Scotts Miracle-Gro, a mainstream landscaping accessories brand that specializes in soils, grass seeds and fertilizers, is jumping into the exciting world of legal cannabis.
Leading the billion-dollar company into the nascent market is Jim Hagedorn, CEO of Scotts Miracle-Gro, who also happens to be a former F-16 fighter pilot. His daily routine includes a painstaking 500-mile commute from Long Island, New York, to Columbus, Ohio, via an airplane that he navigates aggressively. This thrill-seeking mindset might be a key factor in his latest streak of bold cannabis investments.
Entering Legal Cannabis
Scotts Miracle-Gro experienced a growth spurt between 2001 and 2009, when it increased its revenues by 80 percent. During that period, the company sold its products through productive partnerships with large retailers, like Home Depot and Wal-Mart. When the recession hit, the business started to nosedive- consumers simply didn’t have money to keep their lawns in tip-top condition. To ensure the family’s 27 percent stake in the company, Hagedorn decided to look into product development and research projects for cannabis cultivators.
“If you don’t like it, leave. We’re doing it. It’s beyond stopping,” said Hagedorn. “And we’re not getting into pot growing. We’re talking dirt, fertilizer, pesticides, growing systems, lights. You know it’s a multibillion-dollar business, and we’ve got no growth in our core. Are you guys stupid?”
During the ordeal, the motivated CEO fired over half of his management team and made the following investments:
- $135 million on two California-based startups that sell growing essentials (fertilizers, soils and accessories) to weed farmers
- $120 million on an Amsterdam-based lighting and hydroponics equipment company (the group is in the process of injecting another $150 million into the business)
Hagedorn’s entry into the legal weed industry is very calculated. Currently, hydroponics equipment sellers, along with industrial packaging companies and glass customization services (for the manufacturing of bongs and pipes), have grown exponentially in the past four years. The ex-fighter pilot recounted his own experience three years ago in a local gardening shop that sold hydroponics gear. The sales representative inside the store told Hagedorn that customers were buying equipment for cannabis growing operations. With an average bill of $400 and individuals paying with hard cash, he knew he had to enter the sector before his competitors.
Earlier this year, the company released a fresh line of hydroponics-related products under the name Black Magic. Using the brand’s connections with major retailers, the business was able to launch the Black Magic line in over 141 Home Depot stores based in Colorado, Washington and Michigan- states with medical and/or recreational cannabis laws. As more states adopt legal marijuana guidelines and with the possibility of the rescheduling of cannabis from Schedule I to Schedule II on a federal level, the repositioning of Scotts Miracle-Gro could not have come at a better time.