Ancillary Cannabis Stocks to Watch This Week for Potential Breakouts
The U.S. cannabis industry remains a powerful economic force, generating over $30 billion in annual sales in 2024. Industry analysts project sales could exceed $50 billion by 2030, driven by expanding legalization and rising consumer demand. Recently, headlines have focused on federal reform momentum after bipartisan discussions in Congress. These talks aim to improve banking access for cannabis businesses, which could boost profitability. Ancillary cannabis companies, which supply products and services to cultivators and retailers, continue to benefit from sector growth. They avoid direct plant-touching risks while capturing steady revenue from equipment, supplies, and technology demand. Consequently, these stocks can provide diversified exposure to the market.
When evaluating top ancillary cannabis stocks, investors should apply both technical analysis and disciplined risk management. Chart patterns, support levels, and moving averages can identify favorable entry points. However, proper position sizing and stop-loss orders remain critical to protect capital. Market volatility, driven by policy changes and earnings announcements, requires strategic patience. Traders should also monitor volume trends, as spikes can signal institutional interest. Moreover, understanding seasonal patterns in cannabis cultivation cycles can offer an edge. Combining fundamental research with technical signals can help maximize returns. Importantly, risk should always be managed relative to account size and market conditions.
The cannabis industry continues to grow despite market challenges. Ancillary companies, which supply products and services to cannabis growers and retailers, remain vital to the sector’s infrastructure. These businesses often avoid the legal risks of directly selling cannabis, yet still capture growth from cultivation expansion. In August 2025, several ancillary stocks are drawing attention for their positioning, financial performance, and strategic moves.
Three companies in particular stand out this month: GrowGeneration (GRWG), Hydrofarm Holdings Group (HYFM), and Scotts Miracle-Gro (SMG). Each operates in a unique niche of the supply chain, ranging from retail hydroponics stores to large-scale cultivation equipment distribution. Their operations do not involve dispensary sales, but they provide critical tools that enable growers to succeed. For investors seeking exposure to the cannabis market without direct plant-touching risk, these stocks could present compelling opportunities.
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Top 3 Ancillary Cannabis Stocks to Watch in August 2025
- GrowGeneration (NASDAQ: GRWG)
- Hydrofarm Holdings Group (NASDAQ: HYFM)
- Scotts Miracle-Gro (NYSE: SMG) — Hawthorne Gardening Division
GrowGeneration (GRWG)
GrowGeneration operates the largest chain of hydroponic and organic gardening stores in the United States. The company serves cultivation businesses in multiple states, offering a full range of growing equipment. Its largest presence is in California, which leads the country in cannabis cultivation. Additionally, GrowGeneration maintains strong operations in Colorado, Oregon, and Florida. While it does not operate dispensaries, it is a vital supplier to them through its cultivation support services. The company offers lighting systems, climate controls, nutrients, and soils, as well as its own proprietary brands like Char Coir and Drip Hydro. This broad product range, combined with nationwide reach, allows GrowGeneration to serve growers of all sizes while providing valuable expertise.
In the second quarter of 2025, GrowGeneration reported net sales of $41 million, marking a 14.7 percent increase from the prior quarter. Year-over-year revenue declined from $53.5 million, reflecting broader market headwinds. Proprietary brand sales rose to 32 percent of cultivation and gardening revenue, improving the gross profit margin to 28.3 percent. Store and operating expenses fell by nearly 23 percent year-over-year, showing effective cost management. The company recorded a net loss of $4.8 million, an improvement over the $5.9 million loss from the prior year. Adjusted EBITDA loss came in at $1.3 million. Importantly, GrowGeneration ended the quarter with $48.7 million in cash and no debt, giving it financial flexibility to navigate a volatile market.
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Hydrofarm Holdings Group (HYFM)
Hydrofarm Holdings Group manufactures and distributes hydroponics equipment and supplies for controlled-environment agriculture. Its product lineup includes grow lights, climate control systems, nutrients, and growing media. The company serves both retailers and commercial growers across the United States and Canada. Although it does not operate dispensaries, it plays a significant role in supplying products that keep them running. Hydrofarm sells both proprietary and preferred brands, reaching a broad customer base through its extensive reseller network. Its U.S. presence spans multiple states, allowing it to service a diverse range of cultivation facilities.
Hydrofarm is set to release its second-quarter 2025 financial results in mid-August. Investors are watching closely to see whether the company can stabilize revenue after recent declines. In the full year 2024, Hydrofarm generated $190.29 million in revenue, down 16 percent from 2023 levels. Net losses reached $66.72 million, representing a slight increase from the prior year. The company’s ability to manage costs and improve margins will be a focal point moving forward. Analysts expect the stock to remain in a holding pattern until clear signs of recovery emerge. A return to sales growth or significant margin expansion could shift sentiment more positively in the coming months.
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Scotts Miracle-Gro (SMG) — Hawthorne Gardening Division
Scotts Miracle-Gro is a global leader in lawn and garden products, with its Hawthorne Gardening division providing a direct link to the cannabis sector. Hawthorne specializes in hydroponics equipment, nutrients, lighting, and environmental control systems designed for large-scale cannabis cultivation. While Scotts does not run dispensaries, Hawthorne’s extensive distribution network reaches numerous growers and indirectly supports retail operations. This division has positioned Scotts as a key supplier of advanced cultivation infrastructure in the United States.
In 2024, Scotts Miracle-Gro generated approximately $3.55 billion in total revenue, representing flat growth compared to the prior year. However, its net loss declined significantly to $34.9 million, a sharp improvement from 2023. The company’s Hawthorne division faced a 35 percent decline in sales, dropping to $52 million, reflecting ongoing pressure in the cannabis cultivation market. Despite this, Hawthorne focused on higher-margin product offerings, which helped maintain profitability. Looking ahead, Scotts plans to divest the Hawthorne unit to reduce volatility and sharpen its focus on core operations. This strategic shift could improve earnings stability while allowing the company to reallocate capital toward more predictable growth areas. For investors, the combination of restructuring efforts and a strong core business makes Scotts a notable ancillary cannabis play in August 2025.
3 Ancillary Cannabis Stocks Poised for Gains as U.S. Industry Expands
Ancillary cannabis stocks offer a way to gain exposure to the cannabis market while avoiding the legal and operational complexities of direct cannabis sales. GrowGeneration, Hydrofarm, and Scotts Miracle-Gro each operate in essential areas of cultivation support, from retail supply networks to large-scale infrastructure manufacturing.
In August 2025, GrowGeneration stands out for its improving margins and effective cost management. Hydrofarm remains a watch-and-see opportunity, with upcoming earnings likely to determine short-term direction. Scotts Miracle-Gro offers stability through diversification, though its planned divestiture of Hawthorne will reshape its cannabis market exposure.
Investors should keep an eye on market trends, regulatory developments, and company-specific strategies as the cannabis industry continues to evolve. Careful analysis and disciplined risk management will remain crucial when navigating this dynamic and often volatile sector.
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
