Liberal Democrats senator David Leyonhjelm has called on the government to go further than just legalising cannabis for medicinal purposes.
Health Minister Sussan Ley introduced draft laws to parliament on Wednesday that allows the controlled cultivation of cannabis for medicinal or scientific purposes through a national licensing scheme.
Senator Leyonhjelm says allowing people to have a puff for fun would save the cost of a medical regulatory framework and help raise tax revenue.
He cited the example of Colorado in the US, saying marijuana revenue raised more money there than tobacco or alcohol taxes.
"Nobody has died, the sky hasn't fallen, we are not facing rack and ruin, Sodom and Gomorrah," he told reporters.
The Greens have welcomed the government move, but argue more needs to be done to link those who need it to the cannabis.
"It is no good growing medicinal cannabis if a patient can't get it through a doctor," leader Richard Di Natale said.