Scotts Miracle-Gro, a multi-billion-dollar fertilizer company, recently made it rain on the cultivation side of the cannabis industry—$155 million, to be exact. This not only raises the bar for other cannabis cultivation companies, but also has some people standing out in protest against corporate big money.
Horace Hagedorn and his son Jim Hagedorn combined forces to create Scotts Miracle-Gro in 1995. This well-to-do fertilizer company immediately made it known it was out for blood. The Hagedorns fought to be the sole leader in the industry, buying out as many competitors as money would allow. These included Monsanto’s herbicide Roundup and pest-killer Ortho, which sold out for a total of $332 million. This would later pose a threat to Scotts’ positioning within the cannabis industry.
Fifteen years later, Scotts is the market leader within the fertilizer space. Cue Great Recession: Your parents’ lawn and gardening needs quickly became outdated and replaced by urban hydroponic equipment. Jim Hagedorn’s successful empire comes to an abrupt halt. For Hagedorn, a former fighter pilot comfortable with living the high life, this was unacceptable. As a result of Scotts sales flatlining, he made a multi-million dollar decision—to put all his efforts into the cannabis industry.
“I came back, and I told everyone ‘We’re doing it,’” Hagedorn says. “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?”
Following the family tradition, Jim and his son Chris created Hawthorne Gardening Company to meet the demands of hydroponic growers (a.k.a. cannabis growers) across the nation. Unlike Scotts fertilizer made of pesticides, dirt, and grass seed, hydroponic equipment uses lighting and liquid solutions with powerful nutrients to grow plants indoors. Think of your mom’s go-to fertilizer for seasonal tomatoes against your bearded cousin’s shelled-out basement grow op. Scotts Hawthorne Gardening Company markets itself to the latter, using language that’s in line with the free-spirited, artisanal cannabis farmer.
In a recent Cannabist interview with Chris Hagedorn, General Manager of Hawthorne, he discussed how they wanted to keep things small in order to focus on the scientific, R&D side of urban gardening. Rather than the monopolized Scotts Miracle-Gro, the purpose of Hawthorne is to provide organic, nutrient-rich soil for hydroponics.
“That was the concept … allow us to focus on the fun stuff that really matters, allow the mothership to really worry about the other stuff,” he said.
At first glance, Hawthorne appears to be a completely different company, absent of anything Scotts-related. The apple doesn’t fall far from the tree, however. Just like Scotts, Hawthorne has dropped major cash to buy out its competitors in the hydropic space, including a California based General-Hydroponics business and a hydroponics equipment and technology business in Amsterdam. These buyouts total just over $155 million.
Understanding Hawthorne Gardening Company is a subsidiary of Scotts is causing some controversy in the cannabis industry. Many cannabis cultivation companies are seeing this as a threat, a wolf in sheep’s clothing sniffing out big and small competitors. Denver-based Green Lion Partners and Waste Farmers are only two of many companies devoted to making sure this disguised corporation does not change the industry into a monopoly.
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Michael Bologna, founder and CEO of Green Lions Partners, says, “The pushback is the reputational risk that Scotts brings to the table with [its] relationship with Monsanto and [Scotts’] history of selling chemical-based, environmentally damaging products.”
“There always needs to be a David and Goliath,” says John-Paul Maxfield, co-founder and CEO of Waste Farmers. “For [Jim Hagedorn] and his generation, that line of thinking makes sense. I think it’s a reflection of being out of touch with where the market is going. From a competitive perspective, I’m thrilled that they’re of that mindset, because it means they’re going to lose in the end. From a practical perspective, I think that disruption happens at the fringes.”
These smaller companies are trying everything to keep the wolf out of the garden. It seems Scotts is trying to take over all cannabis cultivation, potentially turning the industry into something like Big Pharma. Unfortunately, it seems the Hagedorns may be on the right side of this. The industry seems to no longer be this collective group of like-minded people enjoying the medicinal benefits of herb, but rather a monopolized industry where only the fittest companies survive. We’ll always root for the underdog, but in reality, it seems the title fits the premise.