14 July 2016
Hot on the heels of the likes of Microsoft & Google in the tech sector getting involved in the Cannabis industry comes garden products and fertilizer company, Scotts Miracle-Gro
Here’s a report from Forbes about CEO Jim Hagedorn and his desire to inject $US500 million into the industry
Forbes introduce their piece thus…
Strapped into the pilot’s seat of his private jet, Scotts Miracle-Gro CEO Jim Hagedorn thrusts the throttle forward and hurtles down the runway, a typical start to the day for the former F-16 fighter pilot, who commutes 500 miles from his home on Long Island, N.Y. to his office outside Columbus, Ohio. For an hour and a half every morning and every afternoon, Hagedorn sits behind the control stick of his plane, pushes the seat back and lets his mind run wild.
His latest idea: “Invest, like, half a billion in the pot business,” he yells over the roar of two engines powering his camouflaged Cessna Citation. “It is the biggest thing I’ve ever seen in lawn and garden.”
No one has a better perspective on the lawn and garden business than Hagedorn, who, after watching his father build Miracle-Gro into a national brand, orchestrated its merger with Scotts in 1995 and took over as CEO of the combined company in 2001. Scotts Miracle-Gro, which makes almost all of its money selling grass seed, fertilizer, pesticide and dirt, boosted revenues 80% from 2001 to 2009, riding on the coattails of Home Depot, Lowe’s and Wal-Mart as the retailers built more than 3,000 big boxes across the country. But then the Great Recession hit, and the rapid expansion stalled. Scotts Miracle-Gro’s sales have been stagnant ever since. That hit home for Hagedorn and his family, who collectively own a 27% stake that makes up $1.1 billion of their nearly $1.5 billion fortune. Frustrated with the flatlining business, Hagedorn fired more than half his management, shook up his board and gambled heavily on pot growers.
That controversial decision was made one day in 2013 in Yakima, Wash., when Hagedorn wandered into a garden center. The store had hardly any Scotts merchandise, but there was a massive row of equipment for hydroponics, a method of growing that allows people to cultivate cannabis (or any other plant, for that matter) indoors, using targeted lighting and liquid solutions spiked with nutrients. Hagedorn asked to see the store owner, and out walked a short guy with wild hair and a lazy eye. He told Hagedorn that everyone called him an idiot when he first started selling hydroponics equipment, but the stuff was flying off the shelves, with an average receipt of $400–straight cash. It was a starkly different scene from what he’d just witnessed at a Home Depot across town, which had plenty of Scotts Miracle-Gro products but no hydroponics equipment. “Two worlds, same town. I came back, and I told everyone ‘We’re doing it,’ ” Hagedorn recalls. “ If you don’t like it, leave. We’re doing it. It’s beyond stopping. 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?”
Hagedorn is backing up his big talk with serious cash. He shelled out $135 million last year on two California-based businesses that sell fertilizers, soils and accessories to pot growers, recently spent another $120 million on a still-undisclosed lighting and hydroponics equipment company in Amsterdam and promises to invest about another $150 million by the end of 2016. Altogether, the deals are bigger than the largest single acquisition in the history of Scotts Miracle-Gro, which takes in $160 million of profit on $3 billion in sales annually.
