When thinking about the cannabis industry, it can be easy to only consider the producers and cultivators of the plant, how many tons they can produce, and the quality of the product, as well as the dispensaries where cannabis is sold.

It can be even more enticing to only consider these factors when hearing that the sales of legal cannabis in the U.S. amounted to nearly $10 billion in 2018 alone. However, growers and dispensaries aren’t the only players in the cannabis sector.

When you run the numbers, they’re only a relatively small chunk of the industry. If you compare cultivators and distributors to the size and scope of the ancillary cannabis market, you may be surprised. With cannabis still federally illegal, it’s those on the outskirts, in the ancillary market that avoids any hassle from regulators.

The legality of the cannabis industry is as shrouded in smoke as the consumers themselves, which can create a lot of hurdles to overcome for those that want to be involved in the industry. Unless, however, you’re working in the ancillary market. The ancillary cannabis market operates behind the scenes.

It is made up of companies involved with the packaging of cannabis products, the provision of cash streaming to #0excludeGlossary cannabis businesses, and the development of hydroponic technologies for the growers, to name just a few categories.

Based on the results of over 150 surveys, New Cannabis Executive has provided a list of some of the top ancillary players in the cannabis industry, with a majority falling under the #1excludeGlossary category.

Because those in the ancillary market don’t have any direct involvement with the cannabis plant itself, they are often referred to as being a #2excludeGlossary company and therefore aren’t subject to the same regulations or legislation that the #3excludeGlossary companies are.

Many of the ancillary markets which have popped up are areas that many interested in cannabis wouldn’t even consider. For example, financial consulting and security. As the demand and scale of operations within the cannabis industry continue to grow, companies are beginning to turn to external organizations that can handle cash management, #4excludeGlossary logistics, ATM services, etc.

One company capitalizing on this fact is The Brink’s Company (NYSE: BCO). The company is the world’s largest cash management firm, with transport, logistics, and security as its main areas of focus. Brinks has entered into a #5excludeGlossary agreement with one of the biggest players in the cannabis game – Canopy Growth Corporation (NYSE: CGC).

Brinks will provide secure transportation and logistics for Canopy Growth both in Ontario, Canada as well as internationally, the CEO said:

#6excludeGlossary

– Doug Pertz, Brink’s President and Chief Executive Officer

For the first quarter of 2019, Brinks’ total U.S. revenue was up 53%, and their profit tripled to $24 million. Then you’ve got companies like EyeChronic, who install cameras in cannabis dispensaries to provide marketing information, and WeedMaps who provide a forum for cannabis smokers to find dispensaries near them.

The number of #7excludeGlossary companies involved with cannabis will only grow with increasing legalization, and so the next few years will be very interesting for the ancillary market. Until then, look at some of the key ancillary players in the United States cannabis market.

Scotts Miracle-Gro (NYSE: SMG)

Hydroponics has played a massive role in the growth of the marijuana industry – without hydroponic technologies, cannabis plants can take twice as long to cultivate.

One company that has dominated the hydroponic field is Scotts #9excludeGlossary. Scotts #10excludeGlossary has been around since 1868 when it was founded by Civil War Veteran Orlando Mclean Scott. The company began initially as a hardware store in Ohio, which sold #11excludeGlossary seeds to farmers.

Fast forward 150 years, and now Scotts #12excludeGlossary is one of the market leaders in hydroponic technology. The biggest move made in the history of Scotts #13excludeGlossary occurred in 2018 when the company acquired Sunlight Supply – the largest hydroponic distributor in the United States for USD 450 million.

The acquisition was made under the subsidiary of Scotts #14excludeGlossary known as #15excludeGlossary

– Jim Hagedorn, Chairman and CEO of ScottsMiracle-Gro

It seems that purchasing Sunlight Supply was the right move for the company, as stock prices for Scotts #17excludeGlossary have steadily increased throughout 2019. The company now sits at a market cap of over USD 5 billion.

GrowGeneration Corp (OTC: GRWG)

Alongside Scotts #18excludeGlossary is GrowGen, another industry leader in hydroponic growing technologies within the cannabis space. Beginning in 2014 in Colorado, GrowGeneration started by acquiring Pueblo Organics and Hydroponics, which allowed the company to grow into what it is today.

GrowGen is now the largest hydroponic supplier in the U.S., with 23 organic centers across 9 states. The company sells soils, lighting technology, pest controls, ventilation, and propagation supplies.

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– Darren Lampert, Co-Founder, and CEO

GrowGeneration Corp achieved revenue of $29.0 million in 2018, up to $14.6 million or 102% from their 2017 revenue of $14.4 million. In 2018 the company also acquired 8 stores, with a new location in Oklahoma City.

The company, originally called Kush Bottles Inc, changed its name to KushCo Holdings to illustrate the diverse nature of its operations. In 2019, KushCo formed an exclusive partnership with JSP Portinox to work on hydrocarbon gases, solvents, and #23excludeGlossary gas cylinders under its Kush Energy branch.

The company’s total properties amount to 1.6 million square feet across 11 states and have just expanded to a total of 21 properties following the acquisition of a property in Saxton, Pennsylvania, which comprises two buildings totaling approximately 266,000 square feet of industrial space.

The company acquired Green Leaf Pennsylvania for $13 million in May Q1 2019, IIP generated revenues of roughly $6.6 million in the quarter – a 146% increase from the previous year’s first quarter.

Summary

The ancillary market is picking up some big players, and without #28excludeGlossary the plant themselves, they are going to be more stable than other cannabis stocks that rely on uncertain legislation.

Ultimately, the cannabis industry would be unable to survive without the presence of these ancillary players, who provide much of the framework for marijuana users to purchase and ingest the plant.

And if you want to hone in on the ancillary market, Colorado is the place to look. According to Cannabis Business Executive, forty-one of the top 150 ancillary cannabis companies operate in Colorado.

So when looking into which companies are the next big buy, don’t just think of the cultivators or the retailers, consider also looking into the ancillary market – the companies in finance, accessories, leasing properties, compliance cannabis training, and any other #30excludeGlossary market where a lot of sideline action is occurring.

Let us know what you think.