News and Best Practices

Scotts Miracle-Gro’s Investment in Cannabis Tops $300 Million

August 9, 2016

Scotts Miracle-Gro has continued to follow up on its promise to make cannabis a major area of focus for the company. Earlier this summer, the firm announced an agreement to purchase Dutch lighting manufacturer Gavita. This month, Scotts announced that it closed the Gavita deal and signed a new agreement to buy Chandler, Ariz.-based Botanicare.

The acquisitions are important because they represent a vote of confidence for the cannabis industry from a $3 billion mainstream company. But they also signal another step toward large corporation involvement in what many in the industry would prefer remain a cottage industry.

Founded in 1992, Botanicare manufacturers a line of hydroponics products, including its flagship Pure Blend Tea, a plant nutrient. According to the company, its products are in more than 1,500 independent retail stores in the U.S. and Canada. Scotts said the purchase price is $40 million.

When the Botanicare deal closes, Scotts will have bought four companies that together supply fertilizer, soil, accessories and lighting to the cannabis industry, particularly for hydroponic growing. The four represent an industry investment by Scotts of more than $300 million.

In an article in Forbes in early July, Scotts CEO Jim Hagedorn called cannabis “the biggest thing I’ve ever seen in lawn and garden.” He said he was in the process of remaking the company to support his venture into the industry, and was prepared to invest up to a half-billion dollars to do it.

“I know a lot of people will be watching…”

In announcing the Botanicare deal on an investor call, Hagedorn acknowledged the uneasiness of some in cannabis about a billion-dollar international company entering the space in a big way. He said, “We take seriously our responsibility as an industry leader. Since we are an outsider, I know a lot of people will be watching to see how we behave.”

Indeed, dispensary owners, cultivators and other industry businesses will be watching closely to see how Scotts and other large companies affect the structure, products and services that the industry provides to patients and customers. They offer the potential to lend credibility and capital to an industry that will need additional resources to fuel expansion. But they also threaten the cultural foundation that many believe has been built on compassion rather than profitability.

By Tom Brooksher, Executive Editor
Dispensary Management Today articles are for informational purposes only and should not be considered legal guidance or advice on dispensary operations. You should contact an attorney or a qualified cannabis consultant for specific compliance and dispensary/retailing advice.
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