 explored opportunities outside of the state—leading it to eventually expand operations to California.

Inside the dispensary at Planet 13’s SuperStore in Las Vegas.

Powering Through the Pandemic

Planet 13 made its first step to becoming a multistate operator when it received an adult-use license in California in April 2020, at the height of the COVID-19 pandemic, as restaurants and retailers were figuring out how to continue operations without in-person experiences.

After looking at several locations, they found a 55,000-square-foot facility located close to major highways and attractions in Santa Ana, making it another attractive tourist destination, Groesbeck explains. Although Groesbeck says that the timing wasn’t ideal, they knew they had to “claw back and build it,” he says.

“The nice thing for us at the time was Santa Ana had quite a few dispensaries. Most of them are clustered over in the Eastern part of town and there were just a few over there, closer to the 405 [freeway in Southern California]. So, we thought that was an advantage for us as well,” Groesbeck says.

The Santa Ana SuperStore in Orange County opened in July 2021. Planet 13 has continued expanding its footprint in the Golden State and recently acquired Next Green Wave Holdings Inc. (NGW) to gain cultivation and production operations. Planet 13 will take over NGW’s 35,000-square-foot indoor cultivation facility in Coalinga, Calif.

Aside from Planet 13’s expansion to California throughout the pandemic, it also pivoted to implementing curbside pickup and deliveries at its Nevada locations—the company now offers those services at all its dispensary locations.

“We went heavy on delivery and curbside focus,” Farris says. Before the pandemic, local customers accounted for 14% to 20% of sales. “We really built that side of the business, and I think it created a lot of long-term success for us. We actually were able to connect with a local consumer at a different level that we couldn’t do prior.”

RELATED: How Las Vegas' Planet 13 Shifted From Tourist Base to Locals Only

Farris says when Planet 13 expanded to California, it took that same angle of trying to connect with local customers, similar to what it does at its Medizin location.

“We really set an importance level [in California] of really taking care of that local customer and that customer that can come to your store on a Monday, Wednesday or Friday, doesn’t matter their commute,” he says. “We really hit the reset button during some of those COVID shutdowns and really figured out what makes sense, what doesn’t [and] how we can be more successful.”

Though the company seems to spare no expense when it comes to customer experience, Planet 13 is debt-free, and through the end of last year, it reported roughly $62 million on the balance sheet, Groesbeck says. Seeking capital from debt markets has always been the last option.

“It’s too expensive, and it just has a habit of putting the operations in a really difficult position from our experience,” Groesbeck says. “So, we’ve been fortunate that we haven’t had to go to debt markets, and that’s our intent moving forward.”

He adds that the company has plans to invest its capital into its Las Vegas SuperStore expansion and to take on a more significant project this year: expanding operations southeast.

Entering the Florida Market

In October 2021, Planet 13 completed the purchase agreement with Harvest Health & Recreation Inc. in Florida for $55 million in cash.

What makes Florida attractive to the company is that it mandates vertical integration Groesbeck says.

REALTED: Planet 13 Sets Sight on Medical Cannabis; Eyes Florida Location

“We’re very comfortable with manufacturing our own in-house products and brands and cultivating our own flowers. Florida requires that. So, we’re very comfortable under those constraints,” Groesbeck says. “We knew going into Florida; we weren’t going to site any SuperStores initially. The medical market won’t support something of that magnitude. What we are going to do in Florida, though, initially is build on our neighborhood concept stores.”

The company has announced it will open its first store in Orange Park, a suburb of Jacksonville, Fla. The company is currently looking at several additional locations in Florida, and its goal is to have those locations come online by Q1 next year, Groesbeck says.

The company is also working on building out a cultivation facility in central Florida outside of the metro Orlando area to supply products to its retail locations, he adds.

“So, we’ve actually looked at a number of other grows [and] a number of other locations, but we’re going to build our initial cultivation facility large enough to meet the requirements of all the retail stores. As we start transitioning into SuperStores down the road, [we’ll] look at additional expansion opportunities,” he says.

The Neighborhood Model

Similar to its Medizin location in Nevada, the neighborhood stores in Florida will have a smaller footprint and will be catered exclusively to medical customers, for now, Groesbeck says.

However, Scheffler adds that the company’s neighborhood-style stores are not “like ones you see everywhere,” he says.

“Just like our [Medizin] store that we built on Sunset, we went way over the top. … We even got chastised for spending too much money or making it too fancy. I think that’s why we [generated] $18 million in the first ten months. So, this will still be a high-end neighborhood store for medical only. It’ll be the top of the line.”

Employees produce in-house brands inside the customer-facing production facility.

And Farris agrees as he says Planet 13’s goal for the neighborhood concept is to still create an experience for customers while strongly focusing on customer service at each location.

“I think as consumers, we all appreciate when you are helped at a higher level and assisted in a way where you feel comfortable and safe and invited. I think some of the elements may not be as showmanship or may not be as crazy as the glitz and glamor [compared to the SuperStores], but I do definitely think that our core principles and how we operate our business are great facilities, great product and great customer service,” Farris says. “So, I think those are all very attainable and something that we’re going to set out and do. It’s also that as you enjoy your experience in Florida at our Planet 13 neighborhood stores, you can see what the SuperStores can offer.”

Farris adds that the Florida expansion shouldn't be too much of a challenge for Planet 13, as it already has experience operating a neighborhood-style store in Las Vegas.

“We started as a medical company. So, we really do understand that model,” Farris says. “We understand how to help and serve patients and educate future consumers on what cannabis is and the benefit that it can provide.”

Betting that Florida will eventually transition into the adult-use market, Groesbeck says Planet 13 hopes to site three SuperStores in the state. The company is already looking at locations in metro Miami, Tampa/St. Petersburg, and metro Orlando.

“[Groesbeck] and I have been to Miami a couple of times already looking for sites, trying to [get] ahead of everything for the future recreational SuperStores, when adult-use becomes legal [in Florida],” Scheffler says. “First of all, it’ll probably be Miami. And then second [will] be either Orlando or St. Pete. [We] probably could have three SuperStores in the state of Florida just with the number of tourists that come to Florida [a year].”

Flower on display behind a glass counter on the dispensary floor.

Long-Term Goals

Aside from Florida, the company has plans to expand to other states in the future.

The company was granted an adult-use license in the Chicago-Naperville-Elgin region in August 2021 but has put operations on hold as the state’s retail licensing program remains in limbo. Several applicants sued the state for being excluded from the licensing lottery, and the state cannot issue any of the 185 retail licenses it awarded during the three licensing lotteries last summer until those legal challenges are settled.

“The last round of licenses that were issued have become mired in litigation. Our license is not even part of that litigation, but the state of Illinois thought it was prudent to pull everything back until these lawsuits were resolved," Groesbeck says. "So, there's no ability for us to even process the license at this point. That being said, we've looked at a number of locations in the greater metro Chicago area for a SuperStore location, and we've pulled back a bit on that. We're going to wait until the licenses are real and we have the ability to move forward. But it's still our goal when the dust settles there to build a Planet 13 type store in the metro area."

Groesbeck says the company has also spent the last few years looking at potential opportunities in Arizona, none of which have come to fruition; however, he notes that Arizona, in addition to Michigan, are attractive locations for Planet 13, but for now, their main focus is Florida.

"Right now, our plate is really full, just building Florida out alone this year," Groesbeck says. "Given the schedule we have, it's just a really monumental task. And so, we're laser-focused on getting that license operational."

Andriana Ruscitto is associate editor for Cannabis Business Times and Cannabis Dispensary.