Hallucinations are an indicator of abnormal brain activity. Inducing that on purpose can be risky for people like us. I would be concerned about inadvertently triggering psychosis at some point and for some it is hard to stop the flood once the dam breaks. You could be doing damage.

Melatonin | Mental Health America
'In the absence of better science, consultation with the health care professional providing care for an existing seizure disorder is essential if considering using melatonin. Mood changes have been reported, both highs and lows, and even psychotic symptoms such as hallucinations and paranoia.'

It also apparently interacts with benzos and antidepressants if you're on those.

I would stop taking it and report the effects to your doctor.