California’s legal marijuana industry is about to see big business move in to buy up small players in expectation of continued high growth in the markets for medical and recreation pot.

Sean Williams, who writes about biotech companies for the Motley Foot website, reported that the legal marijuana business is “budding in North America,” with revenues spiking 33 percent higher in 2017 to $9.7 billion. He expects growth driven by expanding marijuana legalization initiatives to continue at a compounded rate of 28 percent, driving sales to $25 billion by 2021.

Williams highlights that California led the planet in 2017 by cultivating 13.5 million pounds of marijuana. Although a small amount has been sold legally for medical uses since California pioneered the concept in 1996, the vast majority was sold illegally, and 11 million pounds, or 81 percent, was exported out of state, according to ERA Economics.

California’s dominance is accelerating with the 2016 passage of Proposition 64, which made recreational marijuana legal in the Golden State on January 1. 30 states now have legalized medical marijuana, and eight states and the District of Columbia have legalized recreational use. Polls even in traditionally conservative Oklahoma are showing 57 percent support for a medical marijuana initiative on today’s ballot.

Canada legalized medical marijuana since 2001. And Prime Minister Justin Trudeau is expected to sign the Cannabis Act, which will legalize recreational marijuana nationwide. Mexico is just beginning to change its enforcement attitudes by legalizing medical cannabis in June of 2017.

Traditionally, cannabis has been produced by small farmers. But in anticipation of the legalization of recreational marijuana, eight Canadian companies that have rapidly bought up independent growers and distributors now control about 70 percent of Canada’s 1.8 million kilograms of annual cannabis production.

The north’s pot industry is in merger mania, with Canada’s three largest players — Aurora Cannabis (NASDAQOTH:ACBFF), Canopy Growth Corp., and Aphria — jockeying to crate massive economies of scale.

Aurora Cannabis paid $1.1 billion in stock to buy Saskatchewan-based CanniMed Therapeutics, and is set to pay $2.5 billion in an all-stock deal to buy Ontario-based MedReleaf. Aphria paid $670 million in cash and stock to buy Toronto-based Nuuvera, which has been acquiring properties and developing foreign partnerships in Italy, Australia and Germany.

The Canadian “big three” are eagerly looking to acquire California farms and distributors to dominate what is predicted to be a $6 billion annual market for recreational marijuana.

California regulators are trying to protect small farmers until 2023 by restricting “medium” cultivation licenses to one per owner for up to 22,000 square feet of planting area. But because there are no restrictions on the number of “small” cultivation licenses for an area up to 10,000 square feet, 12 big businesses are buying out small operators by “stacking” ownership to control 20 percent of California’s 1,714 cultivation licenses issued.

According to Williams, big business is pushing acquisitions to gain economies of scale to drive down prices on a per-gram basis — to squeeze out small competitors — and to build value-added product brand identification with consumers.

In Washington State, which legalized recreational pot in 2014, the wholesale marijuana price plunged from $8 per gram when sales first began, to about $2.53 per gram in late 2017. But more importantly for corporate marijuana acquisitions, the sales percentage of branded higher-margin oils, extracts, and edible cannabis “alternative” products have grown from less than 5 percent of sales revenue in 2014 to 47 percent in 2017.