If Californians legalize marijuana under Proposition 64 in November, legal cannabis sales in the state likely will climb by $1.6 billion within the first year of implementation, according to a report released Tuesday.

That would put the state’s medical and recreational market on track to hit $6.5 billion in revenue by 2020 — up from $2.8 billion in 2015, industry research firms Arcview Group and New Frontier state in the report. And the researchers argue it would serve as a “watershed moment” for the industry in and outside the United States.

“We think the activation of the adult-use market in California will undoubtedly make California the new epicenter in cannabis,” said John Kagia, executive vice president of industry analytics for New Frontier.

Sheer size will help the state maintain that status, Kagia said.

Even with a fractured, unregulated medical industry, the report states California already accounts for nearly half of all legal cannabis sales in the nation.

Lt. Gov. Gavin Newsom, who is campaigning for Prop. 64, cautioned against legalizing marijuana merely to pad government coffers with new tax revenue or to chase the next great California gold rush.

Still, he acknowledged there’s a lot of money to be made, citing estimates that the state’s gray cultivation market now brings in $9 billion to $13 billion annually.

California’s influence isn’t just about dollar signs, Kagia said.

“There’s going to be a professionalism of the industry, an emphasis on innovation once the market is legal in California that will dramatically accelerate the industry in a way that legalization (efforts) in Colorado and Washington haven’t been able to do.”

Silicon Valley should play a leading role, both via capital as well as technical and intellectual expertise, Kagia and co-authors say in the report.

California also is poised to be a leader in creating rules for social pot use, it should become a front-runner in developing organic standards, and it likely will become a hub for cannabis research, as Prop. 64 calls for 10 percent of sales tax collected to be spent on drug abuse research and another 10 percent on cannabis research, according to the market study.

The ripple effects could be vast and could affect industries such as biomedical research, applied materials and nutraceuticals, among many others, Kagia said.

Additionally, if California goes recreational, researchers predict it will apply greater pressure on Mexico to legalize.

The authors state: “The legalization debate south of the U.S. border has evolved quickly as illustrated by the evolution of Mexico’s President Enrique Peña Nieto who, in just six years, has transformed from one of Latin America’s most vocal drug warriors to a proponent of medical cannabis use and advocate for decriminalizing possession of up to an ounce for all adults. Legalization in California will only add fuel to the debate on cannabis law reform in Mexico and in other Latin American countries.”

California’s medical sales should stay relatively flat, according to the report. Arcview and New Frontier project the medical market should decline to $2.53 billion in 2020 from $2.76 billion in 2015.

California also will face plenty of unique challenges if it were to legalize, Kagia said.

The state already has an “outsized scale” of cannabis production and is starting to see some land-grabs by pot prospectors. A greater supply should mean cheaper costs for consumers but also could pinch the producers, the report says.

Legalization also would raise questions about the viability of indoor grow houses and whether the energy costs could be prohibitive as more greenhouses open, Kagia said.

But perhaps one of the greatest challenges for California is whether it can overcome itself.

California’s medical market operated for nearly 20 years with very limited government regulation.

There was no agency tasked with regulatory oversight or business licensing, no requirement for patients to register with the state, and essentially no market standards for product safety and quality.

This led to significant problems with diversion of product from the legal to the illicit market, exposed early business operators to enforcement crackdowns and made it difficult for the state to closely monitor the program because of the lack of centralized data and reporting.

Last fall, the state took steps to establish more stringent regulations for medical cannabis businesses, and individual jurisdictions will likely see further policy adjustments in the coming years.

The stringent regulations came in the form of the Medical Cannabis Regulation and Safety Act, a two-year program intended to provide oversight for the medical industry, create a commercial license program and set consumer and environmental standards, according to the report.

Industry members told Arcview and New Frontier that they’re concerned about how distribution policies outlined in the act could result in higher prices for consumers, whether the costs would be too high for the majority of existing dispensaries to continue operating, and how local jurisdiction approvals would stymie the industry’s potential.

Prop. 64 does have some solutions for those concerns; however, if the contested legalization ballot issue does not pass, it’s not necessarily a death knell for California or the nation’s industry as a whole, Kagia said, noting that other states have legalization measures up for vote.

To some in the industry, the measure’s failure would give the state the chance to implement MCRSA first and set up an established foundation, he said.

“While the failure of the measure in California would be a setback, broadly speaking, we do not think it is going to significantly impede continued forward progress that we have been seeing in the shifting public attitudes (toward legalization),” he said.

Staff writer Brooke Edwards Staggs contributed to this report.