GrowGeneration, the nation's largest chain of specialty hydroponic and organic garden centers, recently announced two acquisitions.
On October 12, GrowGen announced its acquisition of Hydroponics Depot, Phoenix's largest indoor and outdoor garden center, extending its portfolio of hydroponic garden centers to 29 stores across 11 states.
GrowGen's entry into the Arizona market comes as voters consider Prop 207, which would legalize limited possession, cultivation and use of marijuana for adults ages 21 years or older. If approved, it is estimated that Arizona's cannabis market could grow from over $700 million market in 2020 into a $2 billion market, including both recreational and medical marijuana.
"We're excited to add Hydroponics Depot to our growing portfolio, with year-to-date sales in excess of $5 million and year-over-year growth at 50 percent," said Tony Sullivan, GrowGen's COO. "Importantly, it represents our 11th state and our first retail operation in Arizona, a key market in GrowGen's growth plan. We see tremendous potential from both a medical and recreational standpoint."
Arizona is one of the largest medical cannabis markets in the country, with projected 2020 sales of $700 million to $900 million. Retail sales of medical marijuana products in the state rose nearly 20% from January to May, according to the Arizona state estimates.
If Prop 207 is approved, Arizona could grow from an estimated $770 million to $2.0 billionwith both recreational and medical cannabis.
On October 20, GrowGen announced its acquisition of Big Green Tomato ("BGT"), one of Michigan's premier hydroponic equipment stores, founded in 2011 by a team of experienced executives with 25 years of combined experience in the industry. BGT has two well established locations with strong commercial operations and annual revenues approaching $16M. As part of the transaction, GrowGen purchased the 10,000 square-foot retail property in Battle Creek.
With the BGT acquisition, the Michigan market is expected to generate annual revenues well over $40M for GrowGen. It also brings the total number of GrowGen hydroponic garden centers in Michigan to six, with locations in Battle Creek, Grand Rapids, Livonia, Taylor, South Lansing and West Lansing.
"Michigan's recreational cannabis market is growing exponentially," said Tony Sullivan, GrowGen's COO. "We're encouraged by new state regulations that will allow for more cultivation licenses, which in turn will fuel continued expansion and growth for GrowGeneration's customer base in the state."
Currently in Michigan, where adult use has only been in effect for less than nine months, there are 250+ class C medical grows of 1,500 plants each and 50+ class C adult use grows of 2,000 plants each.
Michigan has the second-highest medical marijuana market in the country, behind California. Michigan's 2020 adult-use sales are estimated to total between $400M and $475M. The recreational market is on track to surpass $1B over the next couple of years