California took in $345.2 million in tax revenue from legal cannabis during the first year of regulated sales in 2018, according to figures the state released Tuesday.

That’s just more than a third of the $1 billion in annual revenue analysts predicted California would see once the state’s regulated cannabis industry was in full gear. But it does put the state on track to hit the revenue totals Gov. Gavin Newsom forecast in his current fiscal year budget.

Marijuana tax revenues climbed substantially in the first three quarters of the year, from $60.9 million the first quarter to $80.2 million the second quarter to a revised $100.8 million in the third quarter. But revenue narrowly grew in the fourth quarter, according to figures Tuesday from the California Department of Tax and Fee Administration.

There was $103.3 million in cannabis tax revenue in the final three months of 2018. That includes $50.8 million from California’s 15 percent excise tax on all cannabis sales, $16.4 million from the cultivation tax passed to growers and $36.1 million in sales tax on all recreational products sold.

The industry, along with some regulators and lawmakers, says the state’s high taxes, tough regulatory framework, local bans and a growing illicit market are to blame.

“Lack of enforcement is creating a thriving environment for the unregulated ‘underground market,’” according to the recently released first annual report from the California Cannabis Advisory Committee, a 22-member group of appointees charged with advising state cannabis regulators.

The state largely took a carrot rather than stick approach to enforcement in 2018, hoping to lure unlicensed businesses out of the illicit market. But the advisory committee said enforcement remains “fragmented and uncoordinated.”

Newsom is calling for increased enforcement this year, with a request to send National Guard troops from the Mexican border up to Northern California to combat illegal grows on forest land.

Meanwhile, only a third of California cities and counties permit cannabis businesses in their borders, according to a database of local policies compiled by Southern California News Group.

Assemblyman Rob Bonta, D-Oakland, introduced a bill that would temporarily reduce the cannabis excise tax from 15 percent to 11 percent and suspend the cultivation tax completely for the next three years. An identical bill failed to get support in 2018. But the new state advisory committee report said the current tax rates “may not be sustainable.”

“We heard many, many stories of the sticker shock from the taxes sending people back to the black market,” said Ellen Komp, deputy director of the California chapter of advocacy group NORML.

California has had to reckon with more realistic cannabis revenue forecasts as the first-year totals came through.

Former Gov. Jerry Brown budgeted for the state to take in $185 million in excise and cultivation taxes over the first six months of the year. California missed that mark by more than $100 million.

For the current fiscal year, from July 2018 to June 2019, Brown initially budgeted for the state to take in $630 million in marijuana tax earnings. Newsom’s proposed budget substantially dropped that forecast down to $355 million this fiscal year.

With $204.1 million in revenue during the first six months of the fiscal year, California looks to be on track to hit or even exceed that budget in another six months.

By way of comparison, Nevada – which voted to legalize recreational cannabis at the same time as California – made $69.8 million from marijuana taxes during its first year of legal sales. While California’s population is 13 times bigger than Nevada, it made just five times more revenue from cannabis.

California hasn’t had enough tax revenues yet to start paying back any of the general fund money loaned to state departments to launch the regulated cannabis market. And no funds have so far been dedicated to programs that prevent young people from using cannabis, environmental cleanup and other programs promised to voters when the legalized marijuana through Proposition 64.

Some funds are expected to be allocated to those causes for the coming fiscal year when Newsom revises his budget in May.

Meanwhile, Komp said they hope to see the state lower barriers to entry for small cannabis businesses, plus for things to change at the federal level.

“Opening up the national and international market is ultimately what’s going to help California the most and will also be the only thing that finally eradicates the illicit grows when everything is fully legal.”