Changes to legislation will soon be introduced to allow the cultivation of cannabis for use in medical trials, the federal health minister, Sussan Ley, has announced.

Ley is seeking parliamentary support to change the Narcotics Drugs Act of 1967 to create a regulatory body to cultivate cannabis for state trials of medical marijuana.

While the creation of medical trials and the issue of decriminalisation are state-based ones, the commonwealth has a role in regulating cultivation and importation of the drug.

The regulator would issue licenses to states and territories for the

growing of cannabis without imposing limitations on how the crop is

used. State and territory governments have the jurisdiction to set up

wider industries outside of medical trials if they choose to do so.

States and territories are not able to legally grow cannabis for use in medical trials, nor import the illegal drug. Creating a regulatory body, which Ley describes as the “missing piece” of the puzzle, would remove a major hurdle in the establishment of the state trials.

“Currently there are already systems in place to licence the manufacture and supply of medicinal cannabis-based products in Australia, however there is no mechanism to allow the production of a safe, legal and sustainable local supply,” Ley said. “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,” the health minister said.

The three most populous states – New South Wales, Victoria and Queensland – have pledged to hold trials on the effectiveness of medicinal cannabis to provide pain relief for people suffering terminal illnesses, control severe childhood epilepsy and for the treatment of symptoms arising from chemotherapy.

The NSW government welcomed the announced.

“We believe the approach the federal government is taking is sensible, measured and demonstrates forward thinking,” the NSW minister for medical research, Prue Goward, said. “We do not want patients or carers having to play pharmacist, this collaborative approach ensures we have a way forward.”

A number of state governments are expected to put their hands up to grow the crop once the regulation process is finalised, with the industry likely to recoup millions for struggling state economies, particular if Australia overcomes legal roadblocks to legally export the drug to other countries.

The Tasmanian poppy industry, which produces 45% of the world’s opium for use in pharmaceutical painkillers, is worth $300m to the state annually.

All major political parties endorse the theoretical use of medical marijuana, but differ on how best to deregulate and build the industry.

A cross-party bill, spearheaded by the leader of the Greens, former doctor Richard Di Natale, wants the creation of a medical cannabis regulator. The bill was co-sponsored by Liberal, Labor, Greens and crossbench senators and is currently awaiting debate in the Senate.

Labor released a statement saying that it would create a national scheme to allow “equity of access and a safe and reliable supply” of medical marijuana by creating a federal licensing system for the growing of the crop.

“We need to put in place, by working with the states and territories, uniform criminal laws to exempt people from the fear of prosecution if they’ve got legitimate access to medicinal cannabis for an approved purpose, but we also need to sort out supply and only the Commonwealth can do that,” the shadow assistant health minister, Stephen Jones, told ABC TV.

Ley hopes that the changes to the 1967 act will be expedited and introduced into parliament by the end of the year.