Tuesday, February 10, 2015

Is It Ahead of the Curve or High on the Curve?

On June 14th, 2011, the Wall Street Journal published an article about Miracle Gro. They said “Scotts Miracle-Gro Co. has long sold weed killer.  Now, it’s hoping to help people grow killer weed.” 

Miracle-Gro generates 64% of their revenue from home improvement stores like Home Depot. However, with people hesitant about the economy, sales are down. So the CEO of Miracle-Gro, Jim Hagedorn, says he is looking for
new revenue streams. He thinks there is a market to sell products to the growers of medical marijuana. However, instead of making their own products, he feels it will be better to acquire a company that makes soil for marijuana, for example.

Mr. Hagedorn says he does not think this move will tarnish their image with existing customers. He believes this is the way to avoid the missed opportunities that Kodak experienced when they did not exploit digital cameras sooner. With an estimated $1.7 billion in revenue from the 16 states allowed to sell medical marijuana, this is the next wave for him to catch in his industry. In fact, he hopes his competitors do not beat him to it. 

While I do not condone the use of marijuana, I have to think about my past articles when I discussed the importance of innovating to stay relevant in your career. I wonder how many unemployed people have transferable skills that are suitable for this new industry. What new scientific and agricultural opportunities could arise from the growth and production of marijuana? There would be new demand for distributors, regulators, laborers, and technology. And with only 16 states currently allowing medical marijuana, there is plenty of room for growth.

Some may find the industry offensive and a path to national destruction. Except, there are examples like Holland where countries have made it a part of their economy without falling apart. Is the US rising out of its puritan foundations and entering into an age of anything goes? Or is it politically correct as long as the marijuana industry is geared toward medical purposes?

Regardless of your beliefs, it seems this is a business that is to be taken seriously. Some of the suppliers to the medical marijuana industry are doing IPOs (Initial Public Offerings). If that is the case, then there seems to be a strong investor appetite encouraging us to plant marijuana crops and capitalize. While the companies doing IPOs are not large, it will be a matter of time before there are 101 different types of soils to grow the best marijuana and thousands of companies supplying products and services to the growers. 

In the initial stages, the most unorthodox leaders of companies will most likely be the early adopters. In the article, they mentioned that Mr. Hagedorn is a former fighter pilot.  He flies his own Cessna to work from Washington state to Ohio. They say he goes to work in jeans, much like the image of Steve Jobs.

What do you think? I’m open to ideas. Or if you want to write me about a specific topic, let me know.

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