ScottsMiracle-Gro Sells Hawthorne, Replanting Focus on Core Business

MARYSVILLE, Ohio – April 09, 2026 – The Scotts Miracle-Gro Company has completed the divestiture of its hydroponics subsidiary, The Hawthorne Gardening Company, marking a decisive strategic retreat from the volatile cannabis market to refocus on its traditional lawn and garden empire. The subsidiary was sold to multi-state cannabis operator Vireo Growth, Inc. in an all-share deal that reshapes the competitive landscape for both companies.

The move concludes ScottsMiracle-Gro’s ambitious and often turbulent foray into the cannabis cultivation supply sector. By offloading Hawthorne, the company aims to sharpen its concentration on its powerhouse consumer brands like Scotts®, Miracle-Gro®, and Ortho®, while improving financial stability and margin recovery.

“The divestiture of Hawthorne demonstrates further progress toward our strategy to drive long-term growth in our core lawn and garden business,” said Jim Hagedorn, chairman and CEO of ScottsMiracle-Gro, in the official announcement. “We are focused on making sustained investments to deliver operational efficiencies and groundbreaking innovation while engaging consumers in powerful ways.”

A Strategic Pruning After a Costly Experiment

ScottsMiracle-Gro’s journey with Hawthorne was a high-stakes bet on the burgeoning legal cannabis industry. Under the leadership of the Hagedorn family, the company aggressively acquired a portfolio of hydroponics and indoor gardening brands, aiming to dominate the cultivation supply chain. The strategy initially appeared successful, with Hawthorne’s revenue soaring to a peak of $1.4 billion in fiscal 2021, generating $164 million in profit.

However, the tide turned dramatically as widespread oversupply issues plagued North American cannabis markets. Cultivators scaled back operations, causing demand for growing equipment and nutrients to plummet. Hawthorne's sales collapsed, leading to significant financial strain on its parent company. In one quarter of 2022, Hawthorne's sales fell by a staggering 63%. The subsidiary, which once represented a promising growth engine, became a significant liability, contributing substantially to ScottsMiracle-Gro’s approximately $2.6 billion in debt and reporting a $48 million loss on $454 million in sales in fiscal 2023.

This downturn forced ScottsMiracle-Gro to initiate “Project Springboard,” a major restructuring effort that involved terminating 1,000 employees and writing off $200 million in unsold inventory. The divestiture to Vireo represents the final step in this strategic course correction. By classifying Hawthorne as a discontinued operation, ScottsMiracle-Gro has effectively walled off its core business from the subsidiary's volatility. The company reaffirmed its fiscal 2026 guidance, signaling to investors that the move is expected to stabilize earnings and contribute to its target of achieving a non-GAAP adjusted gross margin of at least 32%.

Vireo Growth’s Cultivation Coup

For Vireo Growth, the acquisition is a transformative coup. The multi-state cannabis operator, with a footprint across 10 states including the key markets of California, Florida, and New York, gains a premier cultivation supply business. The deal provides Vireo with not only Hawthorne’s established brands and market presence but also $35 million in cash, approximately $58 million in net working capital, and $20 million of inventory to be supplied over two years.

This transaction is a powerful vertical integration play for Vireo, which has been on an aggressive expansion and acquisition spree. By absorbing Hawthorne, Vireo creates an internal procurement platform, giving it greater control over its supply chain and a significant cost-efficiency advantage across its 166 dispensaries and 800,000 square feet of cultivation space. This move provides a buffer against market fluctuations and strengthens its competitive position.

“Vireo has a bold vision for its consumer brands in the cannabis space and for Hawthorne in cultivation supply,” said Chris Hagedorn, who led the Hawthorne business for ScottsMiracle-Gro. “It has strong leadership and a solid balance sheet to see that vision through.”

Financially, the all-share deal is structured to be advantageous for Vireo. It issued 213 million subordinate voting shares and 80 million warrants to an independent strategic partner, Good Dog Holdings LLC, which will hold the investment on behalf of ScottsMiracle-Gro. This structure allows Vireo to absorb a major asset without a massive cash outlay, significantly strengthening its balance sheet while positioning it for future growth. Analysts have noted that while Vireo posted a loss over the last twelve months, the company is forecast to return to profitability this year, and the Hawthorne acquisition is expected to accelerate that timeline.

The Hagedorn Connection and Recapturing Value

Perhaps the most intriguing element of the deal is the continued involvement of Chris Hagedorn. As the former head of Hawthorne and executive vice president at ScottsMiracle-Gro, his nomination to Vireo’s Board of Directors creates a unique bridge between the two companies. Upon his election, Vireo plans to form a new strategic growth committee to be chaired by Hagedorn, where he will work closely with Vireo CEO John Mazarakis on future initiatives.

This arrangement ensures that Hawthorne’s institutional knowledge and strategic leadership are not lost in the transition. It also provides ScottsMiracle-Gro with a direct line of sight into its investment and a mechanism to, as Jim Hagedorn stated, “recapture value from the Hawthorne-related investments we have made over the years.” By holding shares in Vireo, ScottsMiracle-Gro retains upside potential, benefiting from any success that Hawthorne achieves under its new, more synergistic ownership.

Chris Hagedorn’s role underscores a deeper alignment of interests. His expertise will be pivotal in integrating Hawthorne into Vireo’s platform and maximizing its potential within a vertically integrated cannabis operation. This strategic continuity is designed to ensure Hawthorne thrives in an environment where its products are directly linked to a large-scale end-user, a stark contrast to its previous position as a supplier to a fragmented and volatile market.

As the consumer lawn and garden industry and the cannabis sector continue to evolve, this divestiture serves as a landmark case study in corporate strategy. ScottsMiracle-Gro has chosen to cultivate its own garden, pruning away a risky venture to strengthen its roots. Meanwhile, Vireo Growth has just planted a seed that could see it grow into one of the most dominant, fully integrated players in the North American cannabis industry.