Sales of recreational marijuana officially launched in California at the start of 2018, but were followed by a federal pushback against legal pot – both developments with implications for promotional product companies keen to capitalize on the nascent legal cannabis market.

In California, legal marijuana is expected to be a revenue generator for not only cannabis businesses, but also the state, which stands to benefit from the $300 million to $500 million in marijuana taxes in 2018 alone, according to analysts.

Still, marijuana advocates, “pot-trepreneurs” and legislators who supported legalization didn’t have long to celebrate California’s cannabis landmark before U.S. Attorney General Jeff Sessions last week rescinded several Obama administration memos that had effectively directed federal prosecutors not to interfere with the legal marijuana trade in places where state law legalizes cannabis.

Under federal law, marijuana is still illegal, even though many states have decriminalized or legalized marijuana use. Through his action, Sessions, an outspoken critic of marijuana who believes it is dangerous, opened the door for federal prosecutors across the U.S. to determine how they want to address marijuana possession, distribution and cultivation in states where the drug has been legalized.

Sessions’ rescission caused markets to react unfavorably, with stocks for the few publicly traded marijuana companies dropping initially before starting to rebound on Friday. Perhaps even more worrying for marijuana businesses, Sessions’ move could discourage banks and credit unions from working with cannabis firms, a result of the attorney general’s revocation essentially removing the legal cover financial institutions had to work with marijuana growers, dispensaries, grow operations, distributors and manufacturers, The Philadelphia Inquirer reported.

Still, USA Today reported that many in the marijuana industry remain undeterred by Sessions’ directive, pressing forward in their building of an industry proponents say is too big and too popular to be repressed. Indeed, the report said marijuana businesses are pouring hundreds of millions of dollars into greenhouses and lighting systems, and renting processing warehouses and retail space to sell cannabis. “You’re either all in or you’re all,” Jessica Lilga, who runs a marijuana dispensary in California, told USA Today. “I just can’t believe they’d put me in jail. We’re too far along in the social acceptance scale.”

Among promotional product distributors, opinions vary about what legal marijuana is going to mean to the ad specialty industry. Certainly, some swag companies are already capitalizing on the burgeoning end-market.

Take Lotus Mountain Custom Screen Printing in Humboldt County, CA – an area that is to America’s pot growing industry what Detroit once was to automotive. Owner Cara Knostman told CNBC that, since California voted to legalize recreational marijuana, sales at her business have expanded at an unprecedented rate. Local cannabis businesses now account for 35% of Lotus’ sales; five years ago, that revenue stream didn’t exist. Powered significantly by sales to the cannabis niche, Lotus expects to top $1 million in revenue in 2018, CNBC reported.

"Whether people want to admit it or not, [cannabis] is the number-one money maker in this county. And that's my thing – bring the people out of the shadows. Have them start paying taxes," Knostman told CNBC.

Nonetheless, other promo pros in California feel the marijuana market, with its potential for legal issues and stricter advertising regulations, is not an attractive niche to pursue.

“While there may be some new companies that might temporarily surge, I suspect eventually the marijuana market won’t be a mainstream sector any distributor of consequence should want to focus on,” Zachary Tyler, CEO of San Francisco-based Creative Marketing Concepts (asi/170631), told Counselor. “Perhaps for (some) distributors, for whom the reputational association isn’t an issue, there’ll be some minor ‘riches in niches’ there. Still, it’s not a market that interests me much. In my view, there are better sectors to spend one’s time on as a distributor.”

Down in Los Angeles, Tim Guza has produced T-shirts for medical marijuana dispensaries. Still, the owner of Sunday Print Co. says it’s too soon to say where the recreational market will go from here. “The questionable legality of the industry seems to have caused a lot of the dispensaries in LA County to keep a fairly low profile,” Guza told Counselor. “I’m not sure if that will change now that it’s legal recreationally. They still don’t even have the rules entirely figured out here, so it’s hard to say what will happen.”

Back in NoCal, Harry Ein takes a middle-of-the-road view on the marijuana niche – one expressed by a number of distributors eyeing the market. “I don’t think legal marijuana is going to be a game changer for promo, but I do think it will be a new source of revenue with opportunities for distributors to capitalize on,” Ein, owner of iPROMOUTEu (asi/232119) affiliate Perfection Promo, told Counselor.

Ein has already realized the potential in a few of those opportunities, providing T-shirts and other products to companies that have operated in the medical marijuana field. Should the marijuana industry gain widespread legitimacy and consolidate under broad corporate umbrellas, Ein thinks competition for the business among distributors will intensify – and become more difficult to win. “Like any company in any industry,” said Ein, “they’re going to need to market. Promotional products are obviously a great way for them to enhance their brands.”