Vireo to Acquire Hawthorne in Major Cannabis Supply Chain Shake-Up

MINNEAPOLIS, MN – January 28, 2026 – In a landmark move poised to reshape the cannabis industry's supply chain, Vireo Growth Inc. today announced it has entered into a non-binding Memorandum of Understanding to acquire The Hawthorne Gardening Company from its parent, The Scotts Miracle-Gro Company. The proposed share-based transaction signals a powerful strategic shift for both entities, with Vireo pursuing aggressive vertical integration while ScottsMiracle-Gro pivots away from the operational volatility of the cannabis market.

The deal, expected to close in the first or second fiscal quarter of 2026, would see Vireo, a multi-state cannabis operator, absorb one of North America's leading suppliers of hydroponic and indoor gardening materials. For ScottsMiracle-Gro, the divestiture marks the culmination of a challenging journey with Hawthorne, transitioning its involvement from direct ownership to an equity stake in the rapidly consolidating cannabis sector.

Vireo's Vertical Integration Gambit

For Vireo Growth Inc., the acquisition of Hawthorne is the capstone of an audacious expansion strategy. The company has been on what industry insiders describe as an "audacious acquisition spree," recently announcing deals to absorb companies like Deep Roots Harvest, Proper Brands, and Eaze to build a formidable coast-to-coast footprint. This move to acquire Hawthorne represents a calculated step toward vertical integration, giving Vireo direct control over a critical segment of its production line: the very nutrients, lighting, and materials used to cultivate cannabis.

This strategy is designed to create a more resilient and cost-effective operation as Vireo expands its multi-state footprint to 10 states, including the massive California, Florida, and New York markets, with plans for 166 dispensaries. By owning a key supplier, Vireo can potentially insulate itself from supply chain disruptions, control quality from seed to sale, and achieve cost synergies that could provide a significant competitive advantage.

John Mazarakis, Chief Executive Officer of Vireo, highlighted the collaborative spirit behind the deal. “We’ve valued our working relationship with ScottsMiracle-Gro and the Hawthorne team, and they have been excellent to work with throughout our discussions,” Mazarakis stated. “This proposed transaction builds on a foundation of mutual respect and trust developed over time.”

The integration of Hawthorne's cultivation supply business into Vireo's consumer-facing cannabis operations is seen as a blueprint for future growth. Mazarakis added, “Our focus now is on executing thoughtfully and responsibly in a way that reflects the expectations of a partner of this caliber as we move toward closing.”

ScottsMiracle-Gro Sharpens Its Focus

While Vireo builds up, ScottsMiracle-Gro is strategically slimming down. The sale of Hawthorne represents a decisive pivot back to its core, and more predictable, consumer lawn and garden business. Hawthorne, while a leader in its field, has been a source of significant financial volatility for its parent company, largely due to its deep ties to the often-turbulent cannabis market.

In a recent quarter, Hawthorne's sales fell a staggering 35% to $52.1 million, a decline the company attributed to a strategic exit from third-party distribution. More telling, ScottsMiracle-Gro recorded a pre-tax asset impairment charge of $105 million related to the subsidiary, reflecting the gap between its book value and its estimated selling price. The segment has been notably hurt by cannabis oversupply issues that have plagued cultivators across North America. CEO Jim Hagedorn had previously lamented that the company had "burned $2 billion" on the venture.

By divesting Hawthorne, Scotts is not exiting the cannabis space entirely but is instead shifting its position. “After evaluating our strategic options, we concluded the most compelling path forward for our shareholders is to transition to an equity participation arrangement with Vireo,” said Jim Hagedorn, Chairman and CEO of ScottsMiracle-Gro. This move allows Scotts to shed a volatile operational unit and its associated costs—realizing what analysts expect to be immediate margin-accretive benefits—while retaining financial upside through its new equity in Vireo. The company has already classified Hawthorne as a "discontinued operation" in its latest fiscal report, a clear signal of its new direction.

Underscoring its confidence in this renewed focus, ScottsMiracle-Gro's board simultaneously approved a new share repurchase program of up to $500 million, signaling a commitment to returning value to shareholders and a bullish outlook on its core business.

The Hagedorn Factor and Leadership Integration

Crucial to the deal's long-term success is the integration of leadership. Upon the transaction's completion, Chris Hagedorn, Executive Vice President of ScottsMiracle-Gro and the executive lead of the Hawthorne business, is slated to join Vireo's Board of Directors. This is more than a ceremonial appointment; Hagedorn is expected to chair a newly formed Strategy Committee and serve on the compensation, nominating, and corporate governance committee.

This move ensures that Hawthorne’s deep institutional knowledge and market expertise are not lost in the transition. Instead, they will be embedded at the highest level of Vireo's strategic decision-making process. Chris Hagedorn brings years of experience operating within the complex cannabis ecosystem, a perspective his father, Jim Hagedorn, believes is invaluable. “[Hawthorne's] experience has given us a clear view of what does and does not create durable value over time,” the elder Hagedorn noted, adding that Vireo is a “good home for Hawthorne.”

For Vireo, gaining Chris Hagedorn's expertise is a significant boon. His leadership will be vital in navigating the integration of the two companies and leveraging Hawthorne’s capabilities to fuel Vireo's ambitious growth plans. This direct infusion of talent from the acquired company signals a true partnership and a commitment to making the combined entity more than the sum of its parts.

While the announcement has been made, the path to finalization requires careful navigation. The Memorandum of Understanding remains non-binding, and the transaction is subject to customary closing conditions and the negotiation of a definitive agreement. However, the strategic alignment and clear benefits for both parties suggest a strong motivation to see the deal through. As Vireo and ScottsMiracle-Gro work toward closing in the coming months, the entire cannabis industry will be watching to see how this transformative deal reshapes the landscape for operators and suppliers alike.