Health Minister Sussan Ley said the Government wants to give people suffering from debilitating illnesses access to the most effective medical treatments.
She said she had been moved by stories of people who got some relief from medicinal cannabis, sometimes legally imported but not always.
"I have heard stories of patients who have resorted to illegal methods of obtaining cannabis and I have felt for them, because with a terminal condition, the most important thing is quality of life and relief of pain," she told AM.
"And we know that many people are calling out for medicinal cannabis. It is important therefore that we recognise those calls for help, that we put in place what we know will support a safe, legal and sustainable supply of a product."