While marijuana legalization will certainly help increase the number of jobs in the cannabis industry, it can also benefit companies in adjacent industries. And you can look no further than Scotts Miracle-Gro to see the positive effects.
The stock price for Scotts Miracle-Gro increased by 21 percent in January, and many are attributing it in large part due to the cannabis industry. In December, Congress passed the 2018 Farm Bill that included a provision to legalize hemp farming in the United States. With a whole new hemp industry about to launch in the United States, investors see plenty of potential in a company that sells products for farmers.
In fact, Scotts Miracle-Gro has a subsidiary called the Hawthorne Gardening Company that's devoted entirely to providing hydroponics, lighting and other products specifically for the cannabis industry. In fact, Hawthorne was a major reason Scotts' stock price increased as well. On January 30th, Scotts that Hawthorne's first quarter earnings were up 84 percent from last year. Revenue for Scotts' in general only increased by 35 percent, so Scotts' cannabis-focused subsidiary is growing faster than the rest of the company.
Obviously, investors see all these numbers and start salivating. More and more states will legalize marijuana in the future, which means there will be more and more opportunities for Hawthorne to make money in the future. It's also helpful that Scotts is just a normal gardening supply company, so it doesn't involve all of the messy legal tangles that are involved when investing in a cannabis company.
Now if only all those rich investors would put pressure on Washington D.C. to legalize marijuana.
(h/t Motley Fool)