Businesses can now apply to grow medicinal cannabis or manufacture medicinal cannabis products in Australia after new laws came into effect.

Budding cannabis producers can now apply for a licence to legally grow the crop in Australia, for medicinal use only.

The Narcotic Drugs Amendment Act 2016, which came into effect on Sunday, allows businesses to apply for a licence to cultivate cannabis or manufacture cannabis products for medicinal purposes, or to conduct related research.

Health Minister Minister Sussan Ley said the changes would give patients and doctors access to a safe, reliable and legal source of cannabis for medicinal use.

"Until now, it has been difficult for patients to access medicinal cannabis products from overseas sources," Ms Ley said in a statement on Sunday.

"These new laws change that situation by providing for a domestic supply of medicinal cannabis products that are not readily available for import."

She stressed the changes do not decriminalise recreational cannabis use.

Licence applicants must pass a security test and meet strict requirements, and individual states and territories will still decide who can use medicinal cannabis.