The company that keeps your lawn green is also heavily invested in the cannabis industry and is pushing for an end to federal restrictions that prevent marijuana businesses from accessing banking services.
Scotts Miracle-Gro, an Ohio-based company that began selling lawn seed in 1868, has become a leading supplier of equipment that cannabis companies need to grow pot plants. It has also invested $150 million in RIV Capital, a cannabis investment and acquisition firm.
“How much they actually impact the legislative landscape through their lobbying efforts, I think is an open question,” Mr. Fox said. Another measure that has failed to gain traction in Congress would change section 280E of the federal tax code to allow licensed cannabis operators to deduct business expenses, which is prohibited because pot is illegal at the federal level. As a result, cannabis businesses end up paying much higher taxes.
“It’s not lost on me that this business has been a drag on earnings,” Mr. Hagedorn said of Hawthorne in an earnings call. “I want to emphasize that we believe in the future of the cannabis industry and its eventual turnaround. There is a huge amount of value that will be unlocked in Hawthorne once this rebound occurs.”In the fourth quarter of 2022, sales fell 31% to $131.5 million.
“When it does, what are the most valuable assets going to be in a post-legalization world?” Mr. Hagedorn said. “I think anybody who thinks about it for a while says consumer-facing brands [that make and sell cannabis products] will be the most valuable.” On Capitol Hill, lawmakers will again introduce the Safe Banking Act as well as other measures to legalize marijuana at the federal level, but the timing is uncertain.
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