In Bangkok these days, it’s hard not to notice the weed dispensaries catering to tourists that have multiplied since the government decriminalized the drug last year.

Many of them take advantage of lax regulations to openly sell visitors dried marijuana flowers that have been imported illegally from Canada or the United States. On a recent afternoon, one shop advertised its pungent offerings — weed strains with names like “Ice Cream Cake” and “Lemon Cookies” — as “California’s finest.”

But such dispensaries may be soon be out of business because of competition, oversupply and expected new regulations around the drug’s cultivation and sale, several Cannabis industry experts said in interviews. The survivors will sell high-quality, domestically grown weed, which helps explain why investors have been plowing millions of dollars into high-tech indoor cannabis farms across Thailand.

Although no one knows what kind of regulations the nation’s newly elected leadership will usher in, cannabis industry experts said the rules will most likely give investors more clarity and raise the bar to market entry in a way that benefits businesses with the best domestic supply chains.

“Smart money’s going to come in,” Sirasit Praneenij, a co-chief executive of the marijuana farming company Medicana, said recently at an indoor cannabis farm in outer Bangkok. He was wearing a white lab coat and standing near grow rooms packed with LED lights, advanced watering systems and row after row of young marijuana plants.

Many Thai cannabis growers, “including us, are happy to comply, provided they’re healthy regulations,” added Mr. Sirasit, whose $2 million farm produces 55 to 66 pounds a month of dried marijuana flowers, the part that causes a high. Some of that is sold at a sister company’s downtown dispensary, Dr. Dope.

As jurisdictions across the United States and in other countries steadily liberalize their laws around marijuana, the novelty of legal weed is wearing off for residents. But Thailand’s industry is thriving in a region where long prison terms — or worse — for marijuana possession, consumption or trafficking are still the norm.

Thailand once had such harsh laws, too. But when the government removed marijuana flowers from its prohibited narcotics list in June 2022, a domestic industry appeared overnight, starting with “weed trucks” in tourist districts. Less than a year later, there were about 12,000 registered dispensaries — by some estimates, more than in the United States.

An obvious draw for investors is that Thailand’s cannabis industry pairs nicely with a prime source of customers: tourists, of whom there were nearly 40 million annually before the pandemic, and who are now starting to return. Growers say that tourists, not locals, are their primary target market.

But because the Thai legislature has not yet passed a law to clarify legal gray areas, the industry exists in a state of regulatory limbo. All sales are still technically for medical purposes, even if cannabis is widely used in practice as a party drug, and illegal imports have become so common that some shops openly advertise them.

Oversupply and illegal imports have sent retail cannabis prices tumbling by about a third in recent months, to the equivalent of about $22 per gram, and some dispensaries have folded during the summer low season for tourism, said Lucksipha Sirithawornsatit, the managing director at Vinzan, a cannabis trading and marketing company based in Bangkok.

There is uncertainty, too, over what Thailand’s cannabis regulations will look like. Srettha Thavisin, the new prime minister whom the Thai Parliament elected on Tuesday, told reporters ahead of a May general election that his political party, Pheu Thai, did not want “full cannabis legalization” and would support use only for medical purposes.

Foreign and Thai investors are piling into the market anyway. Precise investment data is scarce, but Ms. Lucksipha said some companies have already built expensive indoor farms across Thailand with investment from the United States, Europe, Australia, Russia and Singapore, among other places.

Several cannabis entrepreneurs said in interviews that they expected prices to stabilize once there is regulatory clarity, and that the Thai government would not dare destroy an industry with significant economic potential.

“People now see clearly that you’re not going to put Pandora back in the box,” said James Porter, the chief executive at Siam Green, a dispensary that has raised around $1 million from investors in Bangladesh, India, Thailand and the United States.

“Companies that are operating properly, that have a good management team and that are well capitalized will be the ones that end up staying around,” said Mr. Porter, who previously worked in start-ups in New York and Miami.

Siam Green, which plans to open three or four more dispensaries this year, is one of several cannabis firms eyeing expansion. Medicana and its sister company, for example, plan to spend an additional $5 million on farming, retail outlets and product development, Mr. Sirasit said.

On a larger scale, Advanced Canna Technologies, an Israeli company that has worked on cannabis farms in the United States and elsewhere, recently opened a $3 million, 2,000-square-meter indoor farm in Bangkok with a local partner and funding from Singaporean investors. Or Engler, ACT’s chief executive, said the plan is to begin harvesting about 264 pounds of dried flowers a month, starting in October, and to become a “serious” long-term player in the Thai market, even if retail weed prices fall further.

Dispensaries are the most visible part of Thailand’s cannabis industry, but the drug has also been prescribed at hundreds of traditional medicine clinics and plays a prominent role in at least one hospitality business: The Beach Samui, a boutique hotel in southern Thailand, has an on-site dispensary and was modeled on plant-based wellness retreats in Europe and Central America.

Other businesses are focusing on CBD, a cannabis extract that doesn’t get users high but is typically advertised as a therapeutic cure-all. One is Good Neighbors Biotechnology, a 2-year-old Thai company that sells CBD products in dispensaries and plans to eventually target pharmacies.

“This is a good chance to make money and help people,” Sakonpob Kittiwarawut, the company’s founder, said during a tour of his lab in Nakhon Ratchasima Province, northeast of Bangkok. The slick facility — white surfaces, glass distillation equipment, scientists in lab coats and face masks — had the look and feel of a pharmaceutical factory and the smell of a Phish concert.

Not everyone shares his optimism. Shivek Sachdev, an expert on the industry in Bangkok, said that two major CBD businesses in Thailand had already folded because of a crash in the CBD extract price, and that the market was now “quite saturated.”

As for dried flowers, a long-term risk is that Thai farmers and companies could be squeezed out of the market by large foreign competitors that establish their own farm-to-dispensary supply chains, said Mr. Sachdev, the founder of Cantrak, a company that helps Thai cannabis farmers with supply chain traceability.

For now, though, the market is still open to small-scale Thai farmers who produce high-quality flowers, said Ms. Lucksipha, the cannabis trader. She added that some dispensaries would thrive on the strength of good marketing and customer service.

“It’s about the owner and the vibe, and the budtenders,” she said, referring to the marijuana equivalent of bartenders.

On a recent evening night at Siam Green in Bangkok, budtenders were explaining the flavor and chemical profiles of the dispensary’s marijuana strains to Vera Murcia, a tourist from the Philippines. After considering options like “White Truffle” and “Durban Poison,” she settled for “Candy Crush,” a strain advertised to make smokers feel hungry, relaxed and happy.

“I want to be happy and hungry,” said Ms. Murcia, 37, who works in the call center industry.

The weed delivered on the first request within minutes: She was laughing after a few rips of a pipe.