ScottsMiracle-Gro Continues to Advance Consumer and Cannabis Strategies

Core Insights - The Scotts Miracle-Gro Company is transferring its wholly-owned subsidiary, The Hawthorne Collective, to an independent strategic partner to focus on its core lawn and garden business and reduce the impact of cannabis sector volatility on its stock [1][3]. Company Strategy - The Hawthorne Collective was created in 2021 to invest in areas of the cannabis industry not pursued by the Hawthorne Gardening Company, which specializes in cultivation supplies [2]. - The transaction is part of a broader strategy to separate cannabis-adjacent subsidiaries from Scotts Miracle-Gro, with plans to separate The Hawthorne Gardening Company by the end of fiscal 2025 [3]. Market Context - The cannabis sector has faced challenges due to a lack of federal action and unfulfilled promises over the past four years, impacting growth potential [4]. - The company believes that an independent cannabis-focused entity could better capitalize on the market, especially if federal reforms are enacted [4]. Financial Terms - Under the terms of the deal, Scotts Miracle-Gro received an interest-bearing promissory note in exchange for The Hawthorne Collective, with an option to reacquire it if federal cannabis legalization occurs [4]. Company Overview - Scotts Miracle-Gro has approximately $3.6 billion in sales and is the largest marketer of branded consumer products for lawn and garden care, with well-known brands like Scotts®, Miracle-Gro®, and Ortho® [5].