Ancillary Cannabis Stocks to Watch This February
The U.S. cannabis industry continues to expand, creating strong opportunities for ancillary companies that support dispensaries and cultivators. In 2024, legal cannabis sales in the U.S. exceeded $35 billion, with projections reaching over $40 billion by 2025. Ancillary businesses that provide technology, equipment, and services benefit from this rapid growth without facing the same legal challenges as plant-touching companies. Recently, federal legalization talks have gained momentum, with lawmakers pushing for banking reform and rescheduling cannabis. If these changes occur, more businesses could enter the market, boosting demand for ancillary services. Investors looking for exposure to the sector should watch these stocks closely.
When trading cannabis stocks, technical analysis and risk management are essential. Volatility remains high, making support and resistance levels key for identifying potential entry points. Additionally, traders should monitor volume trends and moving averages to gauge momentum. Setting stop-loss orders helps protect against sudden market swings. As legalization efforts advance, traders should stay updated on industry news. Changes in regulations often impact stock prices, creating both risks and opportunities.
As the cannabis industry expands, ancillary companies are playing a critical role. These businesses do not grow or sell cannabis directly. Instead, they provide essential services and infrastructure to dispensaries and growers. Ancillary stocks offer investors a way to gain exposure to the sector while avoiding legal restrictions tied to plant-touching businesses.
With U.S. cannabis sales projected to exceed $40 billion by 2025, companies supporting dispensaries and growers are expected to see strong demand. Additionally, federal legalization talks continue, which could drive further growth. Below are three top ancillary cannabis stocks to watch in February 2025.
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Leafly Holdings, Inc. (NASDAQ: LFLY)
WM Technology, Inc. (NASDAQ: MAPS)
GrowGeneration Corp. (NASDAQ: GRWG)
Leafly Holdings, Inc.
Leafly Holdings, Inc. is a well-known cannabis technology platform. The company operates one of the largest online cannabis marketplaces, helping consumers discover products and dispensaries. Its platform offers reviews, strain information, and purchasing options. This makes it a crucial tool for both consumers and dispensary owners.
The company has a strong presence across the U.S. It connects over 4,500 dispensaries with millions of customers each month. Leafly also provides advertising and data analytics services, helping dispensaries attract and retain customers. In states like California, Colorado, and Michigan, Leafly is a top choice for cannabis users seeking information on legal products.
Recently, Leafly has been expanding its business model. It now integrates directly with dispensary point-of-sale systems. This allows real-time product availability updates. As the cannabis market grows, Leafly continues to strengthen its role as a vital industry resource.
Leafly’s Latest Financials
Leafly’s most recent earnings report showed steady revenue growth. In its latest quarter, the company reported $11.3 million in revenue, marking a 7% year-over-year increase. This growth was driven by increased ad spending from dispensaries and product manufacturers.
However, the company continues to face challenges. Leafly reported a net loss of $4.8 million, mainly due to higher operating costs and investments in platform upgrades. Despite this, Leafly has been working to improve efficiency. The company has streamlined its workforce and optimized marketing expenses.
Cash reserves remain stable. Leafly ended the quarter with $21 million in cash and short-term investments. This gives it enough liquidity to fund operations while expanding its market reach. If ad revenues continue to grow, Leafly could move closer to profitability in the near future.
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WM Technology, Inc.
WM Technology, Inc., known as Weedmaps, is another major player in cannabis tech. It provides an online platform that connects consumers with dispensaries and delivery services. Weedmaps also offers software solutions that help dispensaries manage their businesses efficiently.
Weedmaps is widely used across the U.S., particularly in states with well-established cannabis markets. The platform lists over 5,000 dispensaries and serves millions of monthly users. In states like California, Nevada, and Arizona, Weedmaps plays a crucial role in the cannabis supply chain.
Beyond being a marketplace, Weedmaps offers business tools. Its software helps dispensaries handle inventory tracking, compliance, and customer engagement. This makes it a key partner for legal cannabis businesses looking to streamline operations. The company also provides advertising services, allowing dispensaries to boost visibility.
WM Technology’s Latest Financials
WM Technology recently posted $50.6 million in quarterly revenue, reflecting a 5% year-over-year decline. The decrease was attributed to lower ad spending from dispensaries facing economic pressures. However, the company remains profitable, with a net income of $3.2 million for the quarter.
The company has been focusing on cost control. Operating expenses have been reduced by 10% year-over-year, helping maintain profitability. Weedmaps also continues to invest in improving its platform. New features, such as AI-driven recommendations, have increased user engagement.
Despite short-term revenue challenges, Weedmaps has a strong cash position. The company reported $62 million in cash reserves, ensuring financial stability. With potential federal legalization on the horizon, Weedmaps could see an uptick in business as more dispensaries enter the market.
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GrowGeneration Corp.
GrowGeneration Corp. is one of the largest suppliers of hydroponic and cultivation equipment in the U.S. The company provides growers with lighting, nutrients, soil, and irrigation systems. As legal cannabis cultivation expands, GrowGeneration plays a crucial role in supplying the industry.
GrowGeneration currently operates over 60 retail locations across the U.S., with a strong presence in California, Colorado, and Oklahoma. These states have some of the highest cannabis production levels. The company also serves commercial cultivators, providing bulk equipment and consulting services.
In addition to retail stores, GrowGeneration operates an e-commerce platform. This allows growers to order supplies online with fast shipping. The company continues to expand, acquiring smaller hydroponic retailers to strengthen its market share.
GrowGeneration’s Latest Financials
GrowGeneration’s latest earnings report showed $65.7 million in quarterly revenue, representing a 4% year-over-year increase. The growth was driven by higher demand for cultivation supplies, particularly in newly legalized states.
However, the company reported a net loss of $2.5 million for the quarter. This was primarily due to supply chain challenges and rising operating costs. GrowGeneration has been working to address these issues by optimizing its distribution network.
Cash reserves remain healthy. The company ended the quarter with $78 million in cash, providing flexibility for future expansions. GrowGeneration also recently announced new partnerships with major cannabis cultivators. If demand for growing supplies remains strong, the company could see improved profitability in upcoming quarters.
Cannabis Stocks for February as Industry Demand Increases
Ancillary cannabis stocks provide unique investment opportunities. They support the industry without directly handling cannabis, making them more accessible to investors. Leafly, WM Technology, and GrowGeneration are three leading companies in this space. Each plays a key role in connecting consumers, supporting dispensaries, and supplying cultivators.
Despite some financial challenges, these companies remain strong industry players. With potential federal legalization and continued market expansion, ancillary cannabis stocks could see significant growth in 2025. Investors looking for exposure to the sector should keep a close watch on these companies in the coming months.
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