Top Ancillary Cannabis Stocks to Watch This Week as U.S. Legalization Momentum Builds

Industry Overview - The U.S. cannabis industry is projected to generate over $30 billion in annual sales in 2024, with expectations to exceed $50 billion by 2030 due to expanding legalization and rising consumer demand [1] - Recent bipartisan discussions in Congress aim to improve banking access for cannabis businesses, potentially boosting profitability [1] - Ancillary cannabis companies, which provide products and services to cultivators and retailers, benefit from sector growth while avoiding direct plant-touching risks [1][3] Company Highlights - GrowGeneration (GRWG): Operates the largest chain of hydroponic and organic gardening stores in the U.S., reporting net sales of $41 million in Q2 2025, a 14.7% increase from the prior quarter, despite a year-over-year revenue decline [5][8] - Hydrofarm Holdings Group (HYFM): Manufactures and distributes hydroponics equipment, with 2024 revenue of $190.29 million, down 16% from 2023. The company is set to release Q2 2025 results, with a focus on stabilizing revenue [9] - Scotts Miracle-Gro (SMG): Generated approximately $3.55 billion in total revenue in 2024, with a significant improvement in net loss to $34.9 million. The Hawthorne division faced a 35% decline in sales, but the company plans to divest this unit to reduce volatility [10][13] Investment Considerations - Ancillary cannabis stocks like GrowGeneration, Hydrofarm, and Scotts Miracle-Gro provide exposure to the cannabis market while avoiding the complexities of direct sales [14] - GrowGeneration is noted for improving margins and effective cost management, while Hydrofarm is viewed as a watch-and-see opportunity pending upcoming earnings [15] - Scotts Miracle-Gro's planned divestiture of the Hawthorne unit may reshape its market exposure, focusing on core operations for more predictable growth [15]