The move is projected to generate up to $2 billion through the middle of next year for California's budget, as shareholders cash in their shares.
Analysts increased the state's revenue projection after Facebook raised its initial stock price from $35 to $38 per share.
Facebook CEO Marck Zuckerberg could make a significant contribution to the state himself. Department of Finance officials say California could receive $195 million when he exercises his option on 60 million shares.
Meantime, Facebook announced Wednesday morning that it plans to sell 25 percent more shares in the company to meet the demand.
If all the shares are sold at the high end of the expected price range, the offering could total more than $18 billion. That would make Facebook one of the largest IPOs ever.
The Associated Press contributed to this report.
