You might have thought that 2021 would be a much better year for Planet 13 Holdings (PLNH.F) stock than 2020 was. After all, the cannabis company had to deal with the shutdown of its Las Vegas SuperStore throughout much of last year. However, Planet 13's shares skyrocketed 186% in 2020 but are basically flat so far in 2021.

The momentum from last year carried over into February. Since then, Planet 13's shares have plunged over 30% below the previous peak. That decline might not last much longer, though. Here's why this beaten-down cannabis stock could be poised to explode higher.

Planet 13 Las Vegas SuperStore entrance.

Image source: Planet 13.

Business is booming

Planet 13 co-CEO Larry Scheffler said in the company's first-quarter earnings announcement, "It is clear that Vegas is back." The truth of that statement is apparent from how Planet 13's business is booming.

The company generated revenue of $23.8 million in the first quarter. That total reflected a year-over-year jump of nearly 42% and a quarter-over-quarter increase of 18%.

Planet 13 posted a profit in Q1 of $0.4 million. That might not seem like much, but the company recorded a net loss of $1.4 million in the first quarter of 2020 and a loss of $2.9 million in the previous quarter. 

Things have gotten even better since the end of the first quarter. Planet 13 announced single-day record sales on April 20, which cannabis proponents celebrate as "420 day." The company reported all-time high sales in May of July of $11.9 million. 

Ready to explode higher

It seems likely that Planet 13 will deliver its best quarterly results ever when the company provides its Q2 update on Aug. 26. Those results could serve as a solid catalyst for the stock. And the future for Planet 13 should be even brighter.

The company opened its second SuperStore in Santa Ana, California, on July 1. The store generated around $800,000 in sales in its first month of operation. However, Planet 13 co-CEO Bob Groesbeck said, "Sales have grown week over week as we start to gain traction as one of the top dispensaries in Orange County."

Planet 13 also owns a 49% stake in Planet 13 Illinois, which recently won a license to operate a cannabis dispensary in the Chicago area. Chicago ranks as one of the company's top target markets as a tourist destination with a large population.

The Las Vegas SuperStore should soon add to its attractions as well. Licensed dispensaries in Nevada can now operate consumption lounges next to the dispensaries. Planet 13 already has the space allocated for a consumption lounge and plans to complete construction as quickly as possible.

Two key risks

My Foolish colleague Prosper Junior Bakiny recently referred to Planet 13 as a "high-risk, high-reward" stock. I agree with that description. There are two risks for the stock that investors should especially keep in mind.

The COVID-19 pandemic remains a concern for Planet 13. There's still a possibility that some restrictions implemented last year could return. Even if that scenario doesn't happen, tourists could limit their travel and consumers could stay at home more -- both of which could negatively affect Planet 13's sales.

An even greater long-term risk for Planet 13 is that it won't be able to replicate its Las Vegas success in other locations. It's too soon to know how the company's California SuperStore will perform at its peak. 

However, my take is that Planet 13 stock will deliver the high rewards commensurate with its relatively high risk. I don't think the future effects of the pandemic will be as bad for the company as they were in 2020. I also suspect that what happens in Vegas won't stay in Vegas in this case with Planet 13 winning as it expands its SuperStore concept into new markets.