Today, Scott’s Miracle-Gro announced their 2nd large investment in the cannabis industry by investing $120 million for a 75% stake in Gavita International, “an Amsterdam-based lighting and hydroponics equipment outfit.”
Back in April 2015, Scotts Miracle-Gro made its first foray into the cannabis industry by acquiring General Hydroponics, “a major international supplier of liquid nutrients used to grow food, flowers, and indoor marijuana” for $120 million. When Scotts acquired the company it was generating approximately $50 million in revenue. In a feature piece in Forbes magazine, CEO Jim Hagedorn said that General Hydroponics is growing at about 20% on the top line and that operating margins are ~30% higher than their core business.
These investments demonstrate Scotts Miracle-Gro’s intention of becoming a go-to leader in the indoor hydroponic market that is widely known to be utilized mostly for the production of cannabis indoors. While these 2 investments are encouraging from a validation standpoint, Scotts Miracle-Gro is not done investing in the space. In the Forbes article, Mr. Hagedorn said that he plans on investing another $150 million into the cannabis industry this year. Jim went on to say in the feature piece that “[Cannabis] is the biggest thing I’ve ever seen in lawn and garden.”
With the industry maturing, we will continue to see large Fortune 500 companies not only enter the industry but look to acquire/roll up many of the companies that help build the industry. This bodes well for investors and entrepreneurs, as the potential to exit is becoming more of a reality as big business looks to enter the cannabis industry.