ScottsMiracle-Gro sets up cannabis investment company with huge down payment

Investing in the cannabis industry may have gotten a little easier thanks to an unusual gamer: ScottsMiracle-Gro (NYSE: SMG) announced today in a press release the formation of its newly formed subsidiary, The Hawthorne Collective, which will focus on strategic minority stakes in areas of the cannabis industry that Not currently being pursued by The Hawthorne Gardening Company – their hydroponic, lighting, and nutrient supply line of business that focuses on cannabis.

In addition, The Hawthorne Collective will issue a $ 150 million convertible loan.

Company officials admitted the gauntlet cannabis companies go through on any task involving state-insured banks, but said they believe regulations will change.

“The addition of The Hawthorne Collective to our portfolio enables us to explore and pursue new opportunities in an industry poised for significant growth in the years to come,” said Jim Hagedorn, Chairman and CEO of ScottsMiracle-Gro. “With full appreciation of current banking and legal requirements, The Collective is designed so that we can ultimately participate directly in a larger market if the legal environment changes over time.”

RIV Capital announced that it will use the funds raised by The Hawthorne Collective for general corporate and other legal purposes that could include additional investments and acquisitions.

Upon completion, RIV Capital will become The Hawthorne Collective’s preferred vehicle for future investments. The transaction is expected to close in the fourth quarter of 2021.

“With a minority stake in RIV Capital without equity, this first transaction will have little impact on our financial performance in the short term,” said Hagedorn. “While this approach means we will use capital that is not available for short-term investments with a more immediate return, we are confident that our partners at RIV Capital and our long-term approach will ultimately create significant value for our shareholders.”

Hagedorn recognized the money the cannabis industry brings in that they cannot ignore. He continued, “The growth of the Hawthorne Gardening Company over the past six years has indeed generated significant shareholder value. It has also enabled us to develop a rare level of expertise and insight into the cannabis field without getting involved in the plant-touching aspects of the industry. With this in mind, we are starting to invest in other areas of the industry through The Collective as we continue to pursue strategic acquisitions to enter the existing Hawthorne Gardening business. “

ScottsMiracle Gro story

Long before cannabis was banned in the United States, Civil War veteran Orlando McLean Scott started selling lawn seeds in 1868, and he and his family never really stopped – when the company eventually expanded into several other areas. Miracle-Gro was developed in 1951 and has become a major nutrient, usually for flowers and houseplants. The brand can now be found practically everywhere.

The company has definitely seen its share of criticism that continued as it entered the cannabis industry. ScottsMiracle-Gro entered the cannabis business with the acquisition of General Hydroponics Inc. and Bio-Organic Solutions Inc. in 2015, but the company has been criticized for its stake in Monsanto – the supposedly evil agrochemical and agricultural biotechnology company.

ScottsMiracle Gro addressed some of these concerns – particularly concerns about Roundup – and even issued an announcement to discontinue production of products containing glyphosate. As a background, ScottsMiracle Gro has marketed Roundup since 1998 but does not own it.

Today the company has sales of around $ 4.1 billion and is one of the world’s largest marketers of branded lawn and garden products. ScottsMiracle-Gro’s wholly owned subsidiary, The Hawthorne Gardening Company, is a leading provider of nutrients, lighting and other materials for indoor and hydroponic growing of cannabis.