As New York's new recreational cannabis market shapes up, tech companies that work with the industry say they're gearing up.
Since New York Gov. Andrew Cuomo signed recreational cannabis into law in late March, seemingly every cannabis company in the country has shown interest in entering the Empire State.
Adult-use sales aren't expected to begin until mid-2022, but annual sales could eventually reach $5 billion to $7 billion, rivaling the world's biggest legal-cannabis market, California.
Insider spoke to four cannabis-tech companies: Fyllo, Dutchie, LeafLink, and SpringBig. All of them said they're hiring aggressively to meet the demand of the New York market. One company told Insider it was hunting for office space in New York City and another said it's investing hundreds of millions into R&D.
Some say they're planning to take advantage of elements unique to New York's regulatory framework or cannabis culture.
Cannabis tech companies can easily expand into new markets because they aren't tied down by the same regulatory restrictions that slow down cultivators. Cannabis is federally illegal, so companies that grow and sell marijuana can't transport products over state lines, meaning they have to build operations from the ground up every time they enter a new state.
Dutchie is investing $100 million to hire top talent and develop new products
Dutchie, a tech company that provides sales systems and online stores for cannabis retailers, said its investing over $100 million in hiring and developing new product features over the next few years. The investment is in part to prepare the company to compete for business in New York, said CEO Ross Lipson.
A large chunk of the new hires will be focused on the company's product and engineering teams, which already has more than 150 employees, he said. Dutchie is also hiring across its analytics, customer success, marketing, and operations teams.
"We are hiring hundreds of folks that are experts in research and development to really bolster our products and have robust products to meet the dispensary's needs as they change," he said.
Lipson said that Dutchie has been focusing on the New York market for quite some time and has taken steps to invest in its platform to make sure that the software will work with regulations specific to that state.
"Everybody's looking at New York," Ross Lipson, CEO of Dutchie, told Insider. "Everybody's excited about it."
The company's software lets dispensaries manage online ordering and delivery options in markets where that's legal. Lipson added that because New York's illicit market has such a sophisticated delivery model, Dutchie has made sure that it's ready to address that aspect of the industry once legal sales begin.
SpringBig is hiring employees to take on the emerging Northeast market
Jeffrey Harris, CEO of SpringBig, told Insider that the company has added around 15 new "client success managers" focused on the Northeast who are responsible for client support. SpringBig is a cannabis marketing software company that has over 1,000 customers across 2,300 locations, according to Harris.
Harris said that since the November elections, when a slew of states passed cannabis reform, the company has focused on expanding its sales and marketing teams to tackle new markets in New York and New Jersey.
SpringBig already works with some big cannabis companies in New York's medical market, including Green Thumb Industries and Curaleaf.
The company has been hiring across the board, Harris said, but has honed in on its office in Florida in recent months as employees there will service Northeastern clients in the same time zone.
"Finding great people is never easy but we are making it happen nonetheless," he said.
Fyllo is looking for an office in New York City
Fyllo's New York team has grown from 4 employees to 20 over the past few months, according to Chief Commercial Officer Jeff Ragovin. Fyllo offers data, compliance, and digital marketing solutions to both cannabis and mainstream companies.
The company has around 75 open positions and is hiring across divisions including data, retail, solutions, compliance, and media.
Ragovin said the company is hiring aggressively on its product and engineering teams, which include database engineers, user experience, DevOps, full-stack engineers, and automation engineers. It's also looking for employees in finance and strategy, as well as recruiting.
"Much of the talent we've brought in has been from mainstream market leaders who are attracted to this incredibly hot category," he said. "Some of our recently hired candidates came from Hulu, Oracle, PWC and others."
Ragovin said the biggest growth Fyllo is seeing right now is with its legal compliance software, a subscription-based offering that lets people track regulatory changes as they develop.
In New York, Ragovin says subscriptions are "exploding" as big law firms and cannabis companies alike try to keep up with how the market is shaping up, such as which localities are trying to ban dispensaries and smoking lounges.
He added that Fyllo was also looking to find an office in New York City.
"We're literally right now on the hunt for a new space, just because we've grown so much," he said.
LeafLink's East Regional Director has doubled employees in its New York headquarters
LeafLink, a cannabis software company best known for its wholesale B2B marketplace, which connects distributors, retailers, and cannabis brands together, has been ramping up for the New York market as well, according to Claire Moloney, senior regional director of the company's eastern operations.
Moloney said the company's New York headquarters has doubled its workforce since the start of 2020 — from 90 people to 180 — and that its total headcount should exceed 300 by sometime in 2022.
LeafLink is hiring across roles, including sales, marketing, account management, HR, operations, product, engineering, and data. A spokesperson for the company said that there are currently 47 open positions, and nearly 30% of are those roles are in the company's product and engineering teams.
LeafLink says it's competing for top tech talent in New York as well as in its other big markets, like Los Angles and Austin.
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LeafLink processes $4 billion in annual cannabis orders, or 39% of the US wholesale cannabis market, according to the company, and works with close to 8,000 businesses across 27 markets in North America.
Moloney started her role in February and is LeafLink's first regional director overseeing Eastern operations, though she told Insider that LeafLink has always had a focus on the East Coast, especially as the company's headquarters are in New York.
Because New York's regulatory structure restricts vertical integration, Moloney says the market will be fragmented— creating an opportunity for software like LeafLink's to step in and connect different businesses.
Moloney says the company is expecting several hundred dispensaries to come online in the first few years that the market comes online.
"We're really excited as a marketplace to bring all of those operators together in one networked marketplace," she said.
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