Top 3 Ancillary Cannabis Stocks to Watch in January 2026
The cannabis industry continues evolving as legalization slowly expands across the United States. While plant-touching operators face regulatory and margin pressures, ancillary cannabis companies offer a different opportunity. These businesses sell products and services supporting cannabis cultivation without handling the plant itself. As a result, they often face fewer regulatory hurdles. In January 2026, several ancillary names stand out due to scale, infrastructure, and long-term positioning. Below are three ancillary cannabis stocks investors are watching closely this year.
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Ancillary Cannabis Stocks Positioned for Industry Recovery in 2026
- GrowGeneration Corp. (NASDAQ: GRWG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- The Scotts Miracle-Gro Company (NYSE: SMG)
GrowGeneration Corp. (GRWG)
GrowGeneration Corp. remains one of the most recognizable ancillary cannabis companies in the United States. The company specializes in hydroponic and organic gardening products used by cannabis cultivators. Rather than operating dispensaries, GrowGeneration supplies growers with nutrients, lighting systems, and climate control equipment. This business model allows it to benefit from cultivation growth without plant exposure. The company operates more than twenty retail and distribution locations nationwide. Its largest presence exists in major cannabis markets like California, Colorado, and Florida. Additionally, GrowGeneration maintains a strong e-commerce platform serving customers nationwide. While it does not own dispensaries directly, many licensed growers rely on its products. As cultivation technology becomes more advanced, demand for specialized inputs continues to rise. Therefore, GrowGeneration remains deeply embedded in the cannabis supply chain. Its national footprint provides scale, flexibility, and access to emerging markets.
From a financial perspective, GrowGeneration has focused heavily on restructuring and margin improvement. Recent quarters showed stabilizing revenue compared to prior declines. Gross margins improved due to a higher mix of proprietary brands. Meanwhile, operating expenses were reduced through store optimization and tighter cost controls. These efforts helped narrow overall losses. Importantly, the company reported positive adjusted EBITDA recently. This marked a key milestone after prolonged pressure across the sector. GrowGeneration also maintains a strong cash position with minimal debt. That balance sheet strength provides flexibility during industry downturns. Although profitability remains a work in progress, management continues executing on efficiency initiatives. As cultivation activity recovers, revenue leverage could improve. Consequently, GRWG remains a closely watched ancillary name entering 2026.
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Hydrofarm Holdings Group, Inc. (HYFM)
Hydrofarm Holdings Group has long served the controlled environment agriculture industry. The company manufactures and distributes hydroponic equipment used by commercial growers. Its product lineup includes lighting, grow media, nutrients, and environmental controls. Hydrofarm does not own cannabis dispensaries. However, its products are widely used by licensed cannabis cultivators across North America. The company operates multiple distribution centers throughout the United States and Canada. These facilities support fast delivery to key cultivation regions. Hydrofarm’s strongest presence exists in West Coast cannabis markets. Additionally, its extensive brand portfolio is well known among professional growers. This broad product reach positions the company as a foundational supplier within the ancillary ecosystem. As cultivation evolves, growers increasingly rely on integrated solutions. Hydrofarm remains positioned to serve those technical needs.
Financially, Hydrofarm has faced persistent challenges tied to industry oversupply. Revenue declined as commercial growers delayed capital purchases. Losses increased due to lower volume and fixed cost pressures. However, management has focused on restructuring initiatives to stabilize operations. Cost reductions and operational streamlining remain ongoing priorities. Despite weaker demand, Hydrofarm’s brands retain loyalty among professional cultivators. The company also benefits from exposure beyond cannabis, including indoor food production markets. That diversification provides some revenue insulation. While profitability remains elusive, Hydrofarm continues adapting its business model. If cultivation spending rebounds, operating leverage could improve quickly. As a result, HYFM remains a higher-risk ancillary name with potential upside tied to industry recovery.
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The Scotts Miracle-Gro Company (SMG)
The Scotts Miracle-Gro Company offers a unique way to gain indirect cannabis exposure. While best known for lawn and garden products, its Hawthorne Gardening division serves hydroponic growers. Hawthorne supplies lighting systems, nutrients, and cultivation technology used by cannabis operators. Scotts does not operate dispensaries or handle cannabis plants. Instead, it provides infrastructure tools supporting commercial cultivation. Hawthorne benefits from Scotts’ established distribution network and brand recognition. This structure allows the company to participate in cannabis growth while maintaining diversification. The majority of Scotts’ revenue still comes from traditional consumer products. As a result, its business carries less volatility than pure cannabis names. That balance appeals to more conservative investors seeking ancillary exposure.
From a financial standpoint, Scotts remains profitable and cash-generative. Overall revenue remains strong despite weakness in the Hawthorne segment. Core lawn and garden products continue to support earnings stability. Meanwhile, Hawthorne sales declined as cultivation slowed across the industry. Despite this, Scotts maintained healthy margins and dividend payments. The company also generates strong free cash flow. This financial strength allows continued investment during downturns. Management has publicly supported cannabis reform initiatives. If federal policy shifts favorably, Hawthorne could benefit meaningfully. Although ancillary exposure represents a smaller portion of total revenue, it offers optional upside. Therefore, SMG remains a defensive ancillary cannabis play entering 2026.
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