While the nation’s 50 states remain divided on the legalization of marijuana, New York’s Compassionate Care Act has freed marijuana companies to open dispensaries in the nation’s largest city, capturing the attention of accredited investors nationwide.

The law legalizes certain types of medical marijuana in the Empire State and is expected to lead to the opening up of the state’s first marijuana dispensary in New York City in January—a development seen by some as a significant boost to bringing more investment dollars into the cannabis industry.

“We are receiving inquiries from family offices, funds and other more traditional investors looking for ways to invest in legal marijuana on the East Coast,” said Leslie Bocskor, managing partner of Electrum, a consulting company in Nevada that is launching a marijuana-related hedge fund.

Vireo Health, for example, purchased land in Fulton County in upstate New York to construct its grow facility and is renting a building in the borough of Queens that will house a dispensary in preparation for its grand opening in January.

The four other pot dealers that were granted licenses by the New York Department of Health are Bloomfield Industries, Columbia Care NY, Etain and PharmaCann.

“The New York market will see much more sophistication much sooner, whereas it took years in other states for their operations to mature,” said Troy Dayton, CEO of the ArcView Group, a marijuana investment and research firm.

Vireo Health founder Kyle Kingsley plans a $30 million national capital raise to launch dispensaries in other states, but is steering clear of private equity and venture capital money at this time. “We prefer private investment from high-net-worth individuals who come with no strings attached,” Kingsley told Private Wealth. “We want to maintain control of the enterprise."

So far, no institutional investors have come forth, he added. “They are taking meetings, but as long as marijuana is classified as a Schedule 1 drug by the [federal] government, we don’t expect institutional investors to invest,” said Kingsley.

Investors must be cautious about where they invest their money because the Schedule I category under the Controlled Substances Act is the Drug Enforcement Administration (DEA)'s most restrictive level.

“Unless and until the federal government de-schedules marijuana or at least re-schedules it, we will see the same complications on investment, investing and banking issues in New York that we’ve seen in every other legal state,” Savino said.

That’s unless the business in question is operating ancillary to a dispensary or grow facility.

“New York financiers have substantial opportunities to invest in technology and infrastructure to support the cannabis industry, not only in New York but nationwide,” said Scott Greiper, president of Viridian Capital Advisors in New York.

Investing in the ancillary marijuana industry has less legal risk than investments in companies that are directly involved in the production and sale of cannabis because ancillary businesses do not directly handle the plant.

“Companies that help growers lower production costs or stay compliant under the Compassionate Care Act will be very attractive to the traditional institutional investor,” Greiper said.

One area of opportunity for interested investors in New York would be to establish a service that transports marijuana from dispensaries to the homes of certified users.

“We will see entrepreneurs who want to develop a delivery system because dispensaries are not going to be able to reach all the patients, so that’s an ancillary business,” said N.Y. state Sen. Diane Savino.

But transporting marijuana would be considered illegal under current law.

“The question is unanswered as to whether or not that delivery system would have to be part of the overarching license or … subcontracted,” said Savino. “We’ll know more in January, when medical marijuana is actually in circulation.”

The ArcView Investor Network, whose about 500 investor members are accredited, placed more than $38 million into 55 marijuana companies in 2015.

“Historically, the ones that touch the plant raised more money,” said Dayton.

For example, this year, Vape Exhale, a vaporizer manufacturing company, secured $250,000 in financing compared to $1 million for Steep Hill Labs, a cannabis-testing company.

“There are droves of ancillary businesses that will benefit from the New York market such as point-of-sale software,” Dayton said.

However, there are a number of obstacles that make it difficult for even ancillary entrepreneurs and investors to profit, including restrictions on business expense tax writeoffs, Savino said.

“There’s still a question as to whether a bank will accept your money if you’re doing business in the marijuana industry. So it’s complicated. But it’s also incredibly lucrative for those who can figure it out,” she said.

New York regulations under the Compassionate Care Act contain a number of provisions, including a ban on edibles and the legalization of only extracted marijuana oil that may be vaporized, swallowed in a capsule or absorbed in the mouth.

“We believe the early years of New York’s medical cannabis program will be challenging for early entrants, specifically the five licensed firms, with their substantial start-up costs. However, the program will adjust and become less restrictive, creating a very lucrative environment over time,” said Greiper.

New York Cannabis Alliance Founder Evan Nison favors ancillary cannabis companies such as MarijuanaDoctors.com and Loft Tea.

“Technologies, apps, and marketing companies could very well be merger and acquisition targets in New York come January,” Nison said.