Locally-grown medicinal cannabis will be legalised in Victoria, under a controversial State Government move to ease the suffering of people with serious medical conditions.

In an Australian first, the Andrews Government plans to embark on a state-based cannabis cultivation trial, based on the recommendations of a report by the Victorian Law Reform Commission.

But the move will need the support of the Federal Government, which is a signatory to an international convention on narcotic drugs.

The commission has recommended licensing cultivators and manufacturers to produce the drug under laws similar to those governing the state's opium poppy industry.

Medicinal cannabis should be available in a variety of forms, including tinctures, oils, capsules, sprays and vaporisable liquids, but should not be smoked because of the health dangers, the commission said.

The drug would be prescribed by a specialist and sold at pharmacies under arrangements based on the methadone program, not a grow-your-own scheme.

Commission chairman Philip Cummins said the report was driven by compassion for people, including chronically ill children, who were suffering and had no effective medical relief.

Children with severe epilepsy would be the first to be treated with Victorian-grown medicinal cannabis, from 2017.

Labor made an election pledge to legalise medicinal cannabis in a bid to help parents it said were being forced to choose between breaking the law and watching their children suffer.

Premier Daniel Andrews said it was one of the best days of his political career.

"There are about 450 or those beautiful little people and they're going to get legally for the first time the medicine that they need to transform their lives, and indeed to save their lives," he said.

"The time has come for us to stop finding reasons not to do this.

"There will be a cost involved, there's no doubt about that. It's not about dollars and cents really, this is about saving lives."

'Solid research' justifies medicinal marijuana

The commission has made 42 recommendations, including that medicinal cannabis be available to treat five serious conditions, including multiple sclerosis, cancer, HIV or AIDS, epilepsy and chronic pain.

Dr Ian Freckelton QC, who led the review, said the proposed scheme was ground-breaking and innovative.

"We were struck by the compelling and moving stories of persons suffering serious illnesses or caring for those suffering such illnesses," he said.

Marijuana conditions of use: Severe muscle spasms or severe pain from MS

Severe muscle spasms or severe pain from MS Severe pain from cancer, HIV or AIDS

Severe pain from cancer, HIV or AIDS Severe nausea, vomiting or wasting from cancer, HIV or AIDS

Severe nausea, vomiting or wasting from cancer, HIV or AIDS Severe seizures from epileptic conditions (if other treatments do not work)

Severe seizures from epileptic conditions (if other treatments do not work) Severe chronic pain where two specialist medical practitioners think medicinal cannabis might work better than other medical options Source: Victorian Law Reform Commission

Dr Freckelton said a significant number of people were already using cannabis for medicinal purposes in Victoria.

"They are doing so illegally, that means there's a fear on their part of being prosecuted and embarrassed," he said.

"There is now a solid research base justifying this innovative step."

The State Government will begin a cultivation trial at a research facility and establish an Office of Medicinal Cannabis within the Department of Health and Human Services to oversee the manufacturing, dispensing and clinical aspects of the framework.

The Victorian and Queensland state governments have already joined forces with New South Wales to take part in medicinal cannabis clinical trials.

But Dr Freckelton said it was not appropriate to wait years for the results and Therapeutic Goods Administration approval of pharmaceutical products.

"We were satisfied on the basis of those whom we met, many of whom had utilised medicinal cannabis to their advantage, and on the basis of research evidence, that it is an appropriate time for this modest step to be taken to alleviate suffering," he said.

The commission said there would be a rigorous licensing scheme, to reduce the risk of organised criminals benefiting from medicinal cannabis production.

While the plan needs the support of the Federal Government, Commonwealth legislative change is not required, the commission said.

"The Commonwealth is the signatory to an important international convention in relation to narcotic drugs and so it is fundamental that Australia, including Victoria, comply with its international obligations in that regard," Dr Freckelton said.

The Victorian Government has accepted 40 of the report's recommendations and two in principle.

An independent medical advisory committee will examine whether to increase the number of eligible patients.