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.