Growing Buzz

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Now that its plan to market pot-growing greenhouses as indoor herb gardens for suburban moms is wilting, Gardena’s Growlife Inc. is cultivating a new strategy: opening retail stores.

Growlife last month bought Urban Garden Supplies, a Woodland Hills store that sells equipment for hydroponic gardening – growing plants inside with artificial light and often without soil.

Sterling Scott, who took over as Growlife chief executive in April, said the company plans to use the store to hone its retail skills before opening locations in parts of the country that have relatively few hydroponic stores.

“There are many parts of the country that are underserved,” he said. “We’re already having discussions about getting help with funding to open a line of stores on the East Coast in major metro areas.”

Of course, Growlife could get a boost from recent voter initiatives in Washington state and Colorado that legalized recreational marijuana use. Along with the East Coast, Scott said those states could be big markets for Growlife.

“The new states that come on board with normalization of the approach to cannabis represent possible areas for retail expansion for us,” he said. “They’re at the top of our list.”

All this is a drastic change from the plan the company’s previous managers had when they took the company public last year. Then called Phototron Holdings Inc., the company planned to market Phototrons, hexagonal greenhouses advertised mostly in High Times magazine, to kitchen gardeners interested in growing their own pesticide-free produce. Branding consultants called that goal laughable and Scott acknowledged the sales model behind the plan didn’t pan out.

As Growlife, the company still wants to sell its wares to cannabis cultivators and kitchen gardeners alike, but the company’s new management has a different plan for that.

Urban Garden Supplies, Growlife’s first brick-and-mortar venture, is just the latest addition to the company, which earlier this year bought Greners.com, an online hydroponic equipment retailer, and merged with Scott’s former company, SG Technologies Corp., a maker of lights and sensors used for hydroponic gardening.

In an industry dominated by small manufacturers and local mom-and-pop retailers, Scott hopes to turn Growlife into a national force.

“We’re taking steps to position the company more broadly as a market force in online and retail sales,” he said.

Greener grass

Before the SG Technologies merger, Phototron executives hoped to use the razor-and-blade model, getting customers to buy the Phototrons unit, then counting on those customers to stay loyal to the brand and buy the company’s fertilizers, light bulbs and other products. They also tried to brand the Phototron as a tool for growing vegetables and herbs, not just marijuana. The product was even featured on “The Martha Stewart Show.”

But Scott said the greenhouses, which sell for between $500 and $1,000, were too expensive for the sales model to work, while brand consultants said the company’s attempt to appeal to both kitchen gardeners and pot growers was either a ruse or a pipe dream.

In the first three months of this year, the last period before the merger with SG Technologies, Phototron’s sales were just $108,000, a dip of 10 percent from the same period a year earlier.

In April, when Phototron merged with SG Technologies, Scott and other SG investors ended up with a majority of the new company and Scott took over as chief executive. The stock traded for about 3 cents a share last week on the over-the-counter Bulletin Board.

Since then, Growlife has de-emphasized the vegetable-growing role and proudly notes the product’s history as a High Times advertiser.

“The Phototron may be one of the best products in its specialty market, but perhaps it’s not the best product for growing cucumbers and tomatoes,” Scott acknowledged.

The company also signed a deal to distribute products from Urban Cultivator Inc. in Vancouver, British Columbia, which makes kitchen greenhouses specifically designed for growing nonmarijuana produce such as lettuce and herbs.

With the widened product offerings, Scott now wants to focus on building Growlife’s retail operations. He sees hydroponics stores as an attractive investment, particularly in the Northeast. Scott estimates that Los Angeles County is home to as many as 1,200 hydroponics stores; in contrast, there are perhaps only a few dozen in New England.

In addition, he said many of his core customers – marijuana growers – are likely to favor a local store over a website.

“Generally, buyers think there’s more risk in something delivered to them because it identifies a location,” he said. “The preference is to be able to go somewhere where you can get everything you need.”

Lain Winnicki, one of the owners of Growonix, a Van Nuys company that makes water filtration systems for hydroponic gardening, said there are already too many hydroponics stores in the United States.

“There are saturated places – too many stores, too close to each other,” Winnicki said.

But Erik Biksa, an editor at hydroponics magazine Rosebud, said Growlife could take on other retailers because it sells high-end, user-friendly products such as the Phototron, which comes with built-in sensors, lights and watering equipment.

“Most retail stores end up selling bits and pieces. Through trial and error, growers succeed or they don’t,” Biksa said. “But Sterling Scott is selling a complete, ready-to-use growing system. It’s more accessible to everybody.”

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