New Zealand's fledgling and fragmented medicinal cannabis industry is starting to consolidate, with the country's first listed medicinal cannabis firm set to merge with a rival.

Shareholders in NZX-listed Cannasouth overwhelmingly voted in favour of a merger with Bay of Plenty-based Eqalis at a special meeting on Friday.

Cannasouth chief executive Mark Lucas told shareholders the merger would create New Zealand's leading medicinal cannabis company, giving the combined group critical mass to accelerate innovation, combine technologies and grow faster.

The merger will see Cannasouth, which listed on the NZX in June 2019, buy Eqalis' shares for $48.8 million through the issue of new shares at 33 cents each.

Shares in Cannasouth fell 1.7 per cent to 29c ahead of a capital raising expected to launch on Monday, which will see it sell shares at the discounted price of 29c to raise about $9m for the combined company.

It has received commitments of $4.2m so far.

Tina Morrison/Stuff