Planet 13 Holdings reported second-quarter 2026 results that show a company shrinking its footprint on purpose, trading top-line revenue for tighter margins ahead of a pending combination with Vireo Growth. Revenue fell to $22.9 million, down 14.9% year over year, largely a function of the company's exit from California retail and wholesale. But gross margin climbed to 53.9% from 43.4%, and the net loss narrowed to $5.6 million from $13.3 million a year earlier.
Retreat From California, Progress in Florida
The California exit is the headline mechanism behind these numbers. Vertically integrated multi-state operators have spent the past two years reassessing which license footprints actually pencil out, and California - burdened by heavy taxation, an entrenched illicit market, and thin wholesale pricing - has been near the top of the list for retreat. Planet 13's decision to walk away from that state's retail and wholesale operations removed a drag on gross margin, even as it cost the company top-line revenue. That trade-off is showing up cleanly in the numbers: gross profit actually rose to $12.3 million despite lower sales, and excluding a $1.0 million inventory reserve adjustment tied to Florida distillate, adjusted gross margin still came in at 49.5%.
Florida is where the operational story gets more interesting. Revenue there grew 17.1% quarter over quarter, a signal that the company's push to stabilize its Sunshine State footprint is gaining traction after a rocky stretch. The OMMU approval in May for a BHO extraction facility and the planned Sarasota store expansion suggest Planet 13 is still investing selectively, even while trimming elsewhere. For a multi-state operator, that combination - cut where margins are thin, invest where demand is firming - is standard triage. Whether it holds up depends on how Florida's medical market, still adjusting to price compression across the state, absorbs additional retail capacity.
Cost Discipline and the Adjusted EBITDA Swing
Total expenses dropped 17.7% to $15.2 million, and adjusted EBITDA loss narrowed sharply to $0.5 million from $2.4 million. That's a meaningful improvement for a sector where 280E tax treatment already squeezes net income regardless of operating performance, since federal law bars standard business deductions for plant-touching cannabis companies. Cost-cutting under those constraints tends to hit overhead and SG&A rather than cost of goods, and that appears to be what happened here: procurement initiatives and company-wide cost actions, not simply lower sales volume, drove the margin improvement.
The balance sheet tells a more cautious story. Total assets slipped to $144.3 million from $152.3 million, while total liabilities rose to $105.5 million from $101.2 million. Cash and restricted cash ticked up modestly to $16.5 million. For operators and lenders watching multi-state cannabis credit risk, that liability growth against a shrinking asset base is worth tracking, particularly heading into a merger where balance-sheet composition affects how combined entity leverage gets structured.
A Merger Reframes the Quarter
Everything in this release sits under the shadow of the definitive merger agreement with Vireo Growth, announced in late July. Co-CEO Bob Groesbeck framed the deal as a response to a market that increasingly rewards scale - more purchasing power, broader distribution, and a balance sheet capable of absorbing continued price compression. That's a candid admission from operator leadership: single-state or thin-footprint multi-state operators are finding it harder to compete on wholesale pricing alone as legacy markets mature and price compression spreads from Nevada to Florida to nearly every adult-use state with sufficient cultivation capacity.
Notably, Planet 13 skipped its usual earnings conference call this quarter because of the pending transaction, a common practice when companies enter quiet periods around deal closings to limit forward-looking commentary that could complicate securities disclosure. For shareholders, employees, and the patients and customers who rely on Planet 13's dispensaries in Nevada, Illinois, and Florida, the coming quarters will likely be defined less by same-store sales trends and more by regulatory and shareholder approval timelines tied to the Vireo combination.
