Best Ancillary Plays in Cannabis for April 2025
The U.S. cannabis industry is experiencing significant growth, with legal sales projected to reach around $45 billion in 2025. Wider legalization efforts and increased consumer demand fuel this rapid expansion. Today, most Americans live in areas with at least one licensed dispensary. Recently, there has also been renewed momentum toward federal cannabis reform, with new legalization initiatives gaining traction. As these trends continue, ancillary cannabis companies are becoming key players. They supply the tools, technologies, and services that drive the industry forward without touching the plant directly.
Investing in ancillary cannabis stocks can be a strategic way to gain sector exposure with less legal risk. However, volatility remains high, so using technical analysis is essential. Traders should watch for patterns, support zones, and resistance levels to guide entries. At the same time, proper risk management is crucial. Setting stop-loss orders, position sizing, and staying informed about news are key to protecting capital.
As the U.S. cannabis market expands, ancillary stocks continue to offer unique upside potential. These companies support the cannabis industry without handling the plant directly. Therefore, they avoid federal legal risks while benefiting from sector growth. In April 2025, three notable ancillary stocks stand out for investors—GrowGeneration Corp. (GRWG), Hydrofarm Holdings Group, Inc. (HYFM), and Scotts Miracle-Gro Company (SMG). These companies provide essential cultivation equipment, hydroponic systems, and growing supplies. They support cannabis cultivators across the country. Let’s take a closer look at each one.
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Top 3 Ancillary Cannabis Stocks to Watch in April 2025
- GrowGeneration Corp. (NASDAQ: GRWG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- Scotts Miracle-Gro Company (NASDAQ: SMG)
GrowGeneration Corp. (GRWG)
GrowGeneration Corp. is one of the largest hydroponic and organic gardening retailers in the United States. The company operates dozens of stores that supply commercial cannabis cultivators and home growers alike. It offers nutrients, soils, lighting, and climate control systems. As of early 2025, GrowGeneration has over 60 retail locations spread across key cannabis-friendly states. Its largest presence remains in California, Colorado, and Michigan. These states contribute the highest share of the company’s total revenue. Additionally, GrowGeneration has a growing e-commerce platform that serves customers nationwide. The company continues expanding into new states as legalization advances.
Moreover, GrowGeneration has established itself as a go-to source for commercial cultivators. Through its GrowGen Solutions team, it offers professional cultivation consulting, which helps growers improve yields and efficiency. The company’s expansion strategy focuses on both acquisitions and organic growth. As legalization accelerates in several U.S. states, GrowGeneration is well-positioned to support the increasing demand for cultivation supplies.
In its most recent quarterly report, GrowGeneration posted revenues of $53 million. This figure represented a slight increase from the previous quarter, reflecting improving sales momentum. However, the company remains focused on cost reduction. Operating expenses declined 8% year-over-year, showing progress in efficiency. Gross profit margins held steady at 26%, supported by better inventory control. Although net income remained negative, the loss narrowed compared to earlier quarters. Management expects a return to profitability by late 2025. Cash on hand totaled $42 million, providing a solid cushion for future growth. Overall, GrowGeneration appears to be stabilizing after a challenging 2023–2024. Investors will be watching for signs of accelerating sales and improved margins in upcoming quarters.
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Hydrofarm Holdings Group, Inc. (HYFM)
Hydrofarm Holdings is a leading distributor and manufacturer of hydroponic equipment and controlled-environment agriculture supplies. The company sells its products to specialty retailers, commercial growers, and e-commerce platforms across the U.S. While it does not operate dispensaries, Hydrofarm’s customers span hundreds of cultivation facilities. Its largest market presence is in California, Oregon, and Washington. These three states continue to drive a large portion of the company’s revenue. Hydrofarm’s catalog includes grow lights, ventilation systems, nutrients, and growing media. The company also manufactures several proprietary brands that give it competitive pricing power. As more cannabis grows move indoors, demand for Hydrofarm’s products remains strong.
Hydrofarm is not just a middleman. It plays a direct role in helping cultivators optimize growing conditions. The company supports both licensed cannabis operations and general horticulture growers. Despite recent challenges in the cannabis supply chain, Hydrofarm has maintained solid market presence. Its strategy focuses on streamlining operations and expanding in high-growth states.
Financially, Hydrofarm reported $40 million in revenue in its latest quarter. This marked a 5% increase from the previous quarter, driven by rising demand in new markets. Gross profit margin improved slightly to 21%, reflecting better cost control and less discounting. The company’s operating loss narrowed year-over-year, showing early signs of recovery. Management emphasized a focus on operational efficiency and inventory reduction. As a result, inventory levels dropped by 12% quarter-over-quarter. Hydrofarm ended the quarter with $29 million in cash, which management considers sufficient for near-term operations. However, analysts note the company must return to profitability to sustain long-term growth. With better margins and improving revenue, Hydrofarm may be turning a corner in 2025. Investors will look for continued revenue growth and tighter expense controls in the next earnings report.
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Scotts Miracle-Gro Company (SMG)
The Scotts Miracle-Gro Company is best known for lawn and garden products. However, it also owns Hawthorne Gardening Company, a major supplier of cannabis cultivation products. Hawthorne supplies lighting, nutrients, climate systems, and more to large-scale cannabis growers. While Scotts Miracle-Gro serves general consumers nationwide, its cannabis division focuses on commercial clients. Hawthorne’s largest footprint is in California, Michigan, and Colorado. These three states account for most of its cultivation-related business. Although SMG does not operate any dispensaries, it supports thousands of them through cultivation partners. The company has continued investing in research and development to improve indoor growing technology.
Moreover, Scotts has diversified its revenue through both consumer and professional channels. This diversification provides insulation from cannabis-specific volatility. Hawthorne’s performance has been volatile, but Scotts continues refining its approach. Despite challenges, the cannabis segment remains a long-term growth focus for the company. Therefore, SMG remains one of the top ancillary plays in the cannabis space.
In its most recent financial report, Scotts Miracle-Gro posted consolidated revenue of $3.55 billion for the fiscal year. However, revenue declined 8% year-over-year, largely due to softness in the Hawthorne division. Hawthorne’s sales dropped 17% as pricing pressure and oversupply weighed on cultivators. However, Scotts emphasized that the consumer lawn and garden segment remained stable. Gross margins were 28%, slightly down due to higher freight and raw material costs. Net income totaled $110 million, down from $215 million the prior year. Management plans to improve margins by restructuring underperforming operations. They also plan to reinvest in high-growth segments. The company maintained $180 million in cash and reduced overall debt. Investors remain cautious but hopeful as Hawthorne begins to recover. Analysts are watching for signs of a bottom and potential sales rebound in late 2025.
3 Must-Watch Ancillary Cannabis Stocks for April 2025
Ancillary cannabis companies like GRWG, HYFM, and SMG continue to play vital roles in the expanding U.S. cannabis market. While not directly involved in cannabis production or sales, they provide the infrastructure that supports the industry. As legalization spreads and cultivation becomes more advanced, demand for growing supplies and hydroponic technology should rise. Therefore, these companies offer exposure to sector growth without facing plant-touching risks. Although 2023 and 2024 brought challenges, 2025 may offer a turnaround. Investors seeking long-term value in the cannabis space should keep a close eye on these three stocks.
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