What changed in this filing

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Item 1. Business

2023-03-23 compared with 2022-03-28 · 483 added, 380 removed, 442 unchanged (66% of the section changed)

We are a vertically integrated cultivator and provider of cannabis and cannabis-infused products in the State of Nevada, and following March 2, 2022, also in the State of California.

Through our subsidiaries in Nevada, we hold six licenses for cultivation (three medical licenses and three recreational licenses), six licenses for production (three medical licenses and three recreational licenses), three dispensary licenses (one medical license and two recreational licenses) and two distribution licenses (one active and one conditional).

We are a vertically integrated cultivator and provider of cannabis and cannabis-infused products in the States of Nevada and California.

In addition to these operational cannabis licenses, we hold licenses and are developing operations in Florida and Illinois.

Our common shares are listed for trading on the Canadian Securities Exchange (“

CSE ”) under the symbol “PLTH”

and quoted on the OTCQX in the United States under the symbol “PLNHF.”

Through our subsidiaries in Nevada, we hold six licenses for cultivation (three medical licenses and three adult-use licenses), six licenses for production (three medical licenses and three adult-use licenses), three dispensary licenses (one medical license and two adult-use licenses) and one distribution license.

Additionally, in California, through Newtonian Principles, Inc.

(“ Newtonian ”), a wholly-owned subsidiary of ours located in Santa Ana, California, we hold one dispensary license and one distribution license.

Newtonian ”), a wholly-owned subsidiary of ours located in Santa Ana, California, we hold one dispensary license and one distribution license.

On March 2, 2022, we acquired through a plan of arrangement, and then amalgamated with, Next Green Wave Holdings Inc.

NGW was a Canadian-based, North American seed to sale cannabis company, which provided products and services to the cannabis industry in the State of California.

See “ 2022 Acquisition of Next Green Wave Holdings Inc.

” Through our California subsidiaries obtained following our acquisition of NGW, we hold two licenses for adult-use cultivation, one cultivation adult-use nursery license, one cultivation medical license, one adult-use and medical distribution license, one manufacturer Type P license, and have a local permit approval with a pending California state application for a cultivation processor license.

Our common shares are listed for trading on the Canadian Securities Exchange (“ CSE ”) under the symbol “PLTH” and quoted on the OTCQX in the United States under the symbol “PLNHF.”

We currently sell over 123 different strains of cannabis (more than 35 of which are grown in house) and have a customer-loyalty database of over 45,000 customers.

NGW ”).

NGW was a Canada-based seed to sale cannabis company, which provided products and services to the cannabis industry in the State of California.

2022 Acquisition of Next Green Wave Holdings Inc.

With the California subsidiaries obtained from our acquisition of NGW, we received two licenses for adult-use cultivation, one cultivation adult-use nursery license, one cultivation medical license, one adult-use and medical distribution license, one adult-use and medical manufacturer Type P license, and a pending application for a cultivation processor license.

Shortly after acquiring NGW, we initiated a series of updates and consolidations of NGW licenses, resulting in upgrading the Type P license to a Type 6 manufacturing license, and consolidating the various cultivation licenses into a medium cultivation license. 

Pursuant to the consolidation, on February 27, 2023, we further requested to relinquish our nursery and processor licenses, as those are redundant under the medium cultivation license.

On July 1, 2022, we acquired a 23-acre parcel of real property, inclusive of a 10,500 square foot building, near Ocala, Florida which is currently authorized to cultivate, process, and dispense medical marijuana.

We are in the process of developing our operational plans and continue to select dispensing locations across Florida which we expect to supply from the Ocala cultivation and processing location.

On July 22, 2022, we received the previously awarded Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region and intend to open a dispensary in Waukegan, a suburb of Chicago, by mid to late 2023.

We currently sell over 123 different strains of cannabis (up to 35 of which are grown in-house) and have a customer-loyalty database of over 385,000 customers.

We own and manufacture cannabis products under the following brands:

HaHa (gummies and beverages), Dreamland (chocolates), TRENDI (vapes and concentrates), Medizin (flower, vapes, concentrates), Leaf and Vine (vapes).

We operate our Nevada cultivation licenses at three separate facilities, each location operating jointly under a medical and adult-use cultivation license.

Two of our cultivation licenses operate out of Clark County, Nevada (Las Vegas) and include indoor cultivation and perpetual harvest cycles.

One is located in an approximately 16,100 square foot facility, and the other operates out of a 25,000 square foot facility and is in construction to expand to a total of 45,000 square feet.

The third cultivation license is located near the town of Beatty in Nye County, Nevada.

The Beatty cultivation facility currently houses approximately 500 square feet of research and development and genetics testing with the potential to expand to over 2,300,000 square feet of greenhouse production capacity on 80 acres of owned land that includes municipal water and abundant electrical power already at the edge of the property.

Following the March 2, 2022 NGW acquisition, we hold two adult-use and one medical cultivation licenses, a cultivation nursery license, a distributor license, and a cultivation processor license which operates out of our California indoor cultivation out of the 35,875 square foot facility in Coalinga, California.

California cultivation wholesale products are primarily distributed through a California licensed third-party distributor.

Our six Nevada production licenses operate at three licensed production facilities, each location operating jointly under a medical and adult-use cultivation license.

One production facility is a 18,500 square foot customer facing production facility that opened inside our cannabis entertainment complex adjacent to the Las Vegas Strip (the “ Planet 13 Las Vegas Superstore ”).

This facility incorporates butane hash oil extraction (BHO extraction), distillation equipment and microwave assisted extraction equipment as well as a state-of-the-art bottling and infused beverage line and an edibles line able to produce infused chocolates, infused gummies and other edible products.

The second production facility is co-located at the Beatty facility, and the third facility is co-located in a 25,000 square foot cultivation facility located in Las Vegas.

Manufactured products and Trendi-branded third-party flower are distributed through Nevada under our Nevada distribution license.

Following the March 2, 2022 acquisition of NGW, we hold an adult-use and medical processing license, Type P in California which we operate out of our 4,000 square foot facility in Coalinga, California.

We operate two dispensaries in Nevada under two adult-use and one medical licenses.

Since 2018, two licenses (one medical and one adult-use) jointly operate out of the Planet 13 Las Vegas Superstore and occupy approximately 24,000 square feet of retail space adjacent to the Las Vegas Strip.

Prior to relocating to the Planet 13 Las Vegas Superstore, the licenses operated out of a 2,300 square foot facility located approximately six miles off the Las Vegas Strip (the “ Medizin Facility ”).

In September 2020, we received an unincorporated Clark County recreational license for the Medizin Facility dispensary which had closed when its dispensary licenses were transferred to the Planet 13 Las Vegas Superstore and re-opened the Medizin Facility on November 30, 2020.

We operate one dispensary in California and occupy approximately 25,600 square feet of retail space on Warner Boulevard in the City of Santa Ana located in Orange County (the “ Planet 13 OC Superstore ”).

We have a licensed 6,300 square feet distribution facility adjacent to the Planet 13 OC Superstore, and launched a distribution and delivery service in Orange County to augment our retail location and deliver product to customers and local California state residents throughout Orange County and the surrounding area.

On August 5, 2021, our subsidiary, Planet 13 Illinois LLC (“ Planet 13 Illinois ”), which is owned 49% by us and 51% by Frank Cowan, a resident of Illinois, was a lottery winner for a Social-Equity Justice Involved Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Department of Financial and Professional Regulation in the State of Illinois.

We intend to open a dispensary in the downtown Chicago area and anticipate that it will be operational in late 2022.

On October 5, 2021, we formed Planet 13 Chicago, LLC as a 100% owned leasing entity to support future operations in Illinois.

On October 1, 2021, our wholly owned subsidiary, Planet 13 Florida Inc.

(“ Planet 13 Florida ”), completed the acquisition of a license from a subsidiary of Harvest Health & Recreation Inc.

(the “ Seller ”) pursuant to which Planet 13 Florida purchased from the Seller a license to operate as a Medical Marijuana Treatment Center issued by the Florida Department of Health for $55,000,000 in cash.

No other assets or liabilities were acquired.

Licensed Medical Marijuana Treatment Centers (“ MMTCs ”) are vertically integrated and the only businesses in Florida authorized to dispense medical marijuana cannabis to qualified patients and caregivers.

MMTCs are authorized to cultivate, process, transport and dispense medical marijuana.

As of December 31, 2021, there were 22 companies with MMTC licenses in Florida .

License holders are not subject to restrictions on the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate.

As part of our Florida expansion, as of the date of this report, we have entered into one lease for a dispensary location in Florida located in Orange Park.

The following table presents the inter-corporate relationships between us and our subsidiaries as at the date hereof.

Subsidiaries of Company

Ownership and control

MM Development Company, Inc.

Licensed Nevada cannabis operations

Nevada license holding company;

vertically integrated cannabis operations

BLC Management Company, LLC

Management / Holding Entity

CBD products / sales company

Management/holding company

CBD retail sales and marketing

BLC NV Food, LLC

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By The Slice, LLC

Subsidiary of BLC NV Food, LLC, holdings restaurant and retail operations

Subsidiary of BLC NV Food, LLC;

restaurant and retail operations

Newtonian Principles, Inc.

Licensed California cannabis operations

California license holding company;

cannabis retail sales

Planet 13 Illinois, LLC

Applicant entity for Illinois dispensary license in Chicago region

Illinois license holding company

Planet 13 Florida, Inc.

Holding company for Florida cannabis license

Florida license holding company

Planet 13 Chicago, LLC

Holding entity for prospective Illinois lease(s)

MM Development MI, Inc.

Inactive shelf corporation

MM Development CA, Inc.

Inactive shelf corporation

Additional Subsidiaries of Company Acquired March 2, 2022 from Next Green Wave Holdings Inc.

Holding company

Club One Three, LLC

Crossgate Capital U.S.

Holdings Corp.

Holding company for NGWB, LLC and Next Green Wave, LLC

Subsidiary of Crossgate Capital U.S.

Holdings Corp., holding entity for City of Coalinga, California land-use permits

Holding company for Next Green Wave, LLC

Next Green Wave, LLC

Subsidiary of Crossgate Capital U.S.

Holdings Corp., licensed California cannabis operations

Our registered office is located at 10th floor, 595 Howe St., Vancouver, BC V6C 2T5, and our head office is located at 2548 West Desert Inn Road, Suite 100, Las Vegas, Nevada 89109.

Holdings Corp.;

California license holding company;

cannabis cultivation and processing

Our registered office is located at Bentall 5, 550 Burrard Street, Suite 2501, Vancouver, BC V6C 285, and our head office is located at 2548 West Desert Inn Road, Suite 100, Las Vegas, Nevada 89109.

History of the Company

We were incorporated under the Canada Business Corporations Act (“ CBCA ”) on April 26, 2002 under the name “High Income Preferred Shares Corporation.” On October 18, 2010, Wombat Investment Trust acquired control of us and on January 1, 2011, we changed our name to “Carpincho Capital Corp.” (“ Carpincho ”).

We were incorporated under the Canada Business Corporations Act (“

CBCA ”) on April 26, 2002 under the name “High Income Preferred Shares Corporation.”

On October 18, 2010, Wombat Investment Trust acquired control of us and on January 1, 2011, we changed our name to “Carpincho Capital Corp.”

Carpincho ”).

MM Development Company, Inc.

(“ MMDC ”), now one of our wholly owned subsidiaries, was formed on March 20, 2014 as a Nevada limited liability company under the name MM Development Company, LLC (“ MMDC LLC ”) with the mission to provide compassionate, dignified and affordable access to cannabis, cannabis concentrates and cannabis-infused products to approved customers in the State of Nevada.

MMDC ”), now one of our wholly owned subsidiaries, was formed on March 20, 2014 as a Nevada limited liability company under the name MM Development Company, LLC (“

MMDC LLC ”) with the mission to provide compassionate, dignified and affordable access to cannabis, cannabis concentrates and cannabis-infused products to approved customers in the State of Nevada.

MMDC LLC underwent a statutory conversion to a Nevada corporation and became MMDC on March 14, 2018.

On June 11, 2018, MMDC completed a reverse-take-over (“ RTO ” or “ Business Combination ”) transaction of Carpincho and filed Articles of Amendment to effect (i) a consolidation of its share capital on a 0.875 (new) for one (1) old basis; (ii) a name change from “Carpincho Capital Corp.” to “Planet 13 Holdings Inc.”; and (iii) the creation of a new class of convertible, class A restricted voting shares (the “ Restricted Voting Shares ”).

The Restricted Voting Shares were convertible into common shares of the Company (the “ Common Shares ”) at the option of the holders on a share-for-share basis.

On May 31, 2018, the Nevada State Department of Taxation (“ DOT ”), the agency which regulated cannabis operations in Nevada, approved the transfer of MMDC’s cultivation production and dispensary licenses to us.

On June 26, 2019, we continued out of the jurisdiction of Canada under the CBCA into the jurisdiction of the Province of British Columbia under the Business Corporations Act (British Columbia) (“ BCBCA ”).

On June 11, 2018, MMDC completed a reverse-takeover (“

Business Combination ”) transaction of Carpincho and filed Articles of Amendment to effect (i) a consolidation of its share capital on a 0.875 (new) for one (1) old basis;

(ii) a name change from “Carpincho Capital Corp.”

to “Planet 13 Holdings Inc.”;

and (iii) the creation of a new class of convertible, class A restricted voting shares (the “

Restricted Voting Shares ”).

The Restricted Voting Shares were convertible into common shares of the Company (the “

Common Shares ”) at the option of the holders on a share-for-share basis.

On May 31, 2018, the Nevada State Department of Taxation (“

DOT ”), the agency which regulated cannabis operations in Nevada, approved the transfer of MMDC’s cultivation production and dispensary licenses to us.

On June 26, 2019, we continued out of the jurisdiction of Canada under the CBCA into the jurisdiction of the Province of British Columbia under the Business Corporations Act (British Columbia) (“

BCBCA ”).

On August 12, 2019, our wholly-owned subsidiary 10653918 Canada Inc.

(“ Finco ”) was continued out of the jurisdiction of Canada under the CBCA into the jurisdiction of the Province of British Columbia under the BCBCA and on September 24, 2019, we completed a short-form vertical amalgamation with Finco (the “ Short Form Amalgamation ”).

Finco ”) was continued out of the jurisdiction of Canada under the CBCA into the jurisdiction of the Province of British Columbia under the BCBCA and on September 24, 2019, we completed a short-form vertical amalgamation with Finco (the “

Short Form Amalgamation ”).

The Short Form Amalgamation was undertaken to simplify our corporate structure and to obtain certain administrative and financial reporting efficiencies.

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Following the Business Combination, we have continued the business of MMDC.

2018 Financings, Subscription Receipt Offering, Bought Deal Offering

2018 Financings

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The notes were repaid by us on July 9, 2018.

2018 Subscription Receipt Offering

Over the course of three tranches on April 26, May 18 and May 23, 2018, Finco completed private placements of subscription receipts (the “ Subscription Receipts ”) at a price of C$0.80 per Subscription Receipt for aggregate gross proceeds of approximately C$25,100,000 (the “ Subscription Receipt Offering ”), the brokered portion of which was conducted by a syndicate of agents co-led by Beacon Securities Limited and Canaccord Genuity Corp.

April-May 2018 Subscription Receipt Offering

Over the course of three tranches on April 26, May 18 and May 23, 2018, Finco completed private placements of subscription receipts (the “

Subscription Receipts ”) at a price of C$0.80 per Subscription Receipt for aggregate gross proceeds of approximately C$25,100,000 (the “

Subscription Receipt Offering ”), the brokered portion of which was conducted by a syndicate of agents co-led by Beacon Securities Limited and Canaccord Genuity Corp.

and including Haywood Securities Inc.

(collectively, the “ Agents ”).

(collectively, the “

Agents ”).

The proceeds from the Subscription Receipt Offering, less certain expenses, were placed into escrow on completion of the Subscription Receipt Offering.

In connection with the completion of the Business Combination, the Subscription Receipts were converted on a one-for-one basis into a total of 31,458,300 common shares of Finco and 15,729,150 common share purchase warrants of Finco, which upon completion of the acquisition of Finco by us were exchanged for an equal number of Common Shares and Common Share purchase warrants (the “ Common Share Warrants ”), respectively, and the escrowed proceeds from the Subscription Receipt Offering, less the commission of the Agents and certain fees and expenses, were released from escrow to us.

Common Share Warrants ”), respectively, and the escrowed proceeds from the Subscription Receipt Offering, less the commission of the Agents and certain fees and expenses, were released from escrow to us.

Each Common Share Warrant may be exercised for one Common Share at an exercise price of C$1.40 for a period of 24 months from the date of issue.

In consideration for services rendered, the Agents were paid a cash commission equal to 6% of the gross proceeds of the Subscription Receipt Offering and issued 1,485,645 compensation warrants (the “ Compensation Warrants ”).

Compensation Warrants ”).

Each Compensation Warrant entitled the holder thereof to purchase one Common Share at an exercise price of C$0.80 until June 11, 2020.

2018 Bought Deal Offering

On December 4, 2018, we issued 8,735,250 units (each, a “ Unit ”) at a price of C$3.00 per Unit and 425,000 Common Share Warrants (the “ Over-Allotment Warrants ”) for a price of C$0.44 per Over-Allotment Warrant for aggregate gross proceeds of C$26,392,750 pursuant to a bought deal offering (the “ 2018 Bought Deal Offering ”).

December 2018 Bought Deal Offering

On December 4, 2018, we issued 8,735,250 units (each, a “

Unit ”) at a price of C$3.00 per Unit and 425,000 Common Share Warrants (the “

Over-Allotment Warrants ”) for a price of C$0.44 per Over-Allotment Warrant for aggregate gross proceeds of C$26,392,750 pursuant to a bought deal offering (the “

2018 Bought Deal Offering ”).

The 2018 Bought Deal Offering was led by Beacon Securities Limited and included Canaccord Genuity Corp and Cormark Securities Inc.

(collectively, the “ 2018 Bought Deal Underwriters ”).

Each Unit was comprised of one Common Share and one-half of one Common Share purchase warrant (each whole warrant, a “ Unit Warrant ” and, together with the Over-Allotment Warrants, the “ 2018 Bought Deal Warrants ”).

(collectively, the “

2018 Bought Deal Underwriters ”).

Each Unit was comprised of one Common Share and one-half of one Common Share purchase warrant (each whole warrant, a “

Unit Warrant ”

and, together with the Over-Allotment Warrants, the “

2018 Bought Deal Warrants ”).

Each 2018 Bought Deal Warrant entitled the holder to purchase one Common Share at an exercise price of C$3.75 for a period of 36 months following the closing of the 2018 Bought Deal Offering unless earlier accelerated by us pursuant to the terms thereof.

On December 23, 2020, we announced that we had elected to accelerate the expiry date of the outstanding 2018 Bought Deal Warrants to January 28, 2021.

As consideration for services rendered, the 2018 Bought Deal Underwriters were paid a cash commission equal to 6.0% of the gross proceeds of the 2018 Bought Deal Offering and issued compensation options equal to 6% of the number of Units and Over-Allotment Warrants sold (the “ Compensation Options ”).

Compensation Options ”).

Each Compensation Option entitled the holder thereof to purchase one Common Share at an exercise price of C$3.00 for a period of 24 months following the closing of the 2018 Bought Deal Offering.

We recorded share issuance costs of C$1,536,302.

2019 Formation of Non-Operational Entities

In 2019, we formed MM Development MI, Inc.

and Planet 13 Illinois, LLC for the purpose of state and local cannabis applications, and LBC CBD, LLC for the purpose of marketing and selling our cannabidiol (“ CBD ”) line of products.

We also formed BLC NV Food, LLC in January 2020, for the purpose of potential lounge, restaurant, and catering opportunities, and submitted restricted license applications to local jurisdictions in Nevada.

These projects are non-operational as at the date hereof, and as material information develops related to each entity, it will be disclosed at the appropriate time and manner by us.

2020 Acquisitions and Financing, Re-Opening Medizin Dispensary

Santa Ana Acquisition

On May 20, 2020, we acquired all of the issued and outstanding common stock (the “ Newtonian Shares ”) of Newtonian Principles Inc.

(“ Newtonian ”) (the “ Santa Ana Acquisition ”), resulting in our acquiring a provisional cannabis retail license, adult use issued by the State of California Bureau of Cannabis Control (the “ California License ”) and a regulatory safety permit issued by the City of Santa Ana (the “ Santa Ana Permit ”), which were both held by Newtonian, and a 30-year lease for a dispensary in Santa Ana, California (the “ Santa Ana Premises ”) along with certain other assets (collectively, the “ Warner Assets ”) from Warner Management Group, LLC (“ Warner ”).

May 2020 Santa Ana Acquisition

On May 20, 2020, we acquired all of the issued and outstanding common stock (the “

Newtonian Shares ”) of Newtonian Principles Inc.

Newtonian ”) (the “

Santa Ana Acquisition ”), resulting in our acquiring a provisional adult-use cannabis retailer license issued by the State of California Bureau of Cannabis Control (the “

California License ”) and a regulatory safety permit issued by the City of Santa Ana (the “

Santa Ana Permit ”), which were both held by Newtonian, and a 30-year lease for a dispensary in Santa Ana, California (the “

Santa Ana Premises ”) along with certain other assets (collectively, the “

Warner Assets ”) from Warner Management Group, LLC (“

Warner ”).

Newtonian had no operations at the time of the Santa Ana Acquisition.

We issued 3,940,932 Restricted Voting Shares (the “ Santa Ana Consideration Shares ”), representing an agreed value of US$4,000,000, to certain vendors in consideration for the Newtonian Shares, and paid Warner US$1,000,000 in cash and cancelled an interim buildout loan to Warner in consideration for the Warner Assets.

We issued 3,940,932 Restricted Voting Shares (the “

Santa Ana Consideration Shares ”), representing an agreed value of US$4,000,000, to certain vendors in consideration for the Newtonian Shares, and paid Warner US$1,000,000 in cash and cancelled an interim buildout loan to Warner in consideration for the Warner Assets. 

The Santa Ana Consideration Shares were subject to a four-month and one day hold period under Canadian securities laws and were subject to a lock-up whereby 1/8 of the Santa Ana Consideration Shares were released from lock-up each month beginning on September 22, 2020.

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On June 18, 2021, Newtonian received both a Commercial Cannabis Adult-Use Retail Sales and a Commercial Cannabis Distribution Regulatory Safety Permit Phase 2 approval from the City of Santa Ana, and on June 21, 2021, received a California Adult-Use and Medicinal Distributor License.

In mid-June 2021, we completed the build-out of the Planet 13 OC Superstore dispensary and distribution facility, and opened the facility for California State and the City of Santa Ana licensed cannabis sales and distribution starting July 1, 2021.

WCDN Acquisition

On July 17, 2020, we entered into an asset purchase agreement (the “ WCDN Asset Acquisition Agreement ”) with West Coast Development Nevada, LLC (“ WCDN ”), W The Brand, LLC, and R.

Scott Coffman, pursuant to which we, through MMDC, acquired cannabis inventory, equipment and tenant improvements located in a 25,000 square feet facility at 4801 West Bell Drive, Las Vegas, Nevada 89118 (the “ WCDN Acquisition Facility ”), which has the ability to expand to 45,000 square feet (the “ WCDN Acquisition ”).

The purchase price for the asset purchase was US$4.1 million and consisted of US$1,156,000 in cash for the inventory and US$3,000,000 million (US$500,000 cash and US$2,500,000 of Common Shares, resulting in the issuance of 1,374,833 Common Shares (the “ WCDN Consideration Shares ”) based on a 10-day volume weighted average price of the Common Shares as of the close of trading on July 16, 2020) for the operating assets and licenses.

In mid-June 2021, we completed the build-out of approximately 25,600 square feet of retail space on Warner Boulevard in the City of Santa Ana located in Orange County (the “

Planet 13 OC Superstore ”) and co-located distribution facility, and opened for California State and City of Santa Ana licensed cannabis sales and distribution starting July 1, 2021. 

July 2020 WCDN Acquisition

On July 17, 2020, we entered into an asset purchase agreement (the “

WCDN Asset Acquisition Agreement ”) with West Coast Development Nevada, LLC (“

WCDN ”), W The Brand, LLC, and R.

WCDN Acquisition Facility ”), which has the ability to expand to 45,000 square feet (the “

WCDN Acquisition ”).

WCDN Consideration Shares ”) based on a 10-day volume weighted average price of the Common Shares as of the close of trading on July 16, 2020) for the operating assets and licenses.

The WCDN Consideration Shares were held in escrow until the Second Closing (as defined herein).

The WCDN Acquisition allowed us to solidify our vertical integration in Nevada.

The privileged licenses included medical and adult-use cultivation and production licenses in unincorporated Clark County, and these licenses were transferred to our existing Nevada subsidiary, MMDC, to be operated on the same terms and subject to the same oversight provided at MMDC’s current production and cultivation operations in unincorporated Clark County, Nevada.

The transaction was scheduled to close in two parts, the first closing being cash transferred for the equipment and cannabis inventory which occurred on July 17, 2020, and the second closing (the “ Second Closing ”) being contingent on the approval to transfer the license and receipt of the cultivation and production licenses from the State of Nevada’s Cannabis Compliance Board (the “ CCB ”).

The transaction was scheduled to close in two parts, the first closing being cash transferred for the equipment and cannabis inventory which occurred on July 17, 2020, and the second closing (the “

Second Closing ”) being contingent on the approval to transfer the license and receipt of the cultivation and production licenses from the State of Nevada’s Cannabis Compliance Board (the “

CCB ”).

On August 25, 2020, the CCB conditionally approved the transfer of the cultivation and production licenses to MMDC, and on September 3, 2020, MMDC received the cultivation and production licenses pursuant to a letter from the CCB and certificates issued on November 3, 2020.

By way of an October 12, 2020 letter from the CCB, MMDC received a conditional distribution license from WCDN.

The CCB later revisited that letter, claimed it was issued unintentionally or in error, and by CCB public hearing approved the transfer of the conditional distribution license from WCDN to MMDC on December 18, 2020.

The approval of the conditional distribution license was confirmed in a letter from the CCB dated January 4, 2021.

This is a conditional permit, and no certificate will be available until receipt of a final inspection by the CCB on or prior to February 5, 2023.

On September 11, 2020, we mutually agreed with WCDN that the receipt by MMDC of a business license issued by unincorporated Clark County which would permit us to conduct business in Clark County (the “ Clark County Business License ”) was a necessary condition precedent to the Second Closing.

Pursuant to the WCDN Acquisition, MMDC also received a conditional distribution license which it did not place into operation and later sold on January 6, 2023.

Clark County Business License ”) was a necessary condition precedent to the Second Closing.

MMDC received the Clark County Business License and subsequently completed the Second Closing on November 27, 2020, at which time WCDN Consideration Shares were released from escrow to WCDN.

Concurrent with the first closing of the WCDN Acquisition, RX Land, LLC (“ RX Land ”), an entity owned by Robert Groesbeck and Larry Scheffler (our co-chief executive officers, collectively the “ Co-CEOs” and each a “ Co-CEO ”), acquired the WCDN Acquisition Facility for US$3.3 million and entered into a lease agreement with WCDN in respect of such facility (the “ Initial West Bell Lease ”).

Concurrent with the first closing of the WCDN Acquisition, RX Land, LLC (“

RX Land ”), an entity owned by Robert Groesbeck and Larry Scheffler (our co-chief executive officers, collectively the “

Co-CEOs ”

and each a “

Co-CEO ”), acquired the WCDN Acquisition Facility for US$3.3 million and entered into a lease agreement with WCDN in respect of such facility (the “

Initial West Bell Lease ”).

In accordance with the terms of the WCDN Asset Acquisition Agreement and approvals by our independent directors, WCDN assigned the Initial West Bell Lease to MMDC on November 25, 2020, and MMDC subsequently entered into an amending agreement with RX Land on November 27, 2020, to amend certain terms of such lease agreement including increasing the lease payments, extending the duration of the lease and, if desired, allowing for second floor installation by MMDC without a corresponding lease rate increase due to an increase in facility size.

July 2020 Bought Deal Offering

On July 3, 2020, we completed bought deal financing for aggregate gross proceeds of C$11,521,850 (the “ July 2020 Bought Deal ”) pursuant to which an aggregate of 5,359,000 units (each, a “ July 2020 Bought Deal Unit ”) of the Company were sold at a price of C$2.15 per July 2020 Bought Deal Unit.

Each July 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “ July 2020 Bought Deal Warrant ”).

On July 3, 2020, we completed bought deal financing for aggregate gross proceeds of C$11,521,850 (the “

July 2020 Bought Deal ”) pursuant to which an aggregate of 5,359,000 units (each, a “

July 2020 Bought Deal Unit ”) of the Company were sold at a price of C$2.15 per July 2020 Bought Deal Unit.

Each July 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “

July 2020 Bought Deal Warrant ”).

Each July 2020 Bought Deal Warrant entitles the holder thereof to acquire one Common Share at an exercise price of C$2.85 per Common Share until July 3, 2022.

The underwriters received a cash commission equal to 6.0% of the gross proceeds from the sale of the July 2020 Bought Deal Units.

The underwriters also received compensation options (each a “ July 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of July 2020 Bought Deal Units sold.

The underwriters also received compensation options (each a “

July 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of July 2020 Bought Deal Units sold.

Each July 2020 Bought Deal Compensation Option entitles the underwriters to purchase one Common Share at a price of C$2.15 until July 3, 2022.

September 2020 Bought Deal Offering

On September 10, 2020, we completed our previously announced bought deal financing for aggregate gross proceeds of C$23,019,550 (the “ September 2020 Bought Deal ”) pursuant to which an aggregate of 6,221,500 units (each, a “ September 2020 Bought Deal Unit ”) of the Company were sold at a price of C$3.70 per September 2020 Bought Deal Unit.

Each September 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “ September 2020 Bought Deal Warrant ”).

On September 10, 2020, we completed our previously announced bought deal financing for aggregate gross proceeds of C$23,019,550 (the “

September 2020 Bought Deal ”) pursuant to which an aggregate of 6,221,500 units (each, a “

September 2020 Bought Deal Unit ”) of the Company were sold at a price of C$3.70 per September 2020 Bought Deal Unit.

Each September 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “

September 2020 Bought Deal Warrant ”).

Each September 2020 Bought Deal Warrant entitles the holder thereof to acquire one Common Share at an exercise price of C$5.00 per Common Share until September 10, 2022.

The underwriters received a cash commission equal to 6.0% of the gross proceeds from the sale of the September 2020 Bought Deal Units.

The underwriters also received compensation options (each a “ September 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of September 2020 Bought Deal Units sold.

The underwriters also received compensation options (each a “

September 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of September 2020 Bought Deal Units sold.

Each September 2020 Bought Deal Compensation Option entitles the underwriters to purchase one Common Share at a price of C$3.70 until September 10, 2022.

November 2020 Bought Deal Offering

On November 5, 2020, we completed our previously announced bought deal financing for aggregate gross proceeds of C$28,604,625 (the “ November 2020 Bought Deal ”) pursuant to which an aggregate of 6,698,750 units (each, a “ November 2020 Bought Deal Unit ”) of the Company were sold at a price of C$4.30 per November 2020 Bought Deal Unit.

Each November 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “ November 2020 Bought Deal Warrant ”).

On November 5, 2020, we completed our previously announced bought deal financing for aggregate gross proceeds of C$28,604,625 (the “

November 2020 Bought Deal ”) pursuant to which an aggregate of 6,698,750 units (each, a “

November 2020 Bought Deal Unit ”) of the Company were sold at a price of C$4.30 per November 2020 Bought Deal Unit.

Each November 2020 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “

November 2020 Bought Deal Warrant ”).

Each November 2020 Bought Deal Warrant entitles the holder thereof to acquire one Common Share at an exercise price of C$5.80 per Common Share until November 5, 2022.

The underwriters received a cash commission equal to 6.0% of the gross proceeds from the sale of the November 2020 Bought Deal Units.

The underwriters also received compensation options (each a “ November 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of November 2020 Bought Deal Units sold.

The underwriters also received compensation options (each a “

November 2020 Bought Deal Compensation Option ”) equal to 6.0% of the number of November 2020 Bought Deal Units sold.

Each November 2020 Bought Deal Compensation Option entitles the underwriters to purchase one Common Share at a price of C$4.30 until November 5, 2022.

Medizin Re-opening

November 2020 Medizin Re-Opening

MMDC applied for dispensary licenses in Nevada pursuant to a competitive application process in September 2018, and was notified that no licenses were awarded in December 2018.

On information known at that time, MMDC filed a lawsuit against the State of Nevada, along with a significant majority of similarly denied applicants.

After the first week of trial in July 2020 concerning that litigation pending from December 2018, MMDC entered into a settlement agreement with the State of Nevada, and defendants in intervention to receive a license in unincorporated Clark County to reopen the Medizin location (the “ Nevada License Settlement ”).

Medizin Facility ”) (the “

Nevada License Settlement ”).

On July 31, 2020, the Nevada Tax Commission convened and approved the signed Nevada License Settlement and requested that the CCB, which had authority over Nevada-licensed cannabis businesses as of July 1, 2020, also convene and approve the settlement.

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Pursuant to a letter dated September 3, 2020, the CCB transferred the conditional Clark County dispensary license to MMDC.

On November 20, 2020, we opened the Medizin store location, having received CCB final inspection approvals and a Clark County business license.

On November 20, 2020, we opened the Medizin Facility, having received CCB final inspection approvals and a Clark County business license.

2021 Bought Deal Offering, Opening of Planet 13 OC Superstore, Illinois Conditional License Award, Florida License Purchase Agreement

February 2021 Bought Deal Offering

On February 2, 2021, we completed a bought deal financing for aggregate gross proceeds of C$69,028,750 (the “ February 2021 Bought Deal ”) pursuant to which an aggregate of 9,861,250 units (each, a “ February 2021 Bought Deal Unit ”) of the Company were sold at a price of C$7.00 per February 2021 Bought Deal Unit.

Each February 2021 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “ February 2021 Bought Deal Warrant ”).

On February 2, 2021, we completed a bought deal financing for aggregate gross proceeds of C$69,028,750 (the “

February 2021 Bought Deal ”) pursuant to which an aggregate of 9,861,250 units (each, a “

February 2021 Bought Deal Unit ”) of the Company were sold at a price of C$7.00 per February 2021 Bought Deal Unit.

Each February 2021 Bought Unit consisted of one Common Share and one-half (1/2) of one Common Share purchase warrant (each whole warrant, a “

February 2021 Bought Deal Warrant ”).

Each February 2021 Bought Deal Warrant entitles the holder thereof to acquire one Common Share at an exercise price of C$9.00 per Common Share until February 2, 2023.

The underwriters received a cash commission equal to 6.0% of the gross proceeds from the sale of the February 2021 Bought Deal Units.

The underwriters also received compensation options (each a “ February 2021 Bought Deal Compensation Option ”) equal to 6.0% of the number of February 2021 Bought Deal Units sold.

The underwriters also received compensation options (each a “

February 2021 Bought Deal Compensation Option ”) equal to 6.0% of the number of February 2021 Bought Deal Units sold.

Each February 2021 Bought Deal Compensation Option entitles the underwriters to purchase one Common Share at a price of C$7.00 until February 2, 2023.

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August 2021 Illinois Dispensing License Lottery Win

On August 5, 2021, our subsidiary, Planet 13 Illinois, which is owned 49% by us and 51% by Frank Cowan, a resident of Illinois, was a lottery winner for a Social-Equity Justice Involved Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Department of Financial and Professional Regulation in the State of Illinois.

We intend to launch a dispensary in the downtown Chicago area and anticipate that it will be operational in late 2022.

October 2021 Florida License Acquisition from Harvest Health & Recreation Inc.

On October 1, 2021, Planet 13 Florida completed the acquisition of a license from the Seller pursuant to which Planet 13 Florida purchased from the Seller a license to operate as a MMTC issued by the Florida Department of Health for $55,000,000 in cash.

2022 Acquisition of Next Green Wave Holdings Inc.

On March 2, 2022 (the “ Closing Date ”), we completed our acquisition of NGW.

We entered into an arrangement agreement (the “ Arrangement Agreement ”) with NGW on December 20, 2021 pursuant to which we agreed to acquire (the “ Arrangement ”) all of the issued and outstanding common shares of NGW (the “ NGW Shares ”) pursuant to a plan of arrangement (the “ Plan of Arrangement ”) under the Business Corporations Act (British Columbia).

The Arrangement was approved by the holders of NGW Shares (the “ NGW Shareholders ”) at a special meeting of NGW Shareholders held on February 25, 2022 and approved by the Supreme Court of British Columbia on March 1, 2022.

On August 5, 2021, our subsidiary, Planet 13 Illinois LLC (“

Planet 13 Illinois ”), which was then owned 49% by us and 51% by Frank Cowan, a resident of Illinois, was a lottery winner for a Social-Equity Justice Involved Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Department of Financial and Professional Regulation in the State of Illinois.

We intend to launch a dispensary in Waukegan, a suburb of the greater Chicago area, and anticipate that it will be operational in mid to late 2023.

October 2021 Florida License Acquisition

On October 1, 2021, our wholly owned subsidiary, Planet 13 Florida Inc.

Planet 13 Florida ”), completed the acquisition of a license from a subsidiary of Harvest Health & Recreation Inc.

(the “

Seller ”) pursuant to which Planet 13 Florida purchased from the Seller a license to operate as a Medical Marijuana Treatment Center issued by the Florida Department of Health for $55,000,000 in cash.

No other assets or liabilities were acquired.

Licensed Medical Marijuana Treatment Centers (“

MMTCs ”) are vertically integrated and the only businesses in Florida authorized to cultivate, process, transport and dispense medical marijuana to qualified patients and caregivers.

As of December 31, 2022, there were 22 companies with MMTC licenses in Florida .

License holders are not subject to restrictions on the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate.

Recent Developments

March 2022 NGW Acquisition

On March 2, 2022 (the “

Closing Date ”), we completed our acquisition of NGW.

We entered into an arrangement agreement (the “

Arrangement Agreement ”) with NGW on December 20, 2021 pursuant to which we agreed to acquire (the “

Arrangement ”) all of the issued and outstanding common shares of NGW (the “

NGW Shares ”), and then amalgamate with NGW pursuant to a plan of arrangement (the “

Plan of Arrangement ”) under the Business Corporations Act (British Columbia).

The Arrangement was approved by the holders of NGW Shares (the “

NGW Shareholders ”) at a special meeting of NGW Shareholders held on February 25, 2022 and approved by the Supreme Court of British Columbia on March 1, 2022.

Pursuant to the Plan of Arrangement, at 12:01 a.m.

(Vancouver time) (the “ Effective Time ”) on the Closing Date, we acquired all of the NGW Shares for a total consideration of approximately C$71,791,700 (based on the closing price of our Common Shares (the “ Planet 13 Shares ”) on the Canadian Securities Exchange on February 28, 2022), and NGW then amalgamated with us.

The NGW Shareholders received 0.1145 of one Planet 13 Share (the “ Exchange Ratio ”) and a nominal cash payment of C$0.0001 for each NGW Share held immediately prior to the Effective Time.

(Vancouver time) (the “

Effective Time ”) on the Closing Date, we acquired all of the NGW Shares for a total consideration of approximately C$71,345,747 (based on the closing price of our Common Shares (the “

Planet 13 Shares ”) on the Canadian Securities Exchange on March 2, 2022), and NGW then amalgamated with us.

The NGW Shareholders received 0.1145 of one Planet 13 Share (the “

Exchange Ratio ”) and a nominal cash payment of C$0.0001 for each NGW Share held immediately prior to the Effective Time.

As a result, 21,361,002 Planet 13 Shares and C$18,656 in cash were issued in exchange for the NGW Shares.

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As a result, we issued 1,106,925 options in exchange for the NGW options.

Overview of the Company’s Cannabis Business

Though we have since restructured the cannabis licenses of NGW (as more fully set forth in Table 1 in the Licenses section below), through this acquisition, we gained seven cannabis licenses in the State of California.

The combined licenses of Newtonian and NGW allow for cultivation, production, distribution, and dispensing activities in California.

July 2022 Purchase of Florida Cultivation Site

On July 1, 2022, we, through our subsidiary Planet 13 Florida, Inc., closed on a $3,300,000 purchase of a 23-acre parcel of real property, inclusive of a 10,500 square foot building, near Ocala, Florida.

The property was previously leased by Planet 13 Florida, Inc., and has received approvals for cultivation, processing, and dispensing via delivery from the Florida Office of Medical Marijuana Use 

August 2022 Planet 13 Illinois Option Purchase Agreement

On August 5, 2022, we entered into an option purchase agreement that gave us the option to purchase the remaining 51% of Planet 13 Illinois from Frank Cowan for $866,250 in cash and 1,063,377 common shares of the Company.

The option was exercisable at our discretion for a period of two years.

October 2022 Real Property Purchase Agreement

On October 14, 2022, we, through our wholly-owned subsidiary Planet 13 Chicago, LLC, entered into a $2,500,000 real property purchase agreement for a proposed dispensing location in Waukegan, Illinois, for an approximately 8,000 square foot building on 1.9 acres, previously occupied by a financial institution tenant.

Our obligation to close on the transaction was conditioned upon obtaining local jurisdiction zoning and land-use approvals, completion of customary due diligence, and that the current non-occupying tenant terminate their lease at the property.

On November 1, 2022, the Company provided notice of this site selection to the Illinois cannabis regulator.

On February 3, 2023, we closed on this transaction.

2023 Purchase of Remaining 51% of Planet 13 Illinois

On February 7, 2023, we exercised and closed our option to purchase the remaining 51% of Planet 13 Illinois from Frank Cowan. 

Overview of the Company ’

s Cannabis Business

On November 1, 2018, we opened the Planet 13 Las Vegas Superstore, less than 500 feet from the Trump Tower and less than 2,500 feet from the Wynn hotel.

MMDC entered into an arm’s length agreement to lease a 100,000 square foot building to house its Planet 13 Las Vegas Superstore dispensary and corporate office space in a Phase I build-out of the location.

Planet 13 Las Vegas Superstore ”).

In October 2019, we opened a 4,500-square-foot coffee shop and pizzeria in the Planet 13 Las Vegas Superstore.

In 2020, the coffee shop and pizzeria was renamed as the Trece Eatery + Spirits restaurant, owned and operated by us through our subsidiaries.

In 2020, the coffee shop and pizzeria were renamed as the Trece Eatery + Spirits restaurant, owned and operated by us through our subsidiaries.

Future plans include the opening of a possible consumption lounge and a non-cannabis retail facility.

The Planet 13 Las Vegas Superstore lease has a seven-year term with two seven-year renewal options and we have a right-of-first-refusal on any sale of the building.

Prior to opening the Planet 13 Las Vegas Superstore, we sold both medical and recreational products from our then existing facilities.

Prior to opening the Planet 13 Las Vegas Superstore, we sold both medical and adult-use products from our then existing facilities.

On April 1, 2019, we entered into a lease and sub-license agreement for an additional 4.17 acres of land directly adjacent to the Planet 13 Las Vegas Superstore for additional parking.

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We expect to revisit our expansion plans for the Beatty facility once the wholesale market in Nevada stabilizes.

In Nevada we, through MMDC, cultivate our cannabis products at:

(i) a 16,100 square foot leased facility with a perpetual harvest cycle located in Las Vegas (Clark County); (ii) a 500 square foot facility in Nye County where we conduct product research and development and genetics testing, and (iii) a 25,000 square foot leased facility, which is currently undergoing a 20,000 square foot expansion that will bring the total size of the facility to 45,000 square feet, that houses both cultivation and production facilities located in Las Vegas (Clark County).

Following the Arrangement which closed on March 2, 2022, in California we, through our wholly-owned subsidiary, Next Green Wave, LLC (“ NGW, LLC ”), which is licensed by the State of California to produce, distribute and sell products throughout the State, cultivate and process our cannabis products at our 35,000 square foot facility on one of the four properties owned by us and zoned for cannabis cultivation in the City of Coalinga, California (“ Facility A ”).

Facility A enables us to cultivate medicinal and recreational cannabis and distribute cannabis products in accordance with the requirements under the Medicinal and Adult Use Cannabis Regulation and Safety Act, throughout the State of California.

Since October 2019, we produce our cannabis products in (i) a 14,000 square foot leased facility in Las Vegas (Clark County) co-located at the Planet 13 Las Vegas Superstore, expanded in Q3 2021 to 18,500 square feet, and separate from the 16,100 square foot cultivation and distribution facility in Las Vegas (Clark County); (ii) a facility in Nye County owned by us and co-located with cultivation operations, and (iii) a 25,000 square foot leased facility, currently undergoing an expansion to add an additional 20,000 square feet to the facility for cultivation and production located in Las Vegas (Clark County).

From prior to opening the 18,500 square foot production facility that is co-located in the Planet 13 Las Vegas Superstore complex and up to the end of October 2019, we produced our cannabis products at a separate 4,750 square foot facility leased in Las Vegas (Clark County).

All cannabis production licenses held by us in the State of Nevada have been issued to MMDC.

Following the Arrangement which closed on March 2, 2022, in California, we, through our wholly-owned subsidiary, NGW, LLC, which is licensed by the State of California to produce, distribute and sell products throughout the State, process and package our cannabis products at our 4,000 square foot facility on one of the four properties owned by us and zoned for cannabis cultivation in the City of Coalinga, California (“ Facility C ”).

Facility C enables us to process and package medicinal and recreational cannabis and distribute cannabis products in accordance with the requirements under the Medicinal and Adult Use Cannabis Regulation and Safety Act, throughout the State of California.

We operate our Nevada cultivation licenses at three separate facilities, each location operating jointly under a medical and adult-use cultivation license.

Two of our cultivation licenses operate out of Las Vegas in Clark County, Nevada (Las Vegas) and include indoor cultivation and perpetual harvest cycles.

One is located in an approximately 16,100 square foot facility, and the other operates out of a 45,000 square foot facility.

The third cultivation license is located near the town of Beatty in Nye County, Nevada.

Following the Arrangement which closed on March 2, 2022, we, through our wholly-owned subsidiary, Next Green Wave, LLC (“

NGW, LLC ”), which is licensed by the State of California to produce, distribute and sell products throughout the State, cultivate and process our cannabis products at our 35,875 square foot facility on one of the four properties utilized by us and zoned for cannabis cultivation in the City of Coalinga, California (“

Facility A ”).

Facility A enables us to cultivate medicinal and adult-use cannabis and distribute cannabis products in accordance with the requirements under the Medicinal and Adult Use Cannabis Regulation and Safety Act, throughout the State of California.

As part of our Florida expansion, on July 1, 2022, we closed on a $3,300,000 purchase of a 23-acre parcel of real property, inclusive of a 10,500 square foot building, near Ocala, Florida.

We are in the beginning stages of establishing our cultivation operations at this property as we continue to strategically select dispensary locations across the State of Florida.

Our six Nevada production licenses operate at three licensed production facilities, each location operating jointly under a medical and adult-use cultivation license.

One production facility is a 18,500 square foot customer facing production facility that opened inside the Planet 13 Las Vegas Superstore, our cannabis entertainment complex adjacent to the Las Vegas Strip.

In operation since October 2019, this facility incorporates butane hash oil (BHO) extraction, distillation equipment and microwave assisted extraction equipment as well as a state-of-the-art bottling and infused beverage line and an edibles line able to produce infused chocolates, infused gummies and other edible products.

Prior to opening this facility, we produced our cannabis products at a separate 4,750 square foot facility leased in Las Vegas (Clark County).

The second production facility is co-located at the Beatty facility, and the third facility is co-located in the 45,000 square foot cultivation facility located in Las Vegas.

Manufactured products and Trendi-branded third-party flower are distributed through Nevada under our Nevada distribution license.

Following the Arrangement which closed on March 2, 2022, in California, we, through our wholly-owned subsidiary, NGW, LLC, which is licensed by the State of California to produce, distribute and sell products throughout the State, process and package our cannabis products at our 4,000 square foot facility on one of the four properties utilized by us and zoned for cannabis cultivation in the City of Coalinga, California (“

Facility C ”).

Facility C enables us to process and package medicinal and adult-use cannabis and distribute cannabis products in accordance with the requirements under the Medicinal and Adult Use Cannabis Regulation and Safety Act, throughout the State of California.

We currently operate Nevada distribution activities, primarily for the transport of our products between our cultivation, production, and dispensing operations, out of our 16,100 square foot cultivation facility located in Las Vegas (Clark County).

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We currently operate California distribution activities at our licensed facility in Santa Ana, California to receive cannabis products purchased from our vendors prior to placement in the Planet 13 OC Superstore.

Following the Arrangement which closed on March 2, 2022, in California, we, through our wholly-owned subsidiary, NGW, LLC, which is licensed by the State of California to produce, distribute and sell products throughout the State, distribute our cannabis products from Facilities A and C to California-licensed wholesale customers.

We have three Nevada dispensary licenses, one for medical and two for the sale of adult-use product, and an adult-use California dispensary license.

The Planet 13 Las Vegas Superstore, approximately 23,000 square feet of retail space located adjacent to the Las Vegas Strip, houses one medical and one adult-use license.

The other adult-use license operates out of the Medizin-branded store in Clark County, a 2,300 square foot retail facility.

The Planet 13 Las Vegas Superstore has the capacity to serve between 3,000 to 5,000 customers per day through its new, enhanced dispensary.

Following the Arrangement which closed on March 2, 2022, we, through our wholly-owned subsidiary, NGW, LLC, which is licensed by the State of California to produce, distribute and sell products throughout the State, distribute our cannabis products from Facilities A and C to California-licensed wholesale customers.

We have three Nevada dispensary licenses, one for medical and two for the sale of adult-use product.

Since 2018, the Planet 13 Las Vegas Superstore, approximately 23,000 square feet of retail space located adjacent to the Las Vegas Strip, has housed one medical and one adult-use license.

The Planet 13 Las Vegas Superstore has the capacity to serve between 3,000 and 5,000 customers per day through its new, enhanced dispensary.

We intend to build out the balance of the Planet 13 Las Vegas Superstore location with ancillary services such as a potential cannabis lounge in a segregated area of the facility where patrons will be able to consume products that have been purchased at the dispensary.

Lounge facility build-out and operation are pending state and county regulation and ordinance drafting and subsequent licensing of the facility.

The Planet 13 Las Vegas Superstore also houses our corporate offices.

The Planet 13 OC Superstore, with approximately 15,000 square feet of retail space is located in Santa Ana.

In March 2020, per executive order of Nevada’s Governor Steve Sisolak in response to the public health crisis arising from the novel strain of the coronavirus known as SARS-CoV-2 which is responsible for the coronavirus disease known as COVID-19, all Nevada dispensaries were mandated as an essential service but were restricted to delivery only, with no curb- side pickup or in-store sales permitted until such delivery-only order was lifted on May 30, 2020, when the Planet 13 Las Vegas Superstore re-opened with no more than ten customers allowed in the store at any given time.

During the delivery-only restricted operational period, we increased our delivery vehicle fleet to 29 vehicles, and upon the re-opening of the Planet 13 Las Vegas Superstore, we were able to meet the increased home-delivery requests by keeping 20 of those vehicles in constant operation.

On June 4, 2020, the State of Nevada increased the allowed occupancy of all businesses in Nevada to a maximum of 50% of the fire rated capacity of the location.

We are currently adhering to the guidelines set by the State of Nevada and are able to serve 268 customers in the Planet 13 Las Vegas Superstore at one time under the revised capacity limits set out as of June 4, 2020.

On November 24, 2020, Governor Sisolak instituted a Nevada state-wide “pause”, which limited certain industries such as gaming and restaurants, to 25% capacity, but did not further restrict the 50% fire rated capacity limits imposed on cannabis establishments.

On December 4, 2020, Nevada announced a COVID-19 vaccine allocation plan, and on December 14, 2020, the first shipment of vaccines was received in Nevada and began distribution under the Nevada allocation plan.

The Nevada state-wide “pause” was extended on December 13, 2020, and again for an additional 30-days on January 11, 2021.

On March 4, 2021, Nevada announced a “Roadmap to Recovery” relaxing the restrictions in phases and a release from State-level oversight to local jurisdictions in May 2021.

As of June 1, 2021, businesses have been allowed to operate at 100% capacity so long as they adhere to both state and local COVID-19 operating protocols, which, included maintaining social distancing and the requirement to wear masks while indoors.

As of February 10, 2022, the State of Nevada removed COVID-19 operating protocols requiring masks, regardless of vaccination status.

We have identified that regulatory permits, applications, and submittals are taking longer for Nevada and California regulators to process, as those jurisdictions at the state and local levels have redesignated resources towards COVID-19 response, furloughed regulatory employees, or maintained limited office hours for submissions.

As of the date hereof, we do not yet know the duration or magnitude of the COVID-19 pandemic but will continue to operate our core business of dispensing cannabis to adult-use and medical customers in accordance with the federal and state guidelines and restrictions.

As of February 16, 2022, the State of California removed COVID-19 operating protocols which required masks for vaccinated individuals.

California mask use was revised on March 1, 2022 to a strong recommendation for unvaccinated individuals to wear a mask, as opposed to the February 16, 2022 mask requirement.

On July 31, 2020, the Nevada Tax Commission convened and approved the Nevada License Settlement, we and other plaintiffs, and intervening defendants in connection with the DOT License Matter (as defined herein).

While the Nevada Tax Commission approved the settlement, it also requested that the CCB, which had authority over Nevada-licensed cannabis businesses as of July 1, 2020, also convene and approve of the settlement.

On August 7, 2020, the CCB convened and approved the Nevada License Settlement.

Pursuant to the Nevada License Settlement, our subsidiary MMDC agreed to a release and waiver of its claims against the State of Nevada and the defendants in intervention, in return for MMDC receiving the provisional unincorporated Clark County adult-use dispensary license originally received by Nevada Organic Remedies in December 2018.

As a further condition of the settlement, many of the enjoined parties were re-categorized by the State of Nevada, and thus no longer subject to a preliminary injunction.

In a letter dated September 3, 2020, the CCB transferred the conditional Clark County dispensary license to MMDC.

On November 20, 2020, we opened the Medizin store location, having received CCB final inspection approvals and the Clark County Business License.

We are licensed to operate in the State of Nevada as a Retail and Medical Cultivator, a Retail and Medical Product Manufacturer and a Retail and Medical Dispensary.

In the State of Nevada, “Retail” refers to the recreational cannabis market.

Please see Table 1 below for a list of the licenses issued to us in respect of our operations in Nevada.

Under applicable laws, the licenses permit us to cultivate, manufacture, process, package, sell, and purchase marijuana pursuant to the terms of the licenses, which were formerly issued by the DOT under the provisions of Nevada Revised Statutes section 453A through June 30, 2020 and issued by the CCB under NRS 678A, B and D starting July 1, 2020.

All licenses are independently issued for each approved activity for use at our facilities and retail locations in Nevada.

All Nevada marijuana establishments must register with the CCB.

If applications contain all required information and after vetting by officers, establishments are issued a marijuana establishment registration certificate.

In a local governmental jurisdiction that issues business licenses, the issuance by the CCB of a marijuana establishment registration certificate is considered provisional until the local government has issued a business license for operation and the establishment is in compliance with all applicable local governmental ordinances.

Final registration certificates are valid for a period of one year and are subject to annual renewals after required fees are paid and the business remains in good standing.

It is important to note conditional licenses do not permit the operation of any commercial or medical cannabis activity.

Only after a conditional licensee has gone through necessary state and local inspections, if applicable, and has received a final registration certificate from the CCB may an entity engage in cannabis business operation.

The CCB limits application for all licenses.

On May 20, 2020, pursuant to the Santa Ana Acquisition, we acquired a 100% interest in Newtonian which holds the California License, permitting us to sell cannabis goods to customers at the Santa Ana Premises.

Newtonian also holds the Santa Ana Regulatory Permit for Commercial Cannabis Adult-use Sales for the Santa Ana Premises.

We opened the Planet 13 OC Superstore dispensary on July 1, 2021 and commenced retail sales operations under the California License and also launched distribution activities at the Santa Ana Premises under the California State distribution license.

Both licenses were active but were not used in operations until completion of tenant improvements and are now in operation since July 1, 2021.

As of the date of this Annual Report on Form 10-K, the license has not been issued by the IDFPR.

We intend to launch a superstore dispensary in the Chicago-Naperville-Elgin region of Illinois.

On October 1, 2021, through our subsidiary Planet 13 Florida, we acquired a license from Harvest Health & Recreation Inc.

issued by the Florida Department of Health to operate as a MMTC in the State of Florida for US$55 million in cash.

Licensed MMTCs are vertically integrated and the only businesses in Florida authorized to dispense medical marijuana to qualified patients and caregivers.

MMTCs are authorized to cultivate, process, transport and dispense medical marijuana.

As of December 31, 2021, there were 22 companies with MMTC licenses across Florida.

License holders are not subject to restrictions in the number of dispensaries that may be opened or on the number or size of cultivation and processing facilities they may operate.

Prior to relocating to the Planet 13 Las Vegas Superstore, the licenses operated out of the Medizin Facility, a 2,300 square foot facility located approximately six miles off the Las Vegas Strip.

In September 2020, we received an unincorporated Clark County adult-use license for the Medizin Facility dispensary which had closed when its dispensary licenses were transferred to the Planet 13 Las Vegas Superstore and re-opened the Medizin Facility on November 30, 2020.

The regulatory framework for consumption lounge applications and operations was finalized in July 2022.

In December 2022, we were approved for a retail attached cannabis consumption lounge prospective license and continue to develop our buildout and operational plans.

We operate one dispensary in California, the Planet 13 OC Superstore, which occupies approximately 25,600 square feet of retail space on Warner Avenue in the City of Santa Ana located in Orange County.

On March 3, 2023, we submitted a request to the DCC to add a medical designation to our dispensary license which will allow for the sale of medical cannabis products from the Planet 13 OC Superstore.

On August 5, 2021, our subsidiary, Planet 13 Illinois, which was then owned 49% by us and 51% by Frank Cowan, a resident of Illinois, was a lottery winner for a Social-Equity Justice Involved Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region from the Department of Financial and Professional Regulation in the State of Illinois.

On February 7, 2023, we exercised and closed our option to purchase Mr.

Cowan's 51% interest in Planet 13 Illinois.

On October 5, 2021, we formed Planet 13 Chicago, LLC as a 100% owned leasing entity to support future operations in Illinois.

On February 3, 2023, we closed on the purchase of a dispensary location in the town of Waukegan, a suburb of the greater Chicago area, and anticipate that it will be operational in mid to late 2023.

Our Florida MMTC license authorizes us to dispense medical marijuana to qualified patients and caregivers.

As of the date of this report, we have entered into four leases for dispensing locations in Florida which remain subject to completion of tenant improvements and regulatory inspection prior to sales to customers.

Please see Table 1 below for a list of the cannabis licenses issued to us in each state.

Holding Entity

27 unchanged sentences

March 31, 2023

Clark County, NV

February 5, 2023

Distribution(1)

Adult-Use Retailer

1 unchanged sentence

April 17, 2024

Medical / Adult-Use

Dispensary(1)

Medical / Adult-Use Distribution

Santa Ana, CA

June 11, 2023

Medical/Adult-Use

June 20, 2023

Medical/Adult-Use

October 26, 2023

Manufacturer Type 6(4)

November 17, 2023

Cultivation, Medium Indoor

August 21, 2023

July 12, 2023

Cultivation, Processor(5)

Planet 13 Florida

2 unchanged sentences

Adult-Use Dispensing

Chicago-Naperville-Elgin

Chicago-Naperville-Elgin, IL

July 17, 2023

Dispensary(3)

Transferred from WCDN to MMDC as being associated with the former WCDN cultivation and production facility, approved by CCB hearing on December 18, 2020, as confirmed in the CCB letter dated January 4, 2021.

This is a conditional permit, and no certificate will be available until receipt of a final inspection by the CCB on or prior to February 5, 2023.

As of the date of this Annual Report on Form 10-K, the conditional license has not been issued by the IDFPR.

NGW Licenses Acquired on March 2, 2022

Holding Entity

Permit/License

Expiration/Renewal Date

Cultivation, Small Indoor

Cultivation, Specialty Indoor

Medical/Adult-Use

Manufacturer Type P(1)

Cultivation, Processor(2)

_________________________

License application pending at State of California to enhance this Manufacturer Type P license to Type 6 after March 10, 2022 submittal to authorize solventless extraction.

License application pending at State of California after receiving administrative review clearance from the California Department of Cannabis Control on February 8, 2022.

On March 3, 2023, we submitted a request to the DCC to add a medical designation to our dispensary license which will allow for the sale of medical cannabis products.

Renewal package was timely submitted in September 2022 and is pending OMMU review.

The conditional license was issued to Planet 13 Illinois on July 22, 2022.

Effective May 5, 2022, DCC enhanced this Manufacturer Type P license to Type 6 to authorize solventless extraction.

On February 27, 2023, NGW requested to surrender these licenses to DCC as the related activities are permitted under the new Medium Indoor Cultivation license.

Uses of Cannabis

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In total, we currently offer over 100 cannabis strains at our dispensaries, up to 20 of which are proprietary strains grown in-house in Nevada and up to 15 strains grown at the recently acquired Next Green Wave cultivation facility in California, covering the entire cannabis spectrum.

We believe that carrying a popular variety of strains of medical and recreational cannabis is essential to long-term success.

We believe that carrying a popular variety of strains of medical and adult-use cannabis is essential to long-term success.

Each strain of medical cannabis is different.

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We believe that we can gain a competitive advantage by growing high yielding strains which are good extractors and which mature in a short growing cycle while still providing the desired THC profile.

Further, finding the right product for a customer’s condition or needs may require sampling a variety of strains, as every person is different.

Food and Drug Administration (“ FDA ”) has not recognized or approved cannabis as safe or effective for any indication.

Our cultivation, production, distribution and marketing business is currently focused on the medical and recreational segments, with product offerings sold through our own licensed retail dispensaries as well as third party dispensaries in both California and Nevada.

Further, finding the right product for a customer’s condition or needs may require sampling a variety of strains, as every person is different.

Food and Drug Administration (“

FDA ”) has not recognized or approved cannabis as safe or effective for any indication.

Our cultivation, production, distribution and marketing business is currently focused on the medical and adult-use segments, with product offerings sold through our own licensed retail dispensaries as well as third party dispensaries in both California and Nevada.

Principal Products

We currently operate the Planet 13 Las Vegas Superstore, a 24,000 square foot licensed cannabis dispensary located near the Las Vegas Strip, from which we:

(i) dispense medical (Medizin) and retail (Planet 13) product lines and provides customer experiences through entertainment features; (ii) provide the consultation, education and convenience services described below; and (iii) own and operate Trece Eatery + Spirits as well as operate a non-cannabis retail merchandise store and event space.

(i) dispense medical (Medizin) and retail (Planet 13) product lines and provides customer experiences through entertainment features;

(ii) provide the consultation, education and convenience services described below;

and (iii) own and operate Trece Eatery + Spirits as well as operate a non-cannabis retail merchandise store and event space.

Our principal products are cannabis and cannabis-infused items sold to consumers in the medical and retail cannabis markets in the State of Nevada.

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These products are sold in-store and wholesale to 57 other dispensaries in Nevada.

We also operate the Medizin dispensary, reopened in November 2020 and operate the Planet 13 OC Superstore dispensary in Santa Ana, California on July 1, 2021.

We also operate the Medizin dispensary, reopened in November 2020, and operate the Planet 13 OC Superstore dispensary in Santa Ana, California which opened on July 1, 2021.

Through our cultivation and production facilities in Nevada and California, we manufacture and sell brands at wholesale to licensed dispensaries.

With respect to retail operations, we compete with other retail license holders across Nevada and California.

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We expect, however, that the majority of these illegal dispensaries and cultivators will be forced to cease operations in the near-term.

See “ Risk Factors.

Risk Factors.

The main raw materials and components used in the production of our products are cannabis seeds and clones, water, plant nutrients, and electricity.

Water for our Clark County operations is obtained from the municipal water system in Las Vegas, Nevada.

The price of water is determined by the City of Las Vegas.

Our Nye County operations are similarly part of the municipal water and waste disposal system.

Water for our Clark County, Nye County, and Fresno County operations is obtained from the respective municipal water systems.

The price of water is determined by the respective local governments. 

Raw materials include soil, nutrients, organic integrated pest and disease management, environmental supplementation, disposable supplies, and other miscellaneous inputs, all of which are readily available from multiple sources at wholesale or lower prices.

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Full time employees are distributed among several departments, including sales, management and administration, security, cultivation, operations, marketing, facilities, human resources, finance, accounting and legal.

In order to ensure that the motivation, integrity and culture of our team stays strong, our Board of Directors (the “ Board ”) and executive team put significant focus on our human capital resources.

In order to ensure that the motivation, integrity and culture of our team stays strong, our Board of Directors (the “

Board ”) and executive team put significant focus on our human capital resources.

We are committed to diversity and to providing equal employment opportunities to all employees and applicants.

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These programs include employee mentoring and one-on-one quality and regulatory training sessions overseen by our Human Resources Department and Regulatory Compliance team.

The main objective of our compensation program is to attract, retain, motivate, and reward superior employees who must operate in a quick-paced and patient-focused environment.

The main objective of our compensation program is to attract, retain, motivate, and reward superior employees who must operate in a quick-paced and customer-focused environment.

To accomplish this, we offer a package of company-sponsored benefits to our employees.

Eligibility depends on each employee’s full-time or part-time status, location, and other factors, and benefits include medical and dental plans, paid and unpaid leaves, and flexible time-off.

We provide employee wages that are competitive and consistent with employee positions, skill levels, experience, knowledge, and geographic location.

Additionally, we believe in aligned incentives and utilize share unit and stock option plans as well as annual bonuses to align the long-term compensation of eligible directors, employees, officers and contractors with our shareholders’ interests for a competitive total rewards program.

interests for a competitive total rewards program.

Legal and Regulatory Matters

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At the federal level, cannabis currently remains a Schedule I controlled substance under the U.S.

Controlled Substance Act of 1970 (the “ CSA ”).

Despite this federal prohibition, 48 states and the District of Columbia have either decriminalized or legalized adult-use and/or medical cannabis, and of the two states that have not yet decriminalized or authorized cannabis, Nebraska has decriminalized the first offense.

Controlled Substance Act of 1970 (the “

CSA ”).

federal law, a Schedule I drug or substance has a high potential for abuse, no accepted medical use in the United States, and a lack of accepted safety for the use of the drug under medical supervision.

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This has created a dichotomy between state and federal law, whereby many states have elected to regulate and remove state-level penalties regarding a substance that is still illegal at the federal level.

As of December 31, 2022, and despite the conflict with U.S.

federal law, at least 39 states, the District of Columbia, the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the U.S.

Virgin Islands have legalized cannabis for medical use.

Twenty-one of those states and the District of Columbia, the Commonwealth of the Northern Mariana Islands, and Guam have legalized the adult use of cannabis for recreational purposes.

While technically illegal, the U.S.

federal government’s approach to enforcement of such laws has, at least until recently, trended toward non-enforcement.

On August 29, 2013, the U.S.

Department of Justice (“ DOJ ”) issued a memorandum known as the “ Cole Memorandum ” to all U.S.

Attorneys’ offices (federal prosecutors).

Department of Justice (“

DOJ ”) issued a memorandum known as the “

Cole Memorandum ”

Attorneys’

offices (federal prosecutors).

The Cole Memorandum generally directed U.S.

Attorneys not to prioritize the enforcement of federal marijuana laws against individuals and businesses that rigorously comply with state regulatory provisions in states with strictly-regulated medical or adult-use cannabis programs.

The Cole Memorandum, while not legally binding, assisted in managing the tension between state and federal laws concerning state-regulated marijuana businesses.

The Cole Memorandum, while not legally binding, assisted in managing the tension between state and federal laws concerning state-regulated cannabis businesses.

However, on January 4, 2018, the Cole Memorandum was revoked by then Attorney General Jeff Sessions.

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federal enforcement of the CSA in states where cannabis use is regulated.

Sessions also issued an one-page memorandum known as the “ Sessions Memorandum ”.

This confirmed the rescission of the Cole Memorandum and explained that the Cole Memorandum was “unnecessary” due to existing general enforcement guidance as set forth in the U.S.

Attorney’s Manual (the “ USAM ”).

The USAM enforcement priorities, like those of the Cole Memorandum, are also based on the federal government’s limited resources, and include “law enforcement priorities set by the Attorney General,” the “seriousness” of the alleged crimes, the “deterrent effect of criminal prosecution,” and “the cumulative impact of particular crimes on the community.”

While the Sessions Memorandum does emphasize that marijuana is a Schedule I controlled substance and states the statutory view that it is a “dangerous drug and that marijuana activity is a serious crime,” it does not otherwise guide U.S.

Sessions also issued a one-page memorandum known as the “

Sessions Memorandum ”.

This confirmed the rescission of the Cole Memorandum and explained that the Cole Memorandum was “unnecessary”

due to existing general enforcement guidance as set forth in the U.S.

Attorney’s Manual (the “

USAM ”).

the “seriousness”

of the alleged crimes, the “deterrent effect of criminal prosecution,”

and “the cumulative impact of particular crimes on the community.”

it does not otherwise guide U.S.

Attorneys that the prosecution of marijuana-related offenses is now a DOJ priority.

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Attorneys in deciding whether to prosecute marijuana-related offenses.

Attorneys could individually continue to exercise their discretion in a manner similar to that displayed under the Cole Memorandum’s guidance.

Dozens of U.S.

Attorneys across the country have affirmed their commitment to proceeding in this manner, or otherwise affirming that their view of federal enforcement priorities has not changed, although a few have displayed greater ambivalence.

On November 7, 2018, Mr.

Sessions tendered his resignation as Attorney General at the request of President Donald Trump.

Following Mr.

Sessions’ resignation, and Matthew Whitaker serving as Acting United States Attorney General, William Barr was appointed as US Attorney General on January 15, 2019.

Barr stated at his confirmation hearing to the Senate Judiciary Committee that he would “not go after companies” that had relied upon the Obama-era guidance (the Cole Memorandum) that former Attorney General Jeff Sessions had rescinded in states where cannabis has been legalized.

The Department of Justice under Mr.

Barr did not take a formal position on federal enforcement of laws relating to cannabis.

On January 21, 2021, Joseph Biden, Jr.

was sworn in as President of the United States.

President Biden’s Attorney General, Merrick Garland, was confirmed by the United States Senate on March 10, 2021.

It is not yet known whether the Department of Justice under President Biden and Attorney General Garland will re-adopt the Cole Memorandum or announce a substantive marijuana enforcement policy.

Garland indicated at a confirmation hearing before the United States Senate that it did not seem to him to be a good use of limited resources to pursue prosecutions in states that have legalized and that are regulating the use of marijuana, either medically or otherwise.

Nonetheless, there is no guarantee that state laws legalizing and regulating the sale and use of marijuana will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.

Unless and until the United States Congress amends the CSA with respect to marijuana (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current U.S.

On October 6, 2022, President Biden announced "First:

I'm pardoning all prior federal offenses of simple marijuana possession ...

I'm calling on all governors to pardon simple state marijuana possession offenses ...

I'm asking [Secretary of Health and Human Services Becerra] and the Attorney General to initiate the process of reviewing how marijuana is scheduled under federal law." Despite these statements which appear positive for the nascent cannabis industry, there is no guarantee that cannabis will be rescheduled federally, that current state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local governmental authorities will not limit the applicability of state laws within their respective jurisdictions.

Unless and until the United States Congress amends the CSA with respect to cannabis (and as to the timing or scope of any such potential amendments there can be no assurance), there is a risk that federal authorities may enforce current U.S.

Currently, in the absence of uniform federal guidance, as had been established by the Cole memorandum, enforcement priorities are determined by respective United States Attorneys.

While it is too soon to determine what prosecutorial effects will be created by the rescission of the Cole Memorandum under the Trump administration and the appointment of Mr.

Garland under the current administration, a nationwide “crackdown” on regulated marijuana business is unlikely.

The sheer size of the cannabis industry, in addition to participation by state and local governments and investors, suggests that a large-scale enforcement operation would more than likely create unwanted political backlash for the DOJ and the current administration.

It is also possible that the rescission of the Cole Memorandum could motivate Congress to reconcile federal and state laws.

Regardless, marijuana remains a Schedule I controlled substance at the federal level, and the federal government of the U.S.

continues to reserve the right to enforce federal law in regard to the sale and disbursement of medical or adult-use marijuana, even where state law sanctioned such sale and disbursement.

From a purely legal perspective, the criminal risk today remains identical to the risk on January 3, 2018, prior to the Cole Memorandum being rescinded.

It remains unclear whether the risk of enforcement has been altered.

Additionally, under U.S.

federal law, it may potentially be a violation of federal anti-money laundering statutes for financial institutions to take any proceeds from the sale of marijuana or any other Schedule I controlled substance.

In addition to federal illegality and uncertainty of state-driven legalization frameworks for cannabis operators within the U.S., it may potentially be a violation of federal anti-money laundering statutes for financial institutions to take any proceeds from the sale of cannabis or any other Schedule I controlled substance.

Canadian banks are likewise hesitant to deal with cannabis companies, due to the uncertain legal and regulatory framework of the industry.

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Despite these laws, the U.S.

Department of the Treasury’s Financial Crimes Enforcement Network (“ FinCEN ”) issued a memorandum on February 14, 2014 (the “ FinCEN Memorandum ”) outlining the pathways for financial institutions to bank state-sanctioned marijuana businesses in compliance with federal enforcement priorities.

Department of the Treasury’s Financial Crimes Enforcement Network (“

FinCEN ”) issued a memorandum on February 14, 2014 (the “

FinCEN Memorandum ”) outlining the pathways for financial institutions to bank state-sanctioned cannabis businesses in compliance with federal enforcement priorities.

The FinCEN Memorandum echoed the enforcement priorities of the Cole Memorandum.

Under these guidelines, financial institutions must submit a Suspicious Activity Report (“ SAR ”) in connection with all marijuana-related banking activities by any client of such financial institution, in accordance with federal money laundering laws.

These marijuana-related SARs are divided into three categories - marijuana limited, marijuana priority, and marijuana terminated - based on the financial institution’s belief that the business in question follows state law, is operating outside of compliance with state law, or where the banking relationship has been terminated, respectively.

On the same day as the FinCEN Memorandum was published, the DOJ issued a memorandum (the “ 2014 DOJ Memorandum ”) directing prosecutors to apply the enforcement priorities of the Cole Memorandum in determining whether to charge individuals or institutions with crimes related to financial transactions involving the proceeds of marijuana-related conduct.

Under these guidelines, financial institutions must submit a Suspicious Activity Report (“

SAR ”) in connection with all marijuana-related banking activities by any client of such financial institution, in accordance with federal money laundering laws.

On the same day as the FinCEN Memorandum was published, the DOJ issued a memorandum (the “

2014 DOJ Memorandum ”) directing prosecutors to apply the enforcement priorities of the Cole Memorandum in determining whether to charge individuals or institutions with crimes related to financial transactions involving the proceeds of cannabis-related conduct.

The 2014 DOJ Memorandum has been rescinded as of January 4, 2018, along with the Cole Memorandum, removing guidance that enforcement of applicable financial crimes against state-compliant actors was not a DOJ priority.

However, former Attorney General Sessions’ revocation of the Cole Memorandum and the 2014 DOJ Memorandum has not affected the status of the FinCEN Memorandum, nor has the Department of the Treasury given any indication that it intends to rescind the FinCEN Memorandum itself.

However, former Attorney General Sessions’

revocation of the Cole Memorandum and the 2014 DOJ Memorandum has not affected the status of the FinCEN Memorandum, nor has the Department of the Treasury given any indication that it intends to rescind the FinCEN Memorandum itself.

Though it was originally intended for the 2014 DOJ Memorandum and the FinCEN Memorandum to work in tandem, the FinCEN Memorandum appears to be a standalone document which explicitly lists the eight enforcement priorities originally cited in the Cole Memorandum.

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In the U.S., the SAFE Banking Act of 2019, H.R.

1595 (“ SAFE Banking Act ”), was first introduced on March 7, 2019 and passed a vote on September 25, 2019 by the Committee of the Whole Congress, but failed to receive the support needed to pass the U.S.

1595 (“

SAFE Banking Act ”), was first introduced on March 7, 2019 and passed a vote on September 25, 2019 by the Committee of the Whole Congress, but failed to receive the support needed to pass the U.S.

Generally, the act would let banks offer services to cannabis-related businesses.

They could also offer services to those businesses’ employees.

They could also offer services to those businesses’

In both Canada and the U.S., transactions involving banks and other financial institutions are both difficult and unpredictable under the current legal and regulatory landscape.

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While there is strong support in the public and within Congress for the SAFE Banking Act and similar legislation, there can be no assurance that it will be passed as presently proposed or at all.

Although the Cole Memorandum and 2014 DOJ Memorandum have been rescinded, Congress has used the Rohrabacher-Leahy Amendment as a rider provision in the FY 2015, 2016, 2017, 2018, 2019 2020, and 2021 Consolidated Appropriations Acts and accompanying stopgap spending measures to prevent the federal government from using congressionally appropriated funds to enforce federal marijuana laws against regulated medical marijuana actors operating in compliance with state and local law.

President Joe Biden became the first president to propose a budget with the Rohrabacher-Farr Amendment included.

As of the filing date of this Form 10-K, the Rohrabacher-Farr Amendment provisions are effective through September 30, 2022 as part of the Consolidated Appropriations Act, 2022.

Despite the legal, regulatory, and political obstacles the marijuana industry currently faces, the industry has continued to grow.

Although the Cole Memorandum and 2014 DOJ Memorandum have been rescinded, Congress has used the Joyce Amendment, previously known as the Rohrabacher-Farr and the Rohrabacher-Leahy Amendment, as a rider provision in the FY 2015, 2016, 2017, 2018, 2019, 2020, and 2021 Consolidated Appropriations Acts and accompanying stopgap spending measures to prevent the federal government from using congressionally appropriated funds to enforce federal marijuana laws against regulated medical cannabis actors operating in compliance with state and local law.

President Joe Biden became the first president to propose a budget with the Joyce Amendment included.

Most recently, on December 29, 2022, the Joyce Amendment was renewed through the signing of the "Consolidated Appropriations Act, 2023" which extended the protections for the medical cannabis industry until September 30, 2023.

Despite the legal, regulatory, and political obstacles the cannabis industry currently faces, the industry has continued to grow.

It was anticipated that the federal government would eventually repeal the federal prohibition on cannabis and thereby leave the states to decide for themselves whether to permit regulated cannabis cultivation, production and sale, just as states are free today to decide policies governing the distribution of alcohol or tobacco.

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As an industry best practice, despite the recent rescission of the Cole Memorandum, we intend to abide by the following to ensure compliance with the guidance provided by the Cole Memorandum:

ensure that our operations are compliant with all licensing requirements as established by the applicable state, county, municipality, town, township, borough, and other political/administrative divisions;

ensure that our cannabis related activities adhere to the scope of the licensing obtained (for example, in states where cannabis is permitted only for adult-use, the products are only sold to individuals who meet the requisite age requirements);

implement policies and procedures to ensure that cannabis products are not distributed to minors;

implement policies and procedures in place to ensure that funds are not distributed to criminal enterprises, gangs or cartels;

implement an inventory tracking system and necessary procedures to ensure that such compliance system is effective in tracking inventory and preventing diversion of cannabis or cannabis products into those states where cannabis is not permitted by state law, or cross any state lines in general;

ensure that our state-authorized cannabis business activity is not used as a cover or pretense for trafficking of other illegal drugs, is engaged in any other illegal activity or any activities that are contrary to any applicable anti-money laundering statutes; and

implement policies and procedures to ensure that cannabis products are not distributed to minors;

implement policies and procedures in place to ensure that funds are not distributed to criminal enterprises, gangs or cartels;

ensure that our products comply with applicable regulations and contain necessary disclaimers about the contents of the products to prevent adverse public health consequences from cannabis use and prevent impaired driving.

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Senate Bill 374, which passed the legislature and was signed by the Nevada Governor in 2013, expanded this program and established a for-profit regulated medical marijuana industry.

In 2014, Nevada accepted medical marijuana business applications and a few months later the Nevada Division of Public and Behavioral Health (the “ Division ”) approved 182 cultivation licenses, 118 licenses for the production of edibles and infused products, 17 independent testing laboratories, and 55 medical marijuana dispensary licenses.

In 2014, Nevada accepted medical marijuana business applications and a few months later the Nevada Division of Public and Behavioral Health (the “

Division ”) approved 182 cultivation licenses, 118 licenses for the production of edibles and infused products, 17 independent testing laboratories, and 55 medical marijuana dispensary licenses.

The number of dispensary licenses was then increased to 66 by legislative action in 2015.

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Nevada has a medical marijuana program and passed adult-use legalization through the ballot box in November 2016.

Under Nevada’s adult-use marijuana law, the state licensed marijuana cultivation facilities, product manufacturing facilities, distributors, retail stores and testing facilities.

For the first 18 months after legalization, applications to the DOT for adult- use establishment licenses were only accepted from existing medical marijuana establishments and from existing liquor distributors for the adult-use distribution license.

The Division licensed and regulated medical marijuana establishments up until July 1, 2017, when the state’s medical marijuana program merged with adult-use marijuana enforcement under the DOT.

After merging medical and adult-use marijuana regulation and enforcement, the single regulatory agency was known as the “Marijuana Enforcement Division of the Department of Taxation”.

The Division licensed and regulated medical marijuana establishments up until July 1, 2017, when the state’s medical marijuana program merged with adult-use marijuana enforcement under the DOT.

After merging medical and adult-use marijuana regulation and enforcement, the single regulatory agency was known as the “Marijuana Enforcement Division of the Department of Taxation”.

The DOT oversaw regulation of cannabis operations until the CCB took over on July 1, 2020.

As of October 5, 2020, all five members of the CCB were appointed by the Nevada Governor.

In February 2017, the state announced plans to issue “early start” recreational marijuana establishment licenses in the summer of 2017.

In February 2017, the state announced plans to issue “early start”

recreational marijuana establishment licenses in the summer of 2017.

These licenses expired at the end of the year and, beginning on July 1, 2017, allowed marijuana establishments holding both a retail marijuana store and dispensary license to sell their existing medical marijuana inventory as either medical or adult-use marijuana.

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The regular program was governed by permanent regulations found in Nevada Administrative Code Sections 453A and 453D through June 30, 2020.

In early 2019, Nevada legislature passed Nevada Assembly Bill 533 (“ AB533 ”), which authorized the formation of the CCB to be vested with the authority to license and regulate persons and establishments engaged in cannabis activities within Nevada and promulgated statutes which will replace Nevada Revised Statute (“ NRS ”) 453A and 453D effective on July 1, 2020.

In early 2019, Nevada legislature passed Nevada Assembly Bill 533 (“

AB533 ”), which authorized the formation of the CCB to be vested with the authority to license and regulate persons and establishments engaged in cannabis activities within Nevada and promulgated statutes which will replace Nevada Revised Statute (“

NRS ”) 453A and 453D effective on July 1, 2020.

Those statutes are currently codified at NRS 678A, B, C and D.

On July 21, 2020, the CCB adopted final Nevada Cannabis Compliance Regulations 1 through 15 (“ NCCR ”) which are substantially similar to the former Nevada Administrative Code Sections 453A and 453D.

On July 21, 2020, the CCB adopted final Nevada Cannabis Compliance Regulations 1 through 14 (“

NCCR ”) which are substantially similar to the former Nevada Administrative Code Sections 453A and 453D.

In response to industry feedback, on October 20, 2020, the CCB amended NCCR 5 to give clarity regarding public company ownership of Nevada cannabis companies.

Generally, those amendments include such companies being required to provide to the CCB notice of annual general meetings of shareholders and a non-objecting beneficial owners (“ NOBO ”) list as of the record date of each such meeting, and disclosure of any stockholders having 5% or greater ownership interest or that are able to exert control over a Nevada cannabis establishment.

Generally, those amendments include such companies being required to provide to the CCB notice of annual general meetings of shareholders and a non-objecting beneficial owners (“

NOBO ”) list as of the record date of each such meeting, and disclosure of any stockholders having 5% or greater ownership interest or that are able to exert control over a Nevada cannabis establishment.

Additionally, the CCB requires an updated list of all beneficial owners, regardless of amount or type of ownership, but if a list of all beneficial owners cannot be obtained through reasonable cost and/or effort, the publicly traded company must provide an updated NOBO list as of the annual meeting record date, and explain why it cannot provide a list of all beneficial owners through reasonable cost and effort.

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The last background check waiver approval received from CCB was a request we submitted on November 30, 2020 in relation to the acquisition of the conditional Nevada distribution license acquired from WCDN, but which extended to all shareholders holding less than 5% ownership interest.

We also submitted a background check waiver request to the CCB on January 3, 2022 in relation to the Arrangement Agreement, which may or may not be acted upon by the CCB (see “ Risk Factors ”).

We also submitted a background check waiver request to the CCB on January 3, 2022 in relation to the Arrangement Agreement, which may or may not be acted upon by the CCB (see “

Risk Factors ”).

Although the CCB has not chosen to exercise their authority to require a background check on ownership interests in public cannabis companies that remain under 5% and do not otherwise exercise control over a Nevada cannabis licensee, the CCB does have authority to require a licensee to investigate and submit any ownership interest, beneficial or direct, for CCB approval.

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In addition, vertical integration is neither required nor prohibited.

All medical marijuana sales are made subject to the recipient holding a registry identification card issued by the State of Nevada as defined at NRS 678A.235.

We are permitted to sell medical marijuana products to non-Nevada patients as non-Nevada patients are permitted reciprocity under NRS 678C.470.

Nevada Licenses

There are five types of retail marijuana establishment licenses under Nevada law:

Cultivation Facility - Licenses to cultivate (grow), process, and package marijuana; to have marijuana tested by a testing facility; and to sell marijuana to retail marijuana stores, to marijuana product manufacturing facilities, and to other cultivation facilities, but not to consumers.

Distributor - Licenses to transport marijuana from a marijuana establishment to another marijuana establishment.

Product Manufacturing Facility - Licenses to purchase marijuana; manufacture, process, and package marijuana and marijuana products; and sell marijuana and marijuana products to other product manufacturing facilities and to retail marijuana stores, but not to consumers.

Testing Facility - Licenses to test marijuana and marijuana products, including for potency and contaminants.

Retail Store - Licenses to purchase marijuana from cultivation facilities, marijuana and marijuana products from product manufacturing facilities, and marijuana from other retail stores; can sell marijuana and marijuana products to consumers.

MMDC applied for and did not receive any of the 61 new licenses granted by DOT on December 5, 2018.

Upon review of this result, we determined that there were significant irregularities in the license application and review process.

MMDC filed a complaint against the State of Nevada and DOT on December 10, 2018, and concurrently pursued all available administrative remedies (the “ DOT License Matter ”).

MMDC requested a judicial review of the license application process and the scoring criteria utilized by DOT, and requested that the court award MMDC monetary damages as a result of DOT’s failure to properly award licenses and that the court award retail dispensary licenses to MMDC.

On August 23, 2019, as a result of discrepancies discovered in the application process administered by the State of Nevada, a court issued a partial preliminary injunction against the State of Nevada from moving forward with the numerous holders of provisional licenses awarded under the December 5, 2018, provisional license awards.

After the first week of trial in July 2020, MMDC entered into a settlement agreement with the State of Nevada and defendants in intervention to receive a license in unincorporated Clark County to reopen the Medizin location.

On August 7, 2020, the CCB convened and approved the Nevada License Settlement.

Pursuant to a letter dated September 3, 2020, the CCB transferred the conditional Clark County dispensary license to MMDC.

On November 20, 2020, we opened the Medizin store location, having received CCB final inspection approvals and a Clark County business license.

Cannabis consumption lounges were authorized in Nevada pursuant to AB 341 in the 2021 81st Session of the Nevada Legislature.

On July 9, 2021, our subsidiary MMDC received a notification letter of eligibility to hold a retail cannabis consumption lounge license from the CCB.

On December 2, 2021, the CCB released draft regulations for the cannabis consumption lounge application and requirements to operate, and held a December 14, 2021 workshop discussing the draft regulations with stakeholders.

All medical cannabis sales are made subject to the recipient holding a registry identification card issued by the State of Nevada as defined at NRS 678C.080.

We are permitted to sell medical cannabis products to non-Nevada patients as non-Nevada patients are permitted reciprocity under NRS 678C.470.

Nevada Reporting Requirements

Nevada has selected Franwell Inc.’s METRC solution (“ METRC ”) as the state’s track-and-trace system used to track commercial cannabis activity and movement across the distribution chain.

Nevada has selected Franwell Inc.’s METRC solution (“

METRC ”) as the state’s track-and-trace system used to track commercial cannabis activity and movement through the supply chain.

Individual licensees whether directly or through third-party integration systems are required to push data to the state to meet all reporting requirements.

For all licensed facilities, we have designated an in-house computerized seed to sale software that integrates with METRC via an application programming interface, and captures the required data points for cultivation, manufacturing and retail as required by Nevada statutes and regulations.

Nevada Regulatory Compliance

Our licenses are in good standing to cultivate, possess and/or wholesale marijuana in the State of Nevada and we, through MMDC, are in compliance with Nevada’s marijuana regulatory program.

MMDC has responded to all DOT and CCB inspections and received approval on all corrective actions.

For all licensed facilities, we have designated an in-house computerized seed to sale software that integrates with METRC via an application programming interface, and captures the required data points for cultivation, production and retail as required by Nevada statutes and regulations.

Nevada Licenses and Regulatory Compliance

We are licensed for the cultivation, production, distribution, and retail sale of cannabis and cannabis products.

These licenses were formerly issued by the DOT under the provisions of Nevada Revised Statutes section 453A through June 30, 2020 and reissued by the CCB under NRS 678A, B and D starting July 1, 2020.

All licenses are independently issued for each approved activity for use at our facilities and retail locations in Nevada.

Cannabis consumption lounges were authorized in Nevada pursuant to AB 341 in the 2021 81st Session of the Nevada Legislature.

On July 9, 2021, our subsidiary MMDC received a notification letter of eligibility to hold a retail attached cannabis consumption lounge license from the CCB.

On June 28, 2022, the CCB adopted regulations for the cannabis consumption lounge application and requirements to operate.

In December 2022, we were approved for a retail attached cannabis consumption lounge prospective license and continue to develop our buildout and operational plans.

Our licenses are in good standing and we, through MMDC, are in compliance with Nevada’s cannabis regulatory program.

MMDC has responded to all CCB inspections and received approval on all corrective actions.

We comply with applicable Nevada state licensing requirements as follows:

(i) MMDC is licensed pursuant to applicable Nevada state law to cultivate, possess and/or distribute THC- bearing cannabis (or “marijuana”) in Nevada; (ii) renewal dates for such licenses are docketed by legal counsel and/or other advisors; (iii) random internal audits of our business activities are conducted by the applicable Nevada state regulator and by us to ensure compliance with applicable Nevada state law; (iv) each of our employees is provided with an employee handbook that outlines internal standard operating procedures in connection the cultivation, possession and distribution of marijuana to ensure that all marijuana inventory and proceeds from the sale of such marijuana are properly accounted for and tracked and using scanners to confirm each customer’s legal age and the validity of each customer’s drivers’ license; (v) each room that marijuana inventory and/or proceeds from the sale of such inventory enter is monitored by video surveillance; (vi) software is used to track marijuana inventory from seed to sale; and (vii) we are contractually obligated to comply with applicable Nevada state law in the United States in connection with the cultivation, possession and/or distribution of marijuana in Nevada.

(i) MMDC is licensed pursuant to applicable Nevada state law to cultivate, possess and/or distribute THC- bearing cannabis in Nevada;

(ii) renewal dates for such licenses are docketed by legal counsel and/or other advisors;

(iii) random audits of our business activities are conducted by the applicable Nevada state regulator and by us to ensure compliance with applicable Nevada state law;

(iv) each of our employees is provided with an employee handbook that outlines internal standard operating procedures in connection the cultivation, possession and distribution of cannabis to ensure that all cannabis inventory and proceeds from the sale of such cannabis are properly accounted for and tracked, including through the use of scanners to confirm each customer’s legal age and the validity of each customer’s photo identification;

(v) each room that cannabis inventory and/or proceeds from the sale of such inventory enter is monitored by video surveillance;

(vi) software is used to track cannabis inventory from seed to sale.

We are contractually obligated to comply with applicable Nevada state law in connection with the cultivation, possession and/or distribution of cannabis in Nevada.

All Nevada cannabis establishments must be licensed by the CCB.

If applications contain all required information and after vetting of officers, establishments are issued a cannabis establishment registration certificate.

In a local governmental jurisdiction that issues business licenses, the issuance by the CCB of a cannabis establishment license is considered conditional until the local government has issued a business license for operation and the establishment is in compliance with all applicable local governmental ordinances.

Final licenses are valid for a period of one year and are subject to annual renewals after required fees are paid and the business remains in good standing.

It is important to note that conditional licenses do not permit the operation of any commercial or medical cannabis businesses.

Only after a conditional licensee has gone through necessary state and local inspections, if applicable, and has received a final license from the CCB may an entity engage in cannabis business operation.

The CCB limits applications for all licenses.

We have a full time General Counsel on staff in Nevada, who is a licensed attorney under the State Bar of Nevada, in good standing, whose responsibilities include monitoring the day-to-day activities of regulatory compliance staff, including ensuring that the established standard operating procedures are being adhered to at each stage of the cultivation, processing and distribution cycle, to identify any non-compliance matters and to put in place the necessary modifications to ensure compliance.

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In 2003, Senate Bill 420 was signed into law establishing an optional identification card system for medical marijuana patients.

In September 2015, the California legislature passed three bills collectively known as the Medical Cannabis Regulation and Safety Act (“ MCRSA ”).

In September 2015, the California legislature passed three bills collectively known as the Medical Cannabis Regulation and Safety Act (“

MCRSA ”).

The MCRSA established a licensing and regulatory framework for medical marijuana businesses in California.

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Multiple agencies would oversee different aspects of the program and businesses would require a state license and local approval to operate.

However in November 2016, voters in California overwhelmingly passed Proposition 64, the Adult-Use of Marijuana Act (“ AUMA ”) creating an adult-use marijuana program for adults 21 years of age or older.

However in November 2016, voters in California overwhelmingly passed Proposition 64, the Adult-Use of Marijuana Act (“

AUMA ”) creating an adult-use marijuana program for adults 21 years of age or older.

AUMA included certain conflicting provisions with MCRSA, so in June 2017, the California State Legislature passed Senate Bill No.

94, known as Medicinal and Adult-Use Cannabis Regulation and Safety Act (“ MAUCRSA ”), which amalgamates MCRSA and AUMA to provide a set of regulations to govern a medical and adult-use licensing regime for cannabis businesses in the State of California.

At that time the four agencies that regulated marijuana at the state level were the Bureau of Cannabis Control (“ BCC ”), California Department of Food and Agriculture, California Department of Public Health, and California Department of Tax and Fee Administration.

94, known as Medicinal and Adult-Use Cannabis Regulation and Safety Act (“

MAUCRSA ”), which amalgamates MCRSA and AUMA to provide a set of regulations to govern a medical and adult-use licensing regime for cannabis businesses in the State of California.

At that time the four agencies that regulated marijuana at the state level were the Bureau of Cannabis Control (“

BCC ”), California Department of Food and Agriculture, California Department of Public Health, and California Department of Tax and Fee Administration.

MAUCRSA came into effect on January 1, 2018.

One of the central features of MAUCRSA is known as “local control.” In order to legally operate a medical or adult-use marijuana business in California, an operator must have both a local and state license.

One of the central features of MAUCRSA is known as “local control.”

In order to legally operate a medical or adult-use marijuana business in California, an operator must have both a local and state license.

This requires license holders to operate in cities or counties with marijuana licensing programs.

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Provided renewal applications are submitted in a timely manner, we can expect the renewals to be granted in the ordinary course of business.

On January 10, 2020, the three commercial cannabis licensing agencies in California, the BCC, the Department of Food and Agriculture, and the Department of Public Health (collectively, “ California Licensing Agencies ”) announced that California Governor Gavin Newsom’s budget proposal for cannabis industry regulation and taxation included plans to consolidate the three licensing entities that are currently housed at the California Licensing Agencies into a single Department of Cannabis Control by July 2021.

With the passage of AB 141 on July 12, 2021, the California Licensing Agencies were consolidated into the Department of Cannabis Control (“ DCC ”).

On January 10, 2020, the three commercial cannabis licensing agencies in California, the BCC, the Department of Food and Agriculture, and the Department of Public Health (collectively, “

California Licensing Agencies ”) announced that California Governor Gavin Newsom’s budget proposal for cannabis industry regulation and taxation included plans to consolidate the three licensing entities that are currently housed at the California Licensing Agencies into a single Department of Cannabis Control by July 2021.

With the passage of AB 141 on July 12, 2021, the California Licensing Agencies were consolidated into the Department of Cannabis Control (“

DCC ”).

On September 8, 2021, the DCC announced proposed emergency regulations to move all cannabis regulations into Title 4 of the California Code of Regulations, with a stated goal of consolidating and improving the regulations.

The proposed emergency regulations were in the review and comment period which closed on September 20, 2021.

Effective November 7, 2022, the DCC made permanent the emergency regulations adopted on September 27, 2021, and March 28, 2022.

The DCC adopted a consolidated regulatory package that streamlines and simplifies cannabis regulations, eases burdens for licensees, and enhances consumer and youth protections.

DCC proposed changes to the current regulations are available to track online at:

https://cannabis.ca.gov/cannabis-laws/rulemaking/ .

MAUCRSA allows local municipalities and jurisdictions to authorize the on-site consumption of cannabis by state-licensed retailers and/or microbusinesses.

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California Reporting Requirements

California has selected METRC as the state’s track-and-trace system used to track commercial cannabis activity and movement across the distribution chain.

California has selected METRC as the state’s track-and-trace system used to track commercial cannabis activity and movement across the supply chain.

Individual licensees whether directly or through third-party integration systems are required to push data to the state to meet all reporting requirements.

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We have further retained a California regulatory consultant, with experience operating regulatory-compliant California license operations, to advise us on regulatory requirements and updates in that state.

As of March 2, 2022, upon closing of the Arrangement, we filed a notice of ownership update with the State of California, and assumed responsibility for the NGW licenses.

Upon closing of the Arrangement, we filed a notice of ownership update with the State of California, and assumed responsibility for the NGW licenses.

Additionally, our General Counsel works regularly with our California regulatory consultant and oversees all aspects of services provided in connection with the Santa Ana Permit, the cultivation, manufacturing, and distribution licenses acquired pursuant to the Arrangement completed on March 2, 2022, and the California License to ensure compliance and continuity of those licenses.

Florida State Law Overview

In 2014, the Florida Legislature passed the Compassionate Use Act, which was the first legal medical cannabis program in the state’s history.

The original Compassionate Use Act only allowed for low-THC cannabis to be dispensed and purchased by patients suffering from cancer and epilepsy.

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Also in 2016, the Florida Medical Marijuana Legalization Initiative was introduced by citizen referendum and passed on November 8.

This language, known as “ Amendment 2 ,” amended the state constitution and mandated an expansion of the state’s medical cannabis program.

This language, known as “

Amendment 2 ,”

amended the state constitution and mandated an expansion of the state’s medical cannabis program.

Amendment 2, and the resulting expansion of qualifying medical conditions, became effective on January 3, 2017.

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On June 9, 2017, the Florida House of Representatives and Florida Senate passed respective legislation to implement the expanded program by replacing large portions of the existing Compassionate Use Act, which officially became law on June 23, 2017.

The Florida Statutes Section 381.986(8) provides a regulatory framework that requires licensed producers, which are statutorily defined as “Medical Marijuana Treatment Centers”, to cultivate, process and dispense medical cannabis in a vertically-integrated marketplace.

Licenses are issued by the Office of Medical Marijuana Use (“ OMMU ”) and must be renewed biennially.

Licenses are issued by the Office of Medical Marijuana Use (“

OMMU ”) and must be renewed biennially.

License holders can only own one license.

Currently, the dispensaries can be in any geographic location within the state, provided that the local jurisdiction’s zoning regulations authorize such a use, the proposed site is zoned for a pharmacy and the site is not within 500 feet of a school.

The MMTC license permits us to sell medical cannabis to qualified patients to treat certain medical conditions in Florida, which are delineated in Florida Statutes Section 381.986.

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The manifest must include the following information:

(i) departure date and time; (ii) name, address and license number of the originating MMTC; (iii) name and address of the receiving entity; (iv) the quantity, form and delivery device of the cannabis; (v) arrival date and time; (vi) the make, model and license plate of the delivery vehicle; and (vii) the name and signatures of the MMTC delivery employees.

(i) departure date and time;

(ii) name, address and license number of the originating MMTC;

(iii) name and address of the receiving entity;

(iv) the quantity, form and delivery device of the cannabis;

(v) arrival date and time;

(vi) the make, model and license plate of the delivery vehicle;

and (vii) the name and signatures of the MMTC delivery employees.

These manifests must be kept by the MMTC for inspection for up to three years.

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OMMU Inspections in Florida

The OMMU may conduct announced or unannounced inspections of MMTC’s to determine compliance with applicable laws and regulations.

The OMMU is to inspect an MMTC upon receiving a complaint or notice that the MMTC has dispensed cannabis containing mold, bacteria, or other contaminants that may cause an adverse effect to humans or the environment.

The OMMU is to conduct at least a biennial inspection of each MMTC to evaluate the MMTC’s records, personnel, equipment, security, sanitation practices, and quality assurance practices.

Florida License and Regulatory Compliance

We, through our subsidiary, Planet 13 Florida, hold the MMTC license and are in compliance with applicable licensing requirements and the regulatory framework enacted by the State of Florida.

We have retained Florida regulatory consultants, with experience to advise us on regulatory requirement and update sin that state.

We have retained Florida regulatory consultants with experience to advise us on regulatory requirement and updates in that state.

Our General Counsel works regularly with our Florida regulatory consultant and oversees all aspects of statutory and regulatory compliance for our MMTC license.

Illinois State Law Overview

In June 2019, Illinois passed into law The Cannabis Regulation and Tax Act (“ CRTA ”), which legalized cannabis for recreational use and created one of the largest adult use markets in the country.

In June 2019, Illinois passed the Cannabis Regulation and Tax Act (“

CRTA ”), which legalized cannabis for recreational use and created one of the largest adult use markets in the country.

The law went into effect on June 25, 2019, and adult use sales of cannabis began in the state on January 1, 2020.

Under the CRTA, existing medical cannabis license holders were allowed to apply for Early Approval Adult Use Dispensing Organization (“ EAAUDO ”) licenses to be able to sell adult use product at existing medical cannabis dispensaries (known as “co-located” or “same site” dispensaries).

Existing medical operators also received the privilege of opening a secondary adult use only retail dispensary for every medical cannabis dispensary location already existing in the operator’s portfolio.

All EAAUDO license holders were also required to commit to Illinois’s groundbreaking Social Equity program either through a financial contribution, grant agreement, donation, incubation program, or sponsorship program.

The CRTA also authorized the issuance of an additional 75 Adult Use Dispensing Organization (“ AUDO ”) licenses, 40 craft grower licenses as well as infuser and transporter licenses in 2020.

Under the CRTA, existing medical cannabis license holders were allowed to apply for Early Approval Adult Use Dispensing Organization (“

EAAUDO ”) licenses to be able to sell adult use product at existing medical cannabis dispensaries (known as “co-located”

or “same site”

dispensaries).

The CRTA also authorized the issuance of an additional 75 Adult Use Dispensing Organization (“

AUDO ”) licenses, 40 craft grower licenses as well as infuser and transporter licenses in 2020.

Generally speaking, these licenses were to be awarded via a competitive application process.

The CRTA provided a significant advantage to applicants that qualified as a “Social Equity Applicant” under the CRTA.

The CRTA provided a significant advantage to applicants that qualified as a “Social Equity Applicant”

under the CRTA.

In addition, the CRTA authorized issuance up to 110 additional AUDO licenses and 60 craft grower licenses by December 21, 2021.

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1443, which amended the CRTA, the issuance of new cannabis licenses in Illinois was delayed until July 2021.

As of the date of this filing, the IDFPR reports 40 craft grower licenses, along with infuser and transporter licenses have been issued.

On September 3, 2021, Illinois announced that 185 AUDO licenses have been awarded through three license lotteries that took place on July 29, 2021, August 5, 2021, and August 19, 2021 respectively.

However, no AUDO licenses have been issued to the lottery winners and it is uncertain when they will be issued.

Illinois also announced that it would issue 60 more craft grower licenses by December 21, 2021, but these licenses are pending resolution of a court-ordered injunction issued on November 22, 2021 against the Illinois Department of Agriculture ( GP, LLC v.

Illinois Department of Agriculture , Case No.

By June 2022, the Illinois Department of Agriculture (" IDOA ") has issued approximately 88 craft grower licenses in several tranches, along with infuser and transporter licenses.

Note that those applicants who did not win a craft grow license have since sued IDOA alleging a host of issues and arguments relating to the application and scoring process.

All such cases were consolidated for administrative purposes and are still pending ( In re Cannabis Craft Grow Litigation , Case No.:

22 CH 06071).

On September 3, 2021, the Illinois Department of Financial and Professional Regulation (" IDFPR ") announced that 185 Conditional AUDO licenses have been awarded through three license lotteries that took place on July 29, 2021, August 5, 2021, and August 19, 2021 respectively.

These Conditional AUDO licenses were ultimately issued to the respective winners in July 2022.

Conditional AUDO license holders are required to site and operationalize their dispensaries within 360 days of license receipt.

Illinois Reporting Requirements

The state of Illinois uses BioTrack THC as its computerized track-and-trace system for seed-to-sale reporting.

The state of Illinois uses BioTrackTHC as its computerized track-and-trace system for seed-to-sale reporting.

Individual licensees, whether directly or through third-party integration systems, are required to push data to the state to meet all reporting requirements.

Illinois Licenses and Regulatory Compliance

Illinois allows for four types of cannabis businesses within the state:

(1) cultivation/craft grower; (2) infusing; (3) transportation; and (4) dispensary.

Dispensaries are regulated by the IDFPR.

The remaining licenses are regulated by the Illinois Department of Agriculture (“ IDOA ”).

We have been awarded, but not yet issued, a Conditional Adult Use Dispensary license in the Chicago-Naperville-Elgin region, the most populated region of Illinois.

Such a license will cease to be “conditional” once it is tethered to an approved location, which according to the CRTA should occur within 180 days of issuance.

The CRTA and regulations provide for extensions of this deadline.

Illinois allows for five types of cannabis businesses within the state:

(1) cultivation centers;

(2) craft growers;

(3) infusers;

(4) transporters which are regulated by the IDOA.

Fifth are dispensaries, which are regulated by IDFPR.

All cultivation, infusing, and transporter establishments must register with IDOA.

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The cultivation licenses permit a licensee to acquire, possess, cultivate, manufacture and process cannabis into edible products and cannabis-infused products.

Cultivators can transfer, have tested, supply or sell cannabis and cannabis products and related supplies to dispensaries and infusers.

Infusing licenses permit a licensee to acquire and possess distillate from a licensed cultivator and to manufacture edible and cannabis-infused products.

Cultivators can transfer, have tested, supply or sell cannabis and cannabis products and related supplies to licensed dispensaries, craft growers, and infusers.

Infusing licenses permit a licensee to acquire and possess distillate from a licensed cultivator or craft grower and to manufacture edible and cannabis-infused products.

Infusers can transfer, have tested, supply or sell cannabis and cannabis products to dispensaries.

The transporter license permits a licensee to transport cannabis and cannabis products to and from licensed entities.

The retail dispensary license permits us to purchase cannabis and manufactured cannabis products from licensed cultivation facilities and infusing organizations and to sell such products to adult consumers (21 years old or older).

We have retained Illinois regulatory consultants, with experience to advise us on regulatory requirements during the pre-license issuance period and following the anticipated license issuance to Planet 13 Illinois, LLC.

Our General Counsel works regularly with our Illinois regulatory consultants and oversees all aspects of statutory and regulatory compliance.

The retail dispensary license permits us to purchase cannabis and manufactured cannabis products from licensed cultivation facilities, craft growers, and infusing organizations and to sell such products to adult consumers (21 years old or older).

On August 5, 2021, we, through our subsidiary, Planet 13 Illinois, in which entity we held a minority interest, won a Conditional Adult Use Dispensing Organization License in the Chicago-Naperville-Elgin region, the most populated region of Illinois.

The conditional license was issued to Planet 13 Illinois on July 22, 2022 and expires on July 17, 2023.

Such a license will cease to be "conditional" once it is tethered to an approved location.

On February 7, 2023, and upon the receipt of regulatory approval from IDFPR, we exercised our option to purchase the majority interest of Planet 13 Illinois.

As such, we are now the 100% owner of that license holding entity.

We have retained Illinois regulatory counsel, with experience to advise us on regulatory requirements during the pre-license issuance period and following the anticipated annual license issuance to Planet 13 Illinois.

Our General Counsel works regularly with our Illinois regulatory counsel and oversees all aspects of statutory and regulatory compliance.

Compliance with State Law

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Our General Counsel works with external legal advisors in Nevada, California, Illinois, and Florida to ensure that we and our subsidiaries are in compliance with applicable state laws, including:

weekly correspondence and updates with advisors;

development and maintenance of standard operating procedures with respect to dispensing, cultivation, processing and distribution;

ongoing monitoring of compliance with operating procedures and regulations by on-site management;

appropriate employee training for all standard operating procedures; and

frequent correspondence and updates with advisors;

development and maintenance of standard operating procedures with respect to dispensing, cultivation, processing and distribution;

ongoing monitoring of compliance with operating procedures and regulations by on-site management;

appropriate employee training for all standard operating procedures; and

subscription to monitoring programs to ensure compliance with the FinCEN Memorandum.

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To ensure the safety and security of cannabis business premises and to maintain adequate controls against the diversion, theft, and loss of cannabis or cannabis products, we do the following in full compliance with state statutes and regulations:

have an enclosed, locked facility, with appropriate entrance security;

train employees in security measures and controls, emergency response protocol, confidentiality requirements, safe handling of equipment, procedures for handling products, as well as the differences in strains, methods of consumption, methods of cultivation, methods of fertilization and methods for health monitoring;

install sophisticated, regulatory-compliant security equipment to deter and prevent unauthorized entrances;

install security alarms to alert local law enforcement of unauthorized breach of security; and

have an enclosed, locked facility, with appropriate entrance security;

install sophisticated, regulatory-compliant security equipment to deter and prevent unauthorized entrances;

install security alarms to alert local law enforcement of unauthorized breach of security; and

implement security procedures that:

restrict access of the establishment to only those persons/employees authorized to be there;

deter and prevent theft;

provide identification (badge) for those persons/employees authorized to be in the establishment;

prevent loitering;

require and explain electronic monitoring; and

restrict access of the establishment to only those persons/employees authorized to be there;

deter and prevent theft;

provide identification (badge) for those persons/employees authorized to be in the establishment;

prevent loitering;

require and explain electronic monitoring; and

require and explain the use of automatic or electronic notification to alert local law enforcement of an unauthorized breach of security.

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Adverse outcomes in some or all of these claims may result in significant monetary damages or injunctive relief that could adversely affect our ability to conduct our business.

The litigation and other claims are subject to inherent uncertainties and management’s view of these matters may change in the future.

A material adverse impact on our financial statements also could occur for the period in which the effect of an unfavorable outcome becomes probable and reasonably estimable.

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are subject to inconsistent legislation and regulation.

We began our operations in the State of Nevada, which has legalized the medical and recreational adult-use of cannabis, and have expanded or plan to expand in other states with licensed cannabis opportunities.

We began our operations in the State of Nevada, which has legalized the medical and adult-use of cannabis, and have expanded or plan to expand in other states with licensed cannabis opportunities.

federal government has not enacted similar legislation and the cultivation, sale and use of cannabis remains illegal under federal law pursuant to the CSA.

The federal government of the U.S.

has specifically reserved the right to enforce federal law in regard to the sale and disbursement of medical or recreational adult-use cannabis even if state law sanctioned such sale and disbursement.

has specifically reserved the right to enforce federal law in regard to the sale and disbursement of medical or adult-use cannabis even if state law sanctioned such sale and disbursement.

It is presently unclear whether the U.S.

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This risk was further heightened by the revocation of the Cole Memorandum in January 2018.

See “ United States Federal Law Overview .”

United States Federal Law Overview .”

Further, there can be no assurance that state laws legalizing and regulating the sale and use of cannabis will not be repealed or overturned, or that local government authorities will not limit the applicability of state laws within their respective jurisdictions.

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federal actions against any individual or entity engaged in the cannabis industry or a substantial repeal of cannabis related legislation could adversely affect us.

Our involvement in the medical and recreational adult-use cannabis industry is illegal under the applicable federal laws of the United States and may be illegal under other applicable law.

Our involvement in the medical and adult-use cannabis industry is illegal under the applicable federal laws of the United States and may be illegal under other applicable law.

There can be no assurances the federal government of the United States or other jurisdictions will not seek to enforce the applicable laws against us.

The consequences of such enforcement would be materially adverse to our business and could result in the forfeiture or seizure of all or substantially all of our assets.

See “ Risk Factors .”

Nature of the Company’s Involvement in the U.S.

Risk Factors .”

Nature of the Company ’

s Involvement in the U.S.

Cannabis Industry

We have a material direct involvement in the cannabis industry in Nevada and California.

Currently, we are directly engaged in the cultivation, manufacture and production, possession, use, sale and distribution of cannabis in the medical and adult-recreational use cannabis marketplace in Nevada and the adult-recreational use cannabis market in California.

Approximately 41.3% of our assets and 100% of our revenues are directly attributable to the medical and recreational adult-use cannabis market in Nevada and California.

We hold cultivation, production and retail distribution licenses for the State of Nevada and retail and distribution licenses for the State of California.

Currently, we are directly engaged in the cultivation, manufacture and production, possession, use, sale and distribution of cannabis in the medical and adult-use cannabis marketplace in Nevada and California.

As of December 31, 2022, we hold an MMTC license in Florida and a Conditional Adult-Use Dispensing Organization license in Illinois which we intend to place into operation.

As of December 31, 2022, virtually all of our assets and revenues are directly attributable to the medical and adult-use cannabis market.

We hold cultivation, production, dispensary, and distribution licenses for the State of Nevada and cultivation, manufacturing, dispensary, and distribution licenses for the State of California.

As previously stated, violations of any federal laws and regulations could result in significant fines, penalties, administrative sanctions, convictions or settlements arising from civil proceedings conducted by either the federal government or private citizens, or criminal charges, including, but not limited to, disgorgement of profits, cessation of business activities or divestiture.

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The approach to the enforcement of cannabis laws may be subject to change or may not proceed as previously outlined.

See “ Risk Factors .”

Risk Factors .”

Our operations in the U.S.

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We may, in future periods, expand our operations outside of Nevada and California and intend to restrict such future expansion to:

(i) only those states that have enacted laws legalizing cannabis; and (ii) only those states where we can comply with state (and local) laws and regulations and have the licenses, permits or authorizations to properly carry on each element of our business.

(i) only those states that have enacted laws legalizing cannabis;

and (ii) only those states where we can comply with state (and local) laws and regulations and have the licenses, permits or authorizations to properly carry on each element of our business.

In addition, we will continue to ensure we are in compliance with applicable licensing requirements and the regulatory framework enacted in the states in which we operate by continuous review of our licenses and affirmation certifications from management.

We will continue to monitor, evaluate and re-assess the regulatory framework in the states in which we operate and any state that we may look to expand our operations to in the future, and the federal laws applicable thereto, on an ongoing basis; and will update our continuous disclosure regarding government policy changes or new or amended guidance, laws or regulations regarding cannabis in the U.S as required.

and will update our continuous disclosure regarding government policy changes or new or amended guidance, laws or regulations regarding cannabis in the U.S as required.

Anti-Money Laundering Laws and Regulations

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that involve money laundering, financial recordkeeping and proceeds of crime, including the U.S.

Currency and Foreign Transactions Reporting Act of 1970 (“ Bank Secrecy Act ”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“ USA PATRIOT Act ”) and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

Currency and Foreign Transactions Reporting Act of 1970 (“

Bank Secrecy Act ”), as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“

USA PATRIOT Act ”) and the rules and regulations thereunder, and any related or similar rules, regulations or guidelines, issued, administered or enforced by governmental authorities in the U.S.

Further, under U.S.

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The SEC also maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Our filings with the SEC are available to the public on the SEC’s website at www.sec.gov .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business