GrowGeneration, National Cannabis Equipment Vendor, Acquires Shelby Township Company
Shelby Township-based HGS Hydro has agreed to sell to GrowGeneration Corp., a national company that sells equipment for cannabis operations.
Denver-based GrowGeneration (NASDAQ: GRWG), the nation’s largest chain of hydroponic garden centers, will take over HGS’s six locations in Michigan: Shelby Township, Southfield, Sterling Heights, Hazel Park, Walled Lake and Albion. Another is slated to open this fall in Imlay City, according to a press release.
The deal, announced in late July, is expected to close by the end of fiscal 2021. GrowGeneration is paying $ 35 million in cash and $ 17 million in equity, Chairman Michael Salaman said.
“The addition of HGS Hydro will propel Michigan to GrowGen’s second largest state behind California. Michigan is one of the fastest growing states for medical and recreational cannabis sales,” said CEO Darren Lampert in the press release.
Rocky Shaeena founded HGS Hydro with his family in 2015, acquiring a store in Shelby Township called Third Coast and changing the name.
The hydroponics supply store with around 70 employees reported $ 50 million in revenue last year. HGS sells plant nutrients, growing and lighting equipment, and environmental control equipment such as ventilation and dehumidifiers. Shaeena said he’s not sure what percentage of customers grow cannabis, but that is certainly the primary focus of what they do.
Shaeena and other HGS executives plan to stay in the transition.
GrowGeneration has seven stores in Michigan and 58 in total, including 21 in California and eight in Colorado. It has followed the path of legalization across the country, Salaman told Crain.
“There is definitely a lot of growth inside (Michigan),” he added. “It has become a very strong market and we are also seeing tremendous growth ahead of us in the market.”
The company recorded $ 193 million in revenue in 2020, up 143% from the previous year, according to its annual report. Bloomberg dubbed it last year as one of the best cannabis stocks of the year.
“Our success is directly linked to the growth of the exploding cannabis industry,” CEO Darren Lampert told Bloomberg in November.
The gardening business sells to other home gardeners, not just cannabis growers. But the pot is its biggest source of money, Lampert told Bloomberg.