The Rise and Fall of Scotts Miracle-Gro’s Cannabis Venture
Ohio-based lawn care giant Scotts Miracle-Gro made a bold move almost a decade ago, betting $1.7 billion on the legal cannabis industry. The company created a pot-focused subsidiary called Hawthorne Gardening Company and acquired multiple cannabis cultivation supply companies, including grow light manufacturers, hydroponic supply outfits, and plant nutrient makers. At the time, only four states had legalized recreational marijuana. The move garnered attention and Scotts’ stock price started to rise.
CEO Jim Hagedorn Reflects on the Failure of Hawthorne Gardening Company
However, in a recent interview, CEO Jim Hagedorn admitted that the company’s venture into the cannabis industry has been a failure. Due to an oversupply of cannabis, a crashing wholesale price per pound of weed, punitive federal tax codes, and a lack of progress at the federal level to legalize marijuana, Scotts saw its sales drop significantly. Hawthorne, in particular, experienced a decline in sales and had to lay off employees and shut down one of its acquisitions. The value of the company is now “zero, or less,” according to Hagedorn.
Scotts Miracle-Gro’s Plan to Revive its Cannabis Business
Despite the setbacks, Scotts Miracle-Gro has a plan to revive its cannabis business. The company aims to spin off Hawthorne from Scotts and sell it to a publicly traded cannabis company like Curaleaf, Trulieve, Green Thumb Industries, or Verano. This announcement caused Scotts’ stock to jump. Hawthorne still holds value, particularly its research and development facilities, which test products and equipment to improve harvest yield, THC potency, and consistency. Scotts believes that there is a lot of potential in Hawthorne and is looking towards the future.
The Vision of Becoming the “Procter & Gamble of Marijuana”
The ultimate goal for Scotts Miracle-Gro is to create the “Procter & Gamble of marijuana.” This means building a fully vertically integrated corporation that manufactures everything from grow lights to weed to retail stores. Scotts aims to combine Hawthorne’s assets with a cannabis operator through an acquisition in exchange for a minority stock position and board seats. The company envisions a future where big players in industries like Big Alcohol and Big Tobacco invest heavily in the U.S. cannabis market, once federal laws change to legalize marijuana.
Challenges and Opportunities in the Uncertain Cannabis Market
While Scotts Miracle-Gro is determined to revive its cannabis business, there are challenges ahead. Separating Hawthorne from Scotts is a complex task, and building a strong cannabis brand takes time and significant investment. Some industry experts remain skeptical about the success of Scotts’ plan. However, the Hagedorns, father-and-son team, remain undeterred and are focused on securing a future for Hawthorne and the Scotts legacy. They believe that the unique benefits and assets of Hawthorne, particularly its research and development facilities, set the company apart in the cannabis market.
The future of Scotts Miracle-Gro’s cannabis venture remains uncertain, but the company is determined to bounce back and capitalize on the opportunities in the evolving cannabis industry.
Analyst comment
Negative news: The failure of Scotts Miracle-Gro’s cannabis venture has caused a decline in sales and layoffs. The company’s value is now “zero, or less.”
Short analysis: Scotts plans to revive its cannabis business by spinning off Hawthorne and selling it to a publicly traded cannabis company. The company aims to become the “Procter & Gamble of marijuana” through vertical integration. Challenges include separating Hawthorne and building a strong cannabis brand, but Scotts remains determined to capitalize on opportunities in the evolving cannabis industry. Uncertain future.
