Scotts MiracleGro hopes to make pot profits grow
Scotts Miracle- Gro Co. is betting its fertilizer can help cultivate a different kind of grass.
Hawthorne Gardening Co., a subsidiary of the Marysville, Ohiobased company best known for its garden products, has teamed up with Canadian pot producer Flowr Corp. to build a 50,000-squarefoot research facility in British Columbia.
The lab will initially be used to test Hawthorne’s lights and nutrients on cannabis, but it hopes to eventually study pot genetics and its impact on human physiology.
“Pretty quickly we realized that cannabis and hydroponics were a big opportunity,” said Chris Hagedorn, general manager of Hawthorne and the son of Scotts CEO Jim Hagedorn.
“It has become more acceptable to our investor base, to our board, to our management team and the motivation is obvious: it’s a highgrowth category.”
Scotts joins a growing list of large companies testing the marijuana waters. Constellation Brands Inc. announced the biggest investment in the sector to date last week, paying $3.8 billion for a 38 per cent stake in Canopy Growth Corp. Molson Coors Brewing Co. and Heineken NV have also made initial forays.
U.S. federal law prevents New York-based Hawthorne from touching the marijuana plant, so it’s been testing its cannabis-cultivation products on proxy crops like tomatoes and flowers. Still, the company generates about 90 per cent of its sales from the cannabis industry, not including its AeroGrow indoor-gardening business.
“We’re forced to go through this flawed process, selling products without testing them on the actual crops,” Hagedorn said.
For Scotts and Hawthorne, a presence in cannabis helps to offset the seasonality of their traditional gardening business.
“It’s a lot of things that Scotts’ core business isn’t: it’s West Coast, it’s younger, it’s male, it’s non-seasonal,” Hagedorn said. “Having a counterpoint to all of those things was really appealing to us.”