ScottsMiracle-Gro CEO Expresses Support for President’s Cannabis Rescheduling Executive Order

Rhea-AI Summary

ScottsMiracle-Gro (NYSE: SMG) expressed support for the President’s Dec. 18, 2025 executive order to reschedule cannabis from Schedule I to Schedule III. The company said rescheduling would ease federal research limits, remove the 280E tax penalty that has produced tax rates of 70% or higher vs. 21% for typical corporations, and strengthen the legal cannabis market that employs over 425,000 people and contributes $100 billion to the economy. ScottsMiracle-Gro highlighted potential increased capital spending by cannabis firms and said its Hawthorne Gardening Company could benefit as it is being moved toward a cannabis-dedicated business.

The company expects to combine Hawthorne with a cannabis company early in fiscal 2026, while noting rescheduling does not itself legalize cannabis at the federal level.

Positive

• Removal of 280E could align cannabis tax rates (~70%+) with 21%
• Hawthorne planned combination with a cannabis company early fiscal 2026
• Legal cannabis market noted at 425,000 employees and $100 billion

Negative

• Rescheduling does not legalize cannabis at the federal level
• Hawthorne has seen capital spending on its products decline in recent years

Key Figures

States with cannabis legalized 39 states States with some form of legal cannabis cited by CEO

Cannabis industry employment 425,000 people Jobs in legal and regulated cannabis industry

Cannabis economic impact $100 billion Contribution of legal cannabis industry to the economy

Cannabis tax rate under 280E 70 percent or higher Effective tax rates cited for cannabis companies under 280E

General corporate tax rate 21 percent General U.S. corporate tax rate used as comparison

Schedule level change Schedule I to Schedule III Proposed federal rescheduling of cannabis classification

Hawthorne combination timing Early fiscal 2026 Expected timing to combine Hawthorne with a cannabis company

Market Reality Check

$59.43 Last Close

Volume Volume 973,258 versus 20-day average of 796,891 shows elevated trading ahead of this policy-focused update. normal

Technical Price $58.74 is trading slightly below the 200-day MA of $59.09.

Peers on Argus

Among key agricultural input peers, moves are mixed: FMC up 5.19%, MOS up 1.99%, CF up 1.37%, while ICL and UAN are slightly negative. This points to company- and theme-specific drivers around cannabis exposure rather than a broad sector move.

Historical Context

Date	Event	Sentiment	Move	Catalyst
Dec 04	Conference webcast	Neutral	-1.6%	Announced Raymond James 2025 TMT & Consumer Conference webcast availability.
Nov 25	Brand partnership	Positive	+4.3%	Expanded long-term Columbus Crew partnership with multi-year stadium naming rights.
Nov 05	Dividend declaration	Positive	+2.9%	Announced quarterly cash dividend of <b>$0.66</b> per share payable in December 2025.
Nov 05	Full-year results	Positive	+2.9%	Reported FY 2025 margin expansion, EPS growth, stronger cash flow and 2026 guidance.
Oct 22	Earnings timing	Neutral	+1.0%	Set date and webcast details for Q4 2025 financial results announcement.

Pattern Detected

Recent company-specific updates (dividend, results, partnership) tended to see positive next-day reactions, while event/webcast notices had smaller moves.

Recent Company History

Over the last few months, ScottsMiracle-Gro has highlighted several shareholder- and brand-focused developments. A Q4 2025 results timing announcement on Oct 22 preceded strong full-year 2025 results on Nov 5, featuring margin expansion and EPS growth, plus guidance for fiscal 2026. The same day, a $0.66 quarterly dividend was declared. On Nov 25, the company expanded its Columbus Crew partnership with stadium naming rights. A conference webcast notice on Dec 4 rounded out communications before this cannabis policy-related statement.

Market Pulse Summary

This announcement centers on ScottsMiracle-Gro’s endorsement of rescheduling cannabis from Schedule I to Schedule III via presidential executive order. Management emphasizes that eliminating the 280E tax penalty and aligning tax rates closer to 21% could strengthen legal cannabis operators and, indirectly, Hawthorne’s growth prospects. Historically, investors have reacted more to concrete financial updates and dividends, so observers may watch future Hawthorne performance and any fiscal 2026 combination with a cannabis partner for clearer impact.

Key Terms

executive order regulatory

"expressed support for President Trump’s executive order to reschedule cannabis"

An executive order is a formal directive issued by a country’s chief executive (for example, a president or prime minister) that tells government agencies how to apply or enforce laws and policies without waiting for new legislation. It matters to investors because these orders can quickly change rules, permits, taxes, trade or regulatory enforcement—like a manager changing company policy overnight—creating risks or opportunities that can affect company costs, revenues and share prices.

Schedule III regulatory

"to reschedule cannabis from a Schedule I to Schedule III drug"

A Schedule III classification is a regulatory category for drugs and substances that have a recognized medical use but a moderate risk of dependence or abuse, placing them between higher-risk controlled drugs and over-the-counter medicines. For investors, this matters because it shapes how a product can be manufactured, prescribed, marketed and distributed — affecting potential sales, regulatory hurdles, labeling requirements and legal exposure in the market; think of it as a middle level of control that influences commercial access and compliance costs.

280E tax penalty financial

"cannabis companies have been subjected to the 280E tax penalty, which prohibits"

Section 280E of the U.S. tax code prevents businesses that are involved in trafficking controlled substances under federal law from claiming ordinary business deductions and tax credits, effectively raising their taxable income and tax bill. For investors, this functions like a built-in extra tax cost that can sharply reduce reported profits and cash flow compared with similar legal businesses, so it affects valuations, margins and the company’s ability to reinvest or pay dividends.

PTSD medical

"on the use of cannabis in treating PTSD, cancer and other health conditions"

PTSD, or post-traumatic stress disorder, is a mental health condition that can develop after experiencing or witnessing a traumatic event, leading to ongoing feelings of fear, anxiety, or distress. For investors, understanding PTSD is important because widespread psychological impacts can influence market behavior, cause sudden shifts in confidence, or affect economic stability during times of collective trauma or crisis.

ketamine medical

"classified with Tylenol with codeine, Vicodin, anabolic steroids, ketamine and other drugs"

A fast-acting anesthetic drug that is also used at lower doses to treat severe depression and certain pain conditions; it works differently from traditional antidepressants and can produce rapid symptom relief, often described as a short-term “reset” of brain activity. Investors watch ketamine because clinical trial results, regulatory approvals, safety concerns, legal status, production scale, and potential off-label use drive demand, pricing, and the business prospects of companies involved in its manufacture and delivery.

AI-generated analysis. Not financial advice.

CEO says move enhances company’s broader growth strategy

MARYSVILLE, Ohio, Dec. 18, 2025 (GLOBE NEWSWIRE) -- The Scotts Miracle-Gro Company (NYSE: SMG), the leading marketer of branded consumer lawn and garden products in North America, today expressed support for President Trump’s executive order to reschedule cannabis from a Schedule I to Schedule III drug.

“With 39 states already legalizing cannabis in some form, rescheduling to a lower level drug on the federal level has been long overdue,” said Chairman and CEO Jim Hagedorn. “President Trump deserves credit and praise for taking this bold action, as it reflects the will of the people and sets the stage for much-needed research into the medical use of cannabis.”

“Just as importantly, this will help deliver a blow to the illicit cannabis market by strengthening the financial viability of the legal and regulated industry that employs over 425,000 people and contributes $100 billion to the economy.”

Hagedorn said it is important to note that rescheduling does not legalize cannabis on a federal level but rather removes undue financial constraints on cannabis companies and makes it easier for medical research to be conducted on the use of cannabis in treating PTSD, cancer and other health conditions. Under Schedule I, research is limited and cannabis companies have been subjected to the 280E tax penalty, which prohibits the deduction of business expenses and results in tax rates of 70 percent or higher compared to the general corporate tax rate of 21 percent.

“The 280E tax penalty has hindered the profitability of legal cannabis companies and forced many to go under,” Hagedorn said. “Rescheduling eliminates the penalty, bringing their tax rate in line with other American businesses and enabling them to shift more financial resources into capital investment and growth opportunities.”

Increased capital investments by cannabis companies could positively impact ScottsMiracle-Gro’s Hawthorne Gardening Company subsidiary, which provides nutrients, lighting and other supplies to legal cannabis growing operations. Hawthorne has seen the level of capital spending on its products decline in recent years as cannabis companies have faced financial struggles.

Rescheduling does not alter ScottsMiracle-Gro’s plan to strategically move Hawthorne into a cannabis-dedicated company as part of the broader strategy to focus on the growth of its core consumer lawn and garden business. The company expects to combine Hawthorne with a cannabis company early in fiscal 2026.

“Reclassifying cannabis will set Hawthorne up for greater growth opportunities moving forward and make it a more attractive partner to a cannabis-dedicated company,” Hagedorn said.

As a Schedule I drug, cannabis is on the same level as heroin and other drugs that have no medical benefit and demonstrate a high degree of physical dependence. Under Schedule III, cannabis will be classified with Tylenol with codeine, Vicodin, anabolic steroids, ketamine and other drugs that have accepted medical uses and low potential for physical dependence.

About ScottsMiracle-Gro
With approximately $3.4 billion in sales, the Company is the leading marketer of branded consumer lawn and garden products in North America. The Company’s brands are among the most recognized in the industry. The Company’s Scotts®, Miracle-Gro®, Ortho® and Tomcat® brands are market-leading in their categories. For additional information, visit us at www.scottsmiraclegro.com.

For media inquiries:
Tom Matthews
Chief Communications Officer
tom.matthews@scotts.com
(937) 844-3864

FAQ

What did ScottsMiracle-Gro (SMG) announce on December 18, 2025 about cannabis rescheduling?

ScottsMiracle-Gro said it supports the executive order to reschedule cannabis to Schedule III and highlighted expected benefits for research, taxes, and the legal market.

How would rescheduling affect cannabis tax treatment mentioned by SMG (SMG)?

The company said rescheduling would remove the 280E penalty that has produced tax rates of 70% or higher, aligning rates with the general 21% corporate tax rate.

What is ScottsMiracle-Gro’s plan for Hawthorne after the rescheduling announcement (SMG)?

The company expects to combine Hawthorne with a cannabis company early in fiscal 2026 and to move Hawthorne toward a cannabis-dedicated business.

Will federal rescheduling legalize cannabis according to ScottsMiracle-Gro (SMG)?

No; the company stated rescheduling does not legalize cannabis at the federal level, but reduces certain federal constraints.

How might Hawthorne benefit from increased cannabis capital spending referenced by SMG (SMG)?

ScottsMiracle-Gro said increased capital investment by cannabis firms could raise demand for Hawthorne’s nutrients, lighting and supplies.