California’s tax revenue for the budding legal recreational cannabis market has reached an all-time high, but is still falling short of projections, according to officials.

State tax revenue on cannabis sales jumped from $60.9 million in the first quarter of 2018 to $74.2 million in the second quarter, the California Department of Tax and Fee Administration (CDTFA) reported Monday.

The retail sale of both recreational and medical cannabis is outlawed in the City of Santa Clarita, but delivery services operate within city limits, according to officials.

The figures announced this week include state cultivation, excise and sales taxes. The numbers do not include tax revenue collected by each jurisdiction, officials said.

The tax revenue falls about $40 million short of Governor Jerry Brown’s $175-million projection in the fiscal year 2017-2018 budget for the first six months, with an actual revenue of $135.1 million, according to the CDTFA.

California legislators, including Assemblyman Tom Lackey, R-Palmdale, say that the high tax rate for cannabis may be to blame for the revenue shortfall.

“Voters have approved Proposition 64 and now it’s time for the state to carry out their will. As someone who spent 28 years in law enforcement, I know how sophisticated California’s black market for cannabis has become,” said Lackey. “Criminals do not pay business taxes, ensure consumers are 21 and over, obtain licenses or follow product safety regulations. We need to give legal businesses some temporary tax relief so they do not continue to be undercut by the black market.”

See Related: California Recreational Marijuana Tax Could Be Lowered To Reduce Black Market Demand

Currently legal cannabis sales include a state excise tax of 15 percent, a state cultivation tax of $9.25 per ounce of cannabis flower ($2.75 per ounce of cannabis leaf; $1.29 per ounce of fresh cannabis plant), traditional sales taxes (ranging from 7.25 percent to 9.25 percent), and local cannabis taxes, which vary, according to Lackey’s office.

Assembly Bill 3157, introduced by Lackey and Rob Bonta, D-Oakland, would suspend the state’s cultivation tax, which currently charges a flat tax of $148 per pound. It will also reduce the state’s excise tax from 15 percent to 11 percent, officials said.

Both tax reductions are temporary and would sunset in June 2021 after California’s regulated market has matured and has been fully implemented. The primary goal of the measure is to reduce the size of the state’s black market for cannabis and take money out of the pockets of criminals, according to the author of the bill.

California’s excise tax on cannabis generated $43,490,668 in revenue during the second quarter of calendar year 2018. The cultivation tax generated $4,482,119, and the sales tax generated $26,267,470 in revenue. Medicinal cannabis is exempt from sales tax if the purchaser holds a valid Medical Marijuana Identification card, according to the CDTFA.

In November 2016, California voters approved Proposition 64, the Control, Regulate and Tax Adult Use of Marijuana Act. Beginning Jan. 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent excise tax on the purchase of cannabis and cannabis products, according to the text of the legislation.

In addition, cannabis and cannabis products are subject to state and local sales tax at the time of retail sale.

To learn more, see the Tax Guide for Cannabis Businesses on the CDTFA website.

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