Four men between the ages of 24 and 29 were taken to hospital after the explosion which took place just before 7pm on Thursday evening.
The four were in critical condition with burns to between 30 and 75 percent of their body, a spokesperson for ambulance service Samur said.
One police officer also received medical attention after suffering from smoke inhalation while an eight-year-old girl was treated for cuts to her hand.
Initial investigations suggested the four men were filling lighters in the basement of the shop when the gas explosion happened, Spain's ABC newspaper reported.
Firemen first thought gas canisters on the premises were responsible for the incident but this was later ruled out, El País reported.
The 'grow shop' in Madrid's southern Carabanchel district sells products including cannabis seeds, rolling papers, bongs and pipes.
Growing cannabis for private use is not illegal in Spain, and it is also legal to smoke in the privacy of your own home.
However, the sale of cannabis and consumption in public are both forbidden by Spanish legislation.
Every year, Barcelona hosts Spannabis, allegedly the world's largest event dedicated to cannabis and its cultivation.