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Scotts Miracle-Gro And GrowGeneration Are Leading The Cannabis Green Rush

Bay Area Kid profile picture
Bay Area Kid


  • The U.S. hydroponic sector is large and growing.
  • GrowGeneration is the nation's largest retailer of hydroponic supplies.
  • Scotts Miracle-Gro is the most mature and stable cannabis company in America.

The Cannabis Green Rush Is Back On

Lately, it seems like every few weeks, the cannabis industry experiences another positive development. Whether it be a state taking a step toward legalization or cannabis companies posting better than expected earnings reports, there’s been no shortage of good headlines.

The coming months should be no different, with the positive trend expected to continue. Cannabis banking reform is being included in the COVID-19 stimulus bill being put forth by Congress. The governor of New York recently said he wants to legalize cannabis to generate additional tax revenue to help the struggling state. Additional states are expected to join the growing industry by legalizing recreational sales in the upcoming November election.

These steps mean legal cannabis growing facilities are continually being built, upgraded and maintained. The supplies needed to grow indoor marijuana (and other plants) are called hydroponics. The U.S. hydroponics market is expected to grow to $16 billion by 2025, mainly on the back of the growing cannabis market. The two dominant players in the U.S. hydroponics market are GrowGeneration (NASDAQ:GRWG) and Scotts Miracle-Gro (NYSE:SMG).

GrowGeneration is Lighting the Way

Founded in Colorado in 2014 with a single hydroponic store, GrowGeneration now operates 27 stores in 10 states, making it the largest hydroponic retailer in the U.S. The company also operates an e-commerce site at GrowGen.pro.

GrowGeneration spent 2019 growing its business from 15 stores to 25 stores and added two more stores so far in 2020. Despite all this growth and the resulting costs to incorporate these new stores into the company, management was able to maintain profitability. To most effectively utilize its scale, the company rolled out an enterprise resource planning (ERP) platform.

The ERP allows the company to centralize various business functions, such as HR, accounting and purchasing, removing these costs from the

This article was written by

Bay Area Kid profile picture
I'm a Marine veteran, originally from the San Francisco Bay Area. I have a BS in Hospitality Management and an MBA, both from the University of Nevada, Las Vegas.

Analyst’s Disclosure: I am/we are long GRWG, SMG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (20)

TrumptyDumpty profile picture
Oh...my...gosh. You actually pulled the financials before writing?! This is astonishing. Huge departure from previous practices.
Simple Capital profile picture
hey @Bay Area Kid I really liked your analysis of these companies.

In your opinion if you had to buy one stock for the next 2 years in the pot industry which would it be?

For me it was cgc but I am loosing faith their the best investment
Bay Area Kid profile picture
I own more GRWG than SMG, if that answers your question.
PenelopeVitale profile picture
Marijuana stocks getting sold off with the market.
Buying the dip on these cash generating growth monsters is a no brainer.
They have already survived COVID19 and are flourishing in a recession.
Truth_AndMovement profile picture
Very true but only if you buy right...

See: Trulieve, Green Thumb, Curaleaf and Cresco. long all four; will keep adding should they continue to sell off....and then once 2nd Q ERs roll in 🚀🚀🚀
timothy russell profile picture
$TLRY, $TRUL and $RGR all having good days. These are fundamental holds for me, not trades. Which leads me to pot stocks. They are flying. $CNFA is on fire along with the rest. I sold these because I needed the capital, I know some of my followers held, great move.
OneStrawRevolutionFarming2023 profile picture
Hopefully, many if not everyone will start growing CBG :-)


And sample Synergistic Wellness CBD + CBG products [I don't sell or earn a commission from any company]:




Here is some science for this synergy:


Consuming one cultivar feels almost a bit retrograde; we can combine many medicinal cannabis cultivars with many medicinal hemp CBD and CBG cultivars: buying a full budget worth of only one flower and then experiencing the effects of that one cultivar can be wonderful or it might be a negative for some people who don't like the effects.

Medicinal CBD + CBG hemp can help us remediate our medicinal THC sessions - "the brakes" (medicinal CBD supported by the "flexible, fluid, structure of CBG) - by bending the edge and lessening the intensity of the THC effects;

medicinal CBD + CBG hemp can help us modulate directionally our medicinal THC sessions - "the gearbox"(medicinal CBD to add positive notes and medicinal CBG flower to help stave off "lockdown") - by decreasing/increasing either the uplifting or sedating effects;

medicinal CBD + CBG hemp can amplify our medicinal THC session - "the fuel injection" (finding a workable ratio with perhaps more CBG flower and a bit less CBD flower) - by enhancing the wonderful effects of the THC cannabis :-)

With medicinal hemp we almost never have to relinquish our control over our medicinal THC sessions and become reactive to the effects of a cultivar; with medicinal CBD + CBG hemp we aren't worried about "repeatability" because we can usually control/amplify/modulate/remediate the effects of the host of cannabinoids in most or many flowers :-)

Might it be polyculture as one influential component: many kinds of fish and plants in our tanks, many plants in our dual-root containers and "live soil" and many flowers in our holistic medicinal routines and protocols :-)
OneStrawRevolutionFarming2023 profile picture
The main difficulty is that hydroponics will likely be surpassed and replaced by "live liquid soil" aquaponics because:
1. With "live liquid soil" aquaponics there is no need for the HUGE cost of synthetic inputs and bottled nutrients; this likely reduces the cost by large amounts perhaps as much as 60-90% :-)

2. Aquaponics does not require the "flush" of synthetic materials, and, as a result will not output chemical contaminants like hydro does :-(

3. Aquaponics it appears achieves much, much, much higher levels of terpenes, and, in turn, terpene flavors and terpene effects :-)

4. Aquaponics uses sometimes as much as 90% less water than hydro :-)

5. Aquaponics has more than one revenue stream: plants and fish = more potential profits :-)

6. Dual root zone aquaponics apparently produces natural cannabis and not "performance" cannabis like hydro :-)

It appears that outdoor cultivation paired with aquaponics is most economical and produces the best quality of cannabis that hydro and indoor probably will not be able to compete with; in addition, communities will likely start to ban hydro operations that give off large amounts of chemicals :-(

This approach to cultivation - NPK/synthetic inputs - is probably going to lose the competition once growers discover aquaponics and regenerative "live soil" polyculture, intercropping natural farming :-)
Bay Area Kid profile picture
I'm sure both GrowGeneration and Scotts will be able to pivot whichever way the industry goes.
sundevil8888 profile picture
I own shares of $AERO which is 80% owned by Scott's. Just starting to scale and is now profitable. I think SMG will buy out the remaining 20% soon.
OneStrawRevolutionFarming2023 profile picture
Fair enough and thank you :-)

Although if those companies pivot they will be conceding that their way of cultivation is too costly and too chemically contaminated :-(

Many of the hugely expensive facilities are NPK and these types of retrofits for "chemical-free" cultivation might require additional investment :-)

Many are realizing that it might be more prudent to start with "live liquid soil" aquaponics and regenerative "live soil" polyculture, intercropping natural farming than to invest in NPK chemical cultivation - growing the less costly and best way from the start :-)
Jim Craddock profile picture
Planning on GRWG being a big bet 10+bagger.
How much is TAM for grwg's market?
Bay Area Kid profile picture
U.S. hydroponics market expected to reach $16 billion by 2025
sundevil8888 profile picture
Take a look at AeroGrow (AERO) which is 80% owned by SMG. I think SMG will buy the remaining 20% stake sometime over the next few years. Company is finally starting to hit on all cylinders. More directly exposed to Cannabis than SMG for sure.
Hydro Farm is a very fast growing hydroponics company that is a formidable competitor in this space.
Bay Area Kid profile picture
I believe GrowGeneration is selling some of their products.
Oil And Gas Interest profile picture
Good article. Have been long GRWC since last year. I am holding for the secular rise of Cannabis...it is the new gold rush and they sell all the "mining" equipment, and you know what they say about that!
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