Miracle-Gro Goes After the Medical Marijuana Market
It’s just quasi-legal cooperative organic gardening, right? All $1.7 billion of it.
Put this one in your pipe and smoke it: The chief executive of Scotts Miracle-Gro Company surprised the investment community last week by announcing that the company intends to go after sales in a new niche market—the medical marijuana market. As the Wall Street Journal observed, “Scotts Miracle-Gro Co. has long sold weed killer. Now, it’s hoping to help people grow killer weed.” The Denver Post traced out the strategy that Scotts chief executive Jim Hagedorn, a 55-year old former F-16 fighter pilot who ferries himself between company meetings in his own Cessna, intends to pursue. “I want to target the pot market,” Hagedorn said. “There’s no good reason we haven’t.” Hagedorn had noticed that raids on major marijuana growing operations often included Miracle-Gro products among the evidence seized at the site. To Hagedorn, examples like that spoke of a level of brand awareness and loyalty that money couldn’t buy. Plenty of high-end pot growers used Miracle-Gro already, but Hagedorn was still worried about alternative consumer acceptance of his “straight” product line. His way around this potential obstacle is a strategy aimed at buying up smaller soil companies that are already patronized by marijuana growers; such outfits as Fox Farm, Roots Organics—and Happy Frog, with its slogan, “Outrageous Organics from the Humboldt Nation.”
We can only speculate about the fate of a suburban lawn and garden firm, which presently pulls down about two-thirds of its annual sales through Wal-Mart, Lowe’s, and Home Depot, moving into a business service sector which is not only illegal under federal law, but locally legal in only 16 states, and subject to frequent federal raids—although fewer of those now under Obama than before. The Wall Street Journal has not been slow to notice that venture capital money has been sniffing around the fringes of the medical marijuana industry, looking for a safe way to get in on any future bonanzas. “Centennial Seed Co., a Boulder, Colo., medical-cannabis seed seller, is seeking $500,000 through a private offering,” says the Journal. “General Cannabis Inc., whose stock trades on the Pink Sheets, supports the medical-marijuana market with financial and Internet services.”
Will it finally be mid-cap businesses, and financial pressures to seek out new business markets, that will tip the scales in favor of legalization? Only if the businesspeople involved can find quick ways to turn a profit.