The Turnbull government wants to make it legal to grow medicinal cannabis in Australia this year.
Health Minister Sussan Ley said on Friday she was finalising changes to the Narcotics Drugs Act to allow cannabis to be grown for medicinal and scientific purposes.
Victoria and NSW state governments have indicated they want to legalise medicinal cannabis, and are waiting on a federal regulatory scheme to do so.
This comes days after Greens leader Richard Di Natale announced he would put a separate cross-party bill on the same issue to the Senate next month.
Ms Ley said the government's planned changes would allow the Department of Health to licence growers under a new scheme, with obligations and legal requirements for states and territories. They would be consulted with the Greens, Labor and crossbench senators, as well as the states and territories "before bringing a final version to Parliament by the end of the year".
The model differs from the Greens' proposal, which involves creating a new national regulator that would oversee the growth, manufacture and distribution of medicinal cannabis. Senator Di Natale has said that if their bill was passed, the independent regulator could be set up this year.
Health Department secretary Martin Bowles has previously opposed this idea, saying the bill risked "regulatory gap, overlapping laws and a lack of clarity about the exercise of jurisdiction by agencies and possible inconsistency with other existing laws".
Ms Ley said there were already licensing systems to legally manufacture and sell medicinal cannabis-based products in Australia but nothing to enable legal "production of a safe, legal and sustainable local supply".
"This has meant Australian patients, researchers and manufacturers have had to try to access international supplies of legal medicinal cannabis crops and products, but limited supplies and export barriers in other countries have made this difficult.
"Allowing the cultivation of legal medicinal cannabis crops in Australia under strict controls strikes the right balance between patient access, community protection and our international obligations."
Ms Ley said the planned changes addressed the issues that those who supported the cross-party bill, including Coalition members Sharman Stone and Senator Ian MacDonald, had identified.
New medicinal cannabis products would continue to be regulated by the Therapeutic Goods Administration under the changes.
Patients would still require either a prescription from a doctor or a clinical trial to access medicinal cannabis: "In many cases the long-term evidence is not yet complete about the ongoing use of various medicinal cannabis products and it's therefore important we maintain the role of medical professionals to monitor and authorise its use."
NSW Medical Research Minister Pru Goward supports the plan, describing it as "sensible" and "measured": "We do not want patients or carers having to play pharmacist, this collaborative approach ensures we have a way forward.
The government had no plans to legalise the growth of marijuana for recreational use.