By Andy Serwer

Jim Hagedorn isn't a shrinking violet. He is small in stature, though.

Both points are immediately evident when the first thing Hagedorn says to me is, "Oh, good, another short guy. Do you like being short?" (For the record, I told him I'm fine with it.)

Clearly, the German shepherd--loving, former Air Force pilot, CEO of Scotts Miracle-Gro has no problem speaking his mind. "Twenty to 25% of the business in [stores like] Lowe's and Home Depot is lawn and garden. And we are the King Kong of lawn and garden," he says.

Besides the company's two flagship brands, which Hagedorn calls "the grow side" of the business, there's what he calls "the kill side," which owns Ortho and distributes Roundup to consumers. Scotts, the venerable seed company of Marysville, Ohio, was founded in 1868. Miracle-Gro, originally just a liquid-based plant fertilizer product, was co-founded in 1950 by entrepreneur Horace Hagedorn, Jim's father.

Back when Miracle-Gro was a stand-alone company, S.C. Johnson made an offer to buy it for $400 million, Hagedorn says. It turned the offer down. "I looked at Scotts and it was worth $260 million," he says. "I said, 'Miracle-Gro is worth more than Scotts. Let's make an offer.'"

That was in 1995. Today, the company has a market cap of nearly $3 billion -- and Hagedorn and his family control some 25% of the company's common stock.

Sounds great, but four years ago the company was worth nearly five times that when the stock hit $252. (It currently trades for $52.) Yup, Scotts Miracle-Gro was a hyped-up pandemic stock. What was that like?

"It sucked, dude," Hagedorn says. "When Covid started, we were really scared. It turned out, lawn and garden was deemed an essential business. And smoking pot, which is the other part of our business that became extremely valuable back then, was also deemed essential. People were home and couldn't socialize, so they gardened." (And partook.)

Hagedorn began digging his trowel into the weed business in 2013, when SMG invested in a small Colorado indoor-gardening products company focused on growing marijuana. It then created a subsidiary for the business, Hawthorne, which made acquisitions in companies that sold marijuana cultivation supplies, and invested in a Canadian business directly involved in growing and selling marijuana.

And yes, the weed business got very high and then crashed.

Earlier this month, SMG transferred its investment in the growing and distribution business to Bad Dog Holdings, an "independent strategic partner." It also plans to separate off the cultivation supplies business soon. Hagedorn says SMG could buy one or both companies back, or not, but wants to focus on traditional lawn and garden.

For Hagedorn, weed has been mostly a bummer of a journey, though he still holds out hope. "I think the government completely screwed the pooch on this," he says. "We figured we'll be an early entrant, and that within three to five years -- this is like 10 years ago -- the feds would make the laws so that it wasn't federally a Schedule 1 narcotic. We had a lot of faith the Democrats would do it. Equities in pot companies were at a peak when Biden got elected, and you had a Democratic Senate and a Democratic House."

Hagedorn explains that with weed still illegal on a federal level, "you cannot deduct your business expenses. Your top-line revenue is your taxable income, so you're paying about an 80% tax rate. Throw on state and local taxes, and you cannot make money."

His weed business was earning $150 million-plus a year three years ago, he says, and was "probably worth more than $5 billion. Today, it's probably worth zero." The problem is "we've invested about $2 billion in that space, and I don't want to burn it."

"I have spoken to President Trump a couple of times about this," he says. "I'm a supporter of his, and I think he is in favor of rescheduling, which would help us with banking issues."

Shifting gears, what about tips for having a great lawn?

"Depending on where you live, try to get an inch of water a week on your lawn. Use a sprinkler if you don't get enough rain. And apply four fertilizer treatments per year. That's really all you will need. You'll have much less need for weed killers, and a great yard," Hagedorn says.

I wondered why people care so much about lawns and gardening.

"I have this conversation all the time," he says. "My chief gardening officer is Martha Stewart, and I was with her last week. If you ask Martha, when she gets upset -- and she can get grumpy -- where are you going to find her? In the garden. They've asked women in their 50s, 'Would you rather be intimate with your husband or garden?' And they say, 'I'd rather garden.'

"People have a real need to have their hands in the soil and cultivate," Hagedorn says. "It's a human, psychological need to nurture something and create some beauty. If you live in the suburbs, you see some people who don't care. You look at those lawns and think, 'There's some crazy person living there.' You drive by a nice lawn -- I don't care what your political beliefs are -- you say, 'That's a nice lawn, that's what I want.' "

Write to Andy Serwer at andy.serwer@barrons.com. Follow him on X and subscribe to his At Barron's podcast.

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April 24, 2025 12:33 ET (16:33 GMT)

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