Ancillary companies play a vital role in the marijuana business without ever coming into contact with the plant itself. These entities supply growers with nutrients, solvents, tools, and the equipment necessary to raise marijuana plants in large-scale production facilities. Pure play companies are riskier bets as market fluctuations in the price of cannabis can led to unstable cash flows. Meanwhile, products provided by ancillary companies are needed no matter what, and they often play a vital role in the broade agriculture sector as well.
In November, five states are set to vote on the legalization of cannabis, and full-out federal legalization could come by the end of 2021 with enough bipartisan support. Buying up shares of reliable ancillary companies before a marijuana "gold rush" is a great way to get in on the action. Today, let's take a look at two such stocks, GrowGeneration (NASDAQ: GRWG) and Scotts Miracle-Gro (NYSE: SMG), and determine which one is the better buy.
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