Cannabis Growth from the Ground Up: 3 Ancillary Stocks to Watch Now
The U.S. cannabis industry continues to expand, even with ongoing regulatory challenges. In 2025, the market is projected to generate over $45 billion in revenue. Consumer demand is rising, and dispensary numbers continue to grow across the country. By 2030, the market could exceed $75 billion, driven by both medical and recreational use. So far, 24 states and Washington, D.C., have legalized recreational cannabis. In addition, 39 states allow it for medical purposes. However, federal prohibition still limits banking access and interstate commerce. Despite this, ancillary companies play a vital role. These firms do not touch the plant but support cultivation, production, and distribution. As the industry matures, these businesses offer more stability. For that reason, investors are closely watching key ancillary stocks this week.
Investors should use technical analysis and sound risk management when trading cannabis-related stocks. It is wise to identify clear support and resistance levels. These help define potential entry and exit points. Momentum indicators like moving averages and RSI can provide further insight. However, traders must also prepare for volatility. Stop-loss orders can protect against unexpected downturns. Diversification across multiple sectors can reduce risk exposure. Staying informed about industry trends and federal policy shifts remains essential. This week’s top ancillary stocks include GrowGeneration, Hydrofarm Holdings, and Scotts Miracle-Gro. Each supports the cannabis industry through products such as hydroponic systems, nutrients, or greenhouse equipment. While they face market pressure, their roles are crucial to long-term cannabis sector growth. Therefore, investors should keep them on watch and act based on clear technical signals.
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Grow, Build, Supply: Key Ancillary Cannabis Stocks Poised for Action
- GrowGeneration Corporation (NASDAQ: GRWG)
- Hydrofarm Holdings Group, Inc. (NASDAQ: HYFM)
- The Scotts Miracle-Gro Company (NYSE: SMG)
GrowGeneration Corporation (GRWG)
GrowGeneration Corp. is the largest hydroponic and organic gardening retailer in the United States. It serves the cultivation needs of cannabis producers and home growers alike. The company operates 31 retail and distribution centers across 12 states. It offers products and services that support hydroponic cultivation. Although GrowGeneration does not own cannabis dispensaries, it supplies products to thousands of licensed cultivators and retail outlets nationwide. Moreover, the firm’s network spans approximately 724,000 square feet of retail and warehouse space.
Consequently, GrowGeneration reaches growers from coast to coast. California remains a particularly strong market given its size and regulatory framework. Additionally, locations in Colorado, Oregon, and Florida serve key regions. Therefore, GrowGeneration is a critical supplier of hydroponic equipment and organic nutrients to the legal cannabis industry. Through its extensive footprint, GrowGeneration provides nutrients, lighting, and climate-control systems. Furthermore, it stocks proprietary-brand products that optimize growing performance.
Recent Financials
GrowGeneration reported net sales of $35.7 million in the first quarter of 2025. This compared to $47.9 million in Q1 2024, reflecting consolidation of 19 retail locations during 2024. Meanwhile, gross profit margin improved to 27.2 percent, up from 25.8 percent a year earlier. This increase resulted from a higher mix of proprietary-brand sales. Additionally, store and operating expenses declined by 17.3 percent to $8.8 million versus $10.6 million in the prior-year period.
However, the company recorded a GAAP net loss of $9.4 million, up from a loss of $8.8 million in Q1 2024. Adjusted EBITDA loss stood at $4.0 million, compared to a loss of $2.9 million a year ago. As of March 31, 2025, GrowGeneration held $52.6 million in cash, cash equivalents, and marketable securities. Moreover, it carried no debt, positioning it to invest in future growth initiatives and potential strategic acquisitions. Therefore, GRWG remains well-capitalized to support its long-term growth.
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Hydrofarm Holdings Group, Inc. (HYFM)
Hydrofarm Inc. specializes in distributing and manufacturing controlled-environment agriculture equipment and supplies. It caters to small-scale and commercial cannabis cultivators. Given the state’s extensive licensed cultivation sector, California represents its largest market presence. The company operates nine distribution centers—six in the United States, two in Canada, and one in Spain. These centers supply nutrient, lighting, and climate-control solutions. Although Hydrofarm does not own dispensaries, it serves a broad network of growers and retail outlets. Consequently, growers obtain critical equipment for indoor and greenhouse operations. Moreover, Hydrofarm’s proprietary-brand products provide higher quality and consistency. Therefore, the company plays a vital role in the legal cannabis cultivation supply chain. Furthermore, Hydrofarm invests in research and development to expand its product offerings. Additionally, it maintains strong relationships with leading equipment manufacturers.
In Q1 2025, Hydrofarm’s net sales fell to $40.5 million from $54.2 million in Q1 2024. The oversupplied cannabis market pressured volume and pricing. Consequently, gross profit declined to $6.9 million, or 17.0 percent of net sales, down from $10.9 million, or 20.2 percent, a year earlier. Adjusted gross profit fell to $8.5 million from $12.7 million a year earlier. Selling, general, and administrative expenses decreased 9.0 percent to $17.9 million.
Additionally, adjusted SG&A expenses dropped 11.0 percent to $11.0 million due to cost-saving actions such as workforce reductions and facility consolidations. However, the company recorded a net loss of $14.4 million, or $(3.12) per diluted share, compared to a loss of $12.6 million, or $(2.75) per share. Adjusted EBITDA swung to a loss of $2.4 million versus a gain of $0.3 million in Q1 2024. As of March 31, 2025, Hydrofarm held $13.7 million in cash, with $17.0 million of available borrowing capacity on its revolving credit facility.
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The Scotts Miracle-Gro Company (SMG)
Scotts Miracle-Gro Co. is the world’s leading marketer of branded lawn, garden, and indoor growing products. Its wholly owned subsidiary, Hawthorne Gardening Company, focuses on hydroponic and controlled-environment growing supplies. Hawthorne supports thousands of cannabis cultivators and retailers across the United States by providing nutrients, lighting, and climate-control solutions. Although the parent company does not operate dispensaries, Hawthorne’s products enable licensed cultivators to optimize yields and product quality. California and Colorado rank among key markets given their significant cultivation sectors. Furthermore, Hawthorne maintains distribution centers in key regions to ensure timely delivery.
Consequently, cultivators can access critical supplies when needed. Moreover, the broader Scotts product portfolio—including Scotts®, Miracle-Gro®, and Ortho®—provides stability and cross-selling opportunities. Therefore, the company leverages its scale to offer competitive pricing. Additionally, Scotts invests in research to innovate new hydroponic solutions. As a result, it remains a vital partner for legal cannabis cultivation.
In Q2 2025, Scotts Miracle-Gro reported U.S. consumer segment sales of $1.42 billion, down 7 percent year-over-year. Macroeconomic headwinds and seasonal factors weighed on core lawn and garden revenues. Non-GAAP adjusted EBITDA for Q2 2025 was $402.8 million, improving $6.5 million from Q2 2024. However, the company no longer provides full-year guidance for its Hawthorne segment due to uncertainty in the ongoing cannabis industry. Hawthorne’s revenue declined approximately 35 percent to $52 million in the most recent quarter due to reduced capital expenditures by cultivators. In April 2025, Scotts received an interest-bearing promissory note when transferring The Hawthorne Collective to a strategic partner. The company retained the right to reacquire the business if federal legalization occurs. As of Q2 2025, Scotts maintained $3.6 billion in total sales, with core brands driving the majority of revenue.
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Hydroponics to Green Profits: Ancillary Cannabis Stocks Set to Move
In summary, GrowGeneration (GRWG), Hydrofarm (HYFM), and Scotts Miracle-Gro (SMG) represent three leading ancillary cannabis stocks to watch in June 2025. Each company uniquely supports cultivation, from retail supply and proprietary products to distribution networks and research-driven innovation. Investors should monitor ongoing industry trends, regulatory developments, and financial performance as these ancillary players navigate a rapidly evolving market landscape.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
