Planet 13 Holdings reported second-quarter 2026 results showing revenue of $22.9 million, down 14.9% year over year, but with gross margin expanding to 53.9% and net loss shrinking to $5.6 million from $13.3 million a year earlier. The Las Vegas-based multi-state operator is now running its business under the shadow of a pending merger with Vireo Growth Inc., a deal that reframes nearly every line item in this earnings report as a transition metric rather than a standalone growth story.
Margin Gains Mask a Shrinking Top Line
The headline number here isn't growth - it's the absence of it. Revenue fell nearly 15% from the same period last year, driven by Planet 13's exit from California retail and wholesale operations and continued price compression in its core Nevada and Florida markets. That kind of compression is familiar territory for operators in maturing adult-use states: as cultivation licenses proliferate and wholesale menus fill with oversupply, flower and concentrate prices erode, squeezing margins even for vertically integrated companies that control cultivation, processing, and retail under one roof.
What's striking is that gross margin still improved, climbing to 53.9% from 43.4%. Some of that came from cost and procurement discipline; some came from a $1.0 million reduction in the company's inventory reserve for Florida distillate, as rising in-state sales worked down excess product sitting in inventory. Strip out that reserve adjustment, and adjusted gross margin lands at 49.5% - still a meaningful gain, but a reminder that one-time balance-sheet cleanup can flatter a quarter's optics.
Florida's Rebound and the California Exit
Florida revenue rose 17.1% sequentially, a data point Co-CEO Larry Scheffler flagged as evidence the state business is stabilizing after a rocky stretch. Florida's medical-only market has been a tricky one for multi-state operators: heavy reliance on vertical integration, tight caps on retail licenses, and swings in patient demand make quarter-to-quarter volatility common. The company's approval from the Office of Medical Marijuana Use for a BHO extraction facility, granted in May, and its planned Sarasota store expansion both point to continued investment in the state even as the broader corporate story shifts toward consolidation.
California, by contrast, was a retreat. Exiting retail and wholesale there removed a drag on margins but also cut into total revenue - a trade-off increasingly common among multi-state operators who've concluded that California's combination of high taxes, illicit-market competition, and thin wholesale pricing makes scale there more costly than profitable.
What the Vireo Merger Changes for Stakeholders
Co-CEO Bob Groesbeck's comments frame the quarter less as a standalone result and more as a bridge to the pending combination with Vireo Growth. His point about the market rewarding "scale, greater purchasing power, broader distribution and the balance sheet to absorb continued price compression" is a fairly direct acknowledgment that single-state advantages aren't enough anymore in a sector where 280E tax treatment already squeezes profitability and wholesale price compression shows no sign of reversing.
For dispensary operators and suppliers watching this deal, the practical implications are worth tracking: combined purchasing power can shift wholesale terms, consolidated back-office systems can change vendor relationships, and store-level branding may eventually shift as integration proceeds. Planet 13 skipped its usual earnings call this quarter specifically because of the pending merger - a signal that management is limiting forward-looking commentary until the transaction closes. For now, the company's job is straightforward: keep the current business steady, manage inventory and margin discipline, and get to closing without disruption to patients, customers, or employees.