Hot off the passage of Proposition 64 by California voters, the marijuana industry in that state is preparing for explosive growth. Home to 12% of Americans, California already enjoys substantial market share in marijuana sales.

Industry analysts say that under current conditions, about $4 billion in legal sales just from medical cannabis alone. Proposition 64 was passed on November 8, 2016, making it legal to purchase, use, and sell marijuana for recreational uses in California. When the state begins to issue sales licenses in 2018, analysts suggest that the market could triple almost overnight, pushing annual sales figures to well over $20 billion in just a few years. By the end of 2018, sales of both medical and recreational cannabis products will exceed $6 billion.

On the national scene, those same industry analysts expect consumer spending on both medical and recreational marijuana products to be somewhere above $50 billion by the year 2026. The informal, or “black”, market still exists in states that have not yet passed legalization measures. It also continues to thrive in the states with legal marijuana rules on the books. In California, even though the legal medical marijuana industry has been in existence for almost 20 years, about four out of every five dollars consumers spend on cannabis goes to unregulated vendors. Legitimizing the market by passing recreational laws are a huge step toward reducing or even eliminating black market sales.

There are a number of legal growing operations in California that cater to the medical marijuana market. Those established growers and distributors are preparing for tremendous expansion once the state begins its licensing operations. Some of the larger companies welcome changes to the law and are already gearing up to increase production in anticipation of January 1, 2018, when recreational marijuana seller licenses will begin to be issued. Industry players and analysts expect that prices will skyrocket temporarily, as was the case in Colorado when recreational marijuana licensing began in that state. Once more growers are licensed and operating efficiently, sale prices will stabilize. Some analysts suspect that the huge demand in the state and the massive population of California will combine to keep prices higher for longer. Eventually, though, prices will bottom out while the market continues to flourish.