The Journal – "How Scotts Miracle-Gro's Weed Business Went Up in Smoke"

Date: August 25, 2025
Host: Oyen Adedoyan (Guest), with reporting by Dean Sealed
Produced by: Spotify Studios & The Wall Street Journal

Episode Overview

This episode explores how Scotts Miracle-Gro, an iconic lawn and garden company best known for weed killer, attempted to pivot into the burgeoning legal cannabis industry. The Journal unpacks the motivations, strategies, internal conflicts, and eventual setbacks that characterized Scotts' high-stakes bet on supplying the legal marijuana business. The story offers a revealing look at the risks of entering a still federally illegal industry and the hard lessons learned when bold moves face regulatory and market realities.

Key Discussion Points & Insights

Scotts Miracle-Gro’s Situation and the Growth of Legal Cannabis

• Recession Hits Home (00:12–00:45)

  • The 2008 recession significantly slows Scotts' growth as consumers and retailers cut back.
  • "We had people spending less on their lawns and gardens because there were other things to prioritize spending on." —Dean Sealed [00:20]
  • Meanwhile, the legal cannabis market is emerging and expanding across several states.

• Opportunity Identified (01:10–01:30)

  • Scotts sees a chance to sell supplies and equipment to legal cannabis growers.
  • Quote: "If we specialize in plants, all plants need the same thing... Why not?" —Jim Hagedorn (as recounted by Dean Sealed) [04:22]

Initial Resistance and Risks

• Pushback within Scotts (04:53–05:35)
  • Internal board members urge caution; the federal illegality of cannabis makes entry risky, especially considering banking and regulatory hurdles.

Entering the Hydroponics Space

• Finding a Way In (05:57–07:00)
  • Jim Hagedorn discovers hydroponics (“green tomatoes”) as an indirect path into supplying the cannabis industry.
  • Scotts begins acquiring hydroponics companies to create a subsidiary, Hawthorne Gardening Company.

Culture Clash and Corporate Tensions (07:31–10:57)

• Acquisitions of General Hydroponics and Vermicrop are initially resisted due to fears of increased scrutiny and corporate influence.
  • "They liked the lack of regulation for the most part, because it allowed them to operate pretty freely." —Dean Sealed [08:03]
• Chris Hagedorn (Jim’s son) works to bridge the gap, avoiding corporate trappings and emphasizing respect for current company cultures.
  • "They would never wear suits. They wouldn't even wear anything with Scott's branding..." —Dean Sealed [08:46]
• The sticking point: Scotts’ employee drug testing policy. Potential deals stall until Scotts eliminates marijuana tests for employees company-wide — a cultural breakthrough that wins appreciation from both new and existing workers.
  • "Not only did they back down, they eliminated marijuana drug testing for all of Scott's Miracle Grow." —Dean Sealed [10:18]
  • "They created like a revolution within the company." —Oyen Adedoyan [10:54]
  • "Absolutely." —Dean Sealed [10:57]

The Boom: Hawthorne’s Rise and the Cannabis Surge

• Rapid Growth and Success (11:36–13:07)
  • Hawthorne dominates the hydroponics supply market as cannabis legalization spreads.
  • Sales surge, particularly in the pandemic as marijuana consumption spikes and investors flock to Scotts as a “clean” cannabis play.
    • "During the pandemic, consumption of marijuana reached new heights, and the company's stock price more than doubled." —Oyen Adedoyan [13:07]

The Bust: Industry and Company Setbacks

• Post-Pandemic Slowdown (13:36–14:44)

  • After the pandemic, demand for cannabis falls, leading to oversupply and a price collapse.
  • Hawthorne’s fortunes, tied to its customers’ success, plummet as growers cut back or go out of business.
    • "Those profits turned to loss. Those losses started to weigh on the bottom line..." —Dean Sealed [14:44]

• Regulatory Dead Ends (15:05–16:20)

  • Federal law (marijuana as a Schedule 1 drug) creates crippling tax and business challenges.
    • "They can't deduct ordinary business expenses from their taxes. When you can't deduct business expenses, it's extremely hard to turn a profit." —Dean Sealed [15:23]
  • Broader legalization could "open the gates," but progress is slow and uncertain.

Political Efforts and the Wait for Legalization

• Advocacy & Anticipation (16:20–17:43)
  • Jim Hagedorn pushes for political change, advocating at the highest levels for regulatory reforms.
    • "He was on his way that day...to Mar-a-Lago for a dinner with President Trump where he wanted to push for the federal government to end its hostility towards cannabis." —Dean Sealed [16:25]
  • Trump signals some openness to rescheduling marijuana but no firm promises.
    • "He said a decision will be coming in a few weeks. So I think a lot of people in the industry are waiting with bated breath." —Dean Sealed [17:12]

The Exit: Scaling Back & Strategic Retreat

• Selling Hawthorne & Lessons Learned (17:43–19:20)
  • Scotts plans to sell Hawthorne but retains an option to reacquire if federal legalization comes.
    • "Hawthorne is a...was an experiment that they're not going to pick back up until there's a much cleaner runway in front of them." —Dean Sealed [18:20]
  • Broader lesson: Early, large bets on emerging industries can be as dangerous as being wrong — regulation shapes outcomes.
    • "Being early can sometimes be just as bad as being wrong." —Dean Sealed [19:26]

Notable Quotes & Memorable Moments

• "If we specialize in plants, all plants need the same thing... Why not?" —Jim Hagedorn (as recounted by Dean Sealed) [04:22]
• "Not only did they back down, they eliminated marijuana drug testing for all of Scott's Miracle Grow." —Dean Sealed [10:18]
• "They created like a revolution within the company." —Oyen Adedoyan [10:54]
• "Being early can sometimes be just as bad as being wrong." —Dean Sealed [19:26]

Timestamps for Key Segments

• 00:12-01:30 — Scotts’ struggles during the recession & emerging cannabis opportunity
• 03:18-04:53 — CEO Jim Hagedorn’s vision and internal company resistance
• 05:57-07:00 — Discovery of hydroponics as a cannabis supply market entry
• 07:31-10:57 — Acquisitions, culture clash, and internal policy revolution
• 11:36-13:07 — Hawthorne’s market dominance and pandemic boom
• 13:36-14:50 — Industry downturn and Hawthorne’s financial woes
• 15:05-16:20 — The federal legal wall and tax implications
• 16:20-17:43 — Jim Hagedorn’s cannabis advocacy and federal prospects
• 17:43-19:26 — Exit strategy, lessons for other companies

Key Takeaways

• Scotts Miracle-Gro’s cannabis venture shows that timing and legal uncertainty can unravel even well-resourced corporate bets.
• The intersection of business ambition and unresolved federal policy creates persistent instability for the industry.
• Cultural adaptation and willingness to accommodate (e.g., changing drug testing policies) were crucial for Scotts to even get its foot in the door — a noteworthy corporate transformation.
• The story illustrates that being a market pioneer can bring both boom and bust, especially in industries still shackled by legal questions.