COLUMBUS (COLUMBUS BUSINESS FIRST) — Scotts Miracle-Gro Co. is lending $150 million to a Canadian firm that invests in the U.S. cannabis industry.
The $150 million, six-year convertible note almost doubles the available funds to invest by Toronto RIV Capital. The Marysville lawn and garden supplier created a subsidiary, Hawthorne Collective, to make the investment.
While the Collective can make other investments in the industry, the company said RIV would be its “preferred vehicle.” RIV has segregated the cash from Scotts to ensure none of it goes to companies that actually handle the plants, which the U.S. federal government still considers illegal.
“The Collective is designed to allow us to eventually participate directly in a larger marketplace as the legal environment changes over time,” Scotts CEO Jim Hagedorn said in a release.
The transaction is set to close by the end of the month. After the six-year term is up and the note converts to shares, Scotts would own 42% of RIV.
RIV said it now has about $319 million in available capital, at current exchange rates.
The firm was previously a subsidiary of cannabis company Canopy Growth Corp., but it became independent in a divestiture in February.
Scotts built up its Hawthorne Gardening Co. subsidiary, which supplies the cannabis industry and other horticulture, through more than $1 billion in acquisitions over the past six years. It just made another addition last week.
Investments via Collective would be outside Hawthorne’s purview, the company said.
Scotts is headed for another record year with $4.1 billion in sales through the first nine months, driven by 19% growth in its consumer lawn and garden business and 60% at Hawthorne.
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