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Cannabis legalization continues to make headway in the US and beyond, creating economic opportunities for companies in a host of industries. Much of the investment in the cannabis economy has been put into new companies that do the bulk of marijuana cultivation, processing and sales\u2014some of which have grown into large operations spanning numerous states. But increasingly, more mature companies are taking the dive into cannabis, often through ancillary businesses that serve the needs of plant-touching operations. An early adopter of this business strategy is ScottsMiracle-Gro, a 154-year-old firm that is a staple of American garden centers.<\/p>\n
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<\/a>ScottsMiracle-Gro is probably best known for the fertilizer and weed killer combo found in the lawn spreaders of millions of suburban dads and the plant food in the watering cans owned by a similar number of grandmothers across the country. But over the past decade, the company has been taking a deep dive into cannabis, with its subsidiary Hawthorne Gardening Company picking up leaders in marijuana grow lights, nutrients, hydroponic supplies and more. And recently, Scotts has been lobbying for the legalization of marijuana at the federal level. This is a prospect that Chris Hagedorn, executive vice president of ScottsMiracle-Gro and president of the Hawthorne division, says is inevitable.<\/p>\n
\u201cIt\u2019s our belief, and this isn\u2019t a grand revelation by any stretch: Federal legalization is obviously going to happen; the question is when and how,\u201d\u00a0Hagedorn told CNN<\/a>\u00a0in a recent interview. \u201cWhen it does, what are the most valuable assets going to be in a post-legalization world? I think anybody who thinks about it for a while says consumer-facing brands [that make and sell cannabis products] will be the most valuable.\u201d<\/p>\n Back in 2011, ScottsMiracle-Gro CEO Jim Hagedorn, Chris Hagedorn\u2019s father,\u00a0told the Wall Street Journal<\/a> that he saw opportunities for the company in the emerging legal cannabis sector.<\/p>\n \u201cI want to target the pot market,\u201d he said. \u201cThere\u2019s no good reason we haven\u2019t.\u201d<\/p>\n As a publicly traded company, ScottsMiracle-Gro wasn\u2019t able to delve into the heart of legal cannabis with operations in marijuana cultivation, processing or sales because of the federal illegality of the plant. Instead, the company went shopping for companies serving the burgeoning market. In 2013, the company began its new venture with a $4.5 million investment in the Colorado-based indoor gardening products company AeroGrow.<\/p>\n \u201cWe see long-term opportunity in using AeroGrow\u2019s technology to grow the indoor gardening category, as well as in expanding the \u2018seed pod\u2019 technology outdoors,\u201d Jim Gimeson, then senior vice president and general manager of gardens at ScottsMiracle-Gro,\u00a0said in a statement<\/a>. \u201cIn addition, we see an opportunity for these products to perform well in international markets where indoor plants are very popular with consumers.\u201d<\/p>\n Since then, ScottsMiracle-Gro\u2019s jump into the cannabis industry has continued with notable ancillary companies, including nutrient and indoor gardening supply firm General Hydroponics, grow light manufacture Gavita and nutrients maker Botanicare all becoming part of the Hawthorne family of brands. Scotts\u2019 focus on companies that offer products attractive to commercial cultivators and home growers positioned it well to survive the pandemic, a time when garden centers and home improvement retailers saw strong sales.<\/p>\n \u201cIf people are stuck at home, what are they going to do? They smoke a joint and go garden,\u201d Chris Hagedorn said. \u201cAnd that\u2019s pretty much what happened, so the consumer business [of Scotts] saw a huge boost; we did as well.\u201d<\/p>\n Last year, the Hawthorne division\u2019s sales amounted to $1.4 billion, 30% of Scotts\u2019 total sales. In 2019, Hawthorne was responsible for a fifth of ScottsMiracle-Gro\u2019s sales, rising to a 25% share of the company\u2019s revenue in 2020. But supply chain issues and other economic factors have led to a slump at Hawthorne, with sales dropping 44% to $202.6 million during the second quarter of this year.<\/p>\n \u201cThe current slowdown is really the result of a perfect storm that\u2019s hitting growers hard,\u201d Chris Hagedorn said. \u201cThere is oversupply in key markets such as California and Oklahoma, and inflation is causing increases in the cost of raw materials and services. We expect the industry to bounce back as these key markets work through the excess supply and as new markets come online in the Northeast over the next 12 to 18 months.\u201d<\/p>\n The drop in sales has led ScottsMiracle-Gro to cut its guidance for full-year revenue and adjusted earnings. The company said it expected US consumer sales to decline between 4% and 6%, with Hawthorne sales expected to drop 40% to 45% for the year ending Sept. 30.<\/p>\n \u201cThe revised guidance we\u2019re providing is our best estimate of where things currently stand in a fluid and rapidly evolving market,\u201d\u00a0Jim Hagedorn said<\/a>\u00a0last week. \u201cWhile we are striving to deliver the best outcome for fiscal 2022, our focus is shifting toward the future.\u201d<\/p>\n ScottsMiracle-Gro is also now testing the waters for an eventual plunge into the plant-touching side of the cannabis industry. In March, RIV Capital Inc, a cannabis investment firm backed in part by Scotts\u2019 subsidiary The Hawthorne Collective, had entered an agreement to acquire New York-based licensed cannabis cultivator and retailer Etain.<\/p>\n Andrew Carter, an investment analyst who follows ScottsMiracle-Gro for Stifel, said he believes the company is well-positioned for the long term.<\/p>\n \u201cAbsent some kind of change at the company, I\u2019d argue that they\u2019re going to be a big player in cannabis, somehow, some way,\u201d Carter said.<\/p>\n Chris Hagedorn says Hawthorne will continue its expansion into the cannabis industry.<\/p>\n \u201cI hope we\u2019ll be among the leaders,\u201d he said. \u201cIf not, I\u2019ll be disappointed in myself.\u201d<\/p>\n The post How Did ScottsMiracle-Gro Become a Cannabis Power Player?<\/a> appeared first on Cannabis Now<\/a>.<\/p>\n
Cannabis legalization continues to make headway in the US and beyond, creating economic opportunities for companies in a host of industries. Much of the investment in the cannabis economy has been put into new companies that do the bulk of marijuana cultivation, processing and sales\u2014some of which have grown intoContinue Reading<\/a><\/span><\/p>\n","protected":false},"author":381,"featured_media":55372,"comment_status":"false","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[50,505,16268,170,16269,3219,16270],"tags":[],"_links":{"self":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55371"}],"collection":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/users\/381"}],"replies":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/comments?post=55371"}],"version-history":[{"count":1,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55371\/revisions"}],"predecessor-version":[{"id":55373,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/posts\/55371\/revisions\/55373"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media\/55372"}],"wp:attachment":[{"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/media?parent=55371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/categories?post=55371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cannabiscultivatornews.com\/home\/index.php\/wp-json\/wp\/v2\/tags?post=55371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}In it for the Long Haul<\/h4>\n
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\nRead More: How Did ScottsMiracle-Gro Become a Cannabis Power Player?<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"