Scotts Miracle-Gro Exits Direct Cannabis Ownership, Sells Hawthorne to Vireo

Scotts Miracle-Gro is selling its cannabis-focused subsidiary Hawthorne Gardening Company to multistate operator Vireo Growth, marking the end of the lawn care giant's direct ownership of ancillary cannabis assets.

The transaction will convert Scotts' ownership into an equity participation arrangement with Vireo rather than maintaining operational control of Hawthorne, which has supplied hydroponic equipment and nutrients to cannabis cultivators since 2016.

Financial terms of the deal were not immediately disclosed. The sale comes after years of volatility in Scotts' cannabis-adjacent business, which saw the company invest heavily in cultivation supplies as state-level legalization expanded across the U.S.

The Hawthorne Experiment

Scotts Miracle-Gro entered the cannabis supply market aggressively under former CEO Jim Hagedorn, who famously declared in 2016 that he wanted to "take the pot industry by storm." The company acquired multiple hydroponics brands and retailers, betting that ancillary businesses could capitalize on cannabis growth without touching the plant itself.

But the strategy proved costly. Hawthorne's revenue peaked in 2021 before declining as oversupply issues hit cannabis markets nationwide. The subsidiary reported significant losses as cultivation operations scaled back purchases of growing equipment and nutrients.

Industry analysts had long questioned whether Scotts' traditional retail distribution model fit the specialized needs of commercial cannabis growers. The company faced additional pressure from investors concerned about cannabis exposure, despite Hawthorne's products being federally legal.

What Vireo Gets

For Vireo Growth, the acquisition brings an established supply chain and brand recognition in cultivation inputs. The Minnesota-based MSO operates dispensaries and cultivation facilities across multiple states, giving it direct insight into grower needs.

The deal represents a vertical integration play—bringing equipment supply in-house while potentially offering those products to other operators. Vireo has pursued similar strategies in other markets, building cultivation expertise that could inform product development.

Scotts' shift to an equity stake suggests the company still sees long-term value in cannabis markets but wants distance from day-to-day operations. This structure allows Scotts to benefit from potential upside while reducing its direct exposure to an industry that remains federally illegal.

What's Next

The transaction awaits standard regulatory approvals and is expected to close in the coming months. Neither company provided a specific timeline for the transition of Hawthorne's operations to Vireo's control.

Scotts has not announced whether it will redeploy capital from the sale into its core lawn and garden business or pursue other investments. The company's stock has struggled in recent years, partly due to Hawthorne's underperformance.

For the broader cannabis industry, the deal signals continued consolidation as companies seek efficiency gains and vertical integration advantages. MSOs with capital are increasingly acquiring ancillary businesses that can support their operations while generating revenue from third-party sales.

The sale also reflects the maturation of cannabis markets—early-stage rapid expansion has given way to more measured growth and profitability focus. Equipment suppliers that thrived during the initial buildout phase now face steadier but slower demand.

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This article is based on original reporting by mjbizdaily.com.