Cannabis, however, still can't be used to get high.
Thai Health Minister Anutin Charnvirakul told CNN that he wants the decision to help the economy, but at the same, "We still have regulations under the law that control the consumption, smoking or use of cannabis products in non-productive ways."
The Thai government hopes to develop a local cannabis trade that could lead to a boost in agriculture and tourism.
Under the new laws, it is not criminal to grow and trade products made of marijuana and hemp.
The plants can also be used to treat illnesses.
Additionally, cafes and restaurants can serve cannabis-infused food and drinks with less than 0.2 percent tetrahydrocannabinol (THC) content (the psychoactive part of the plant).
The government has also said that it plans to release 4,000 prisoners who have been put behind bars due to cannabis-related offences.
"Thailand will promote cannabis policies for medical purposes. If [tourists] come for medical treatment or come for health-related products then it's not an issue but if you think that you want to come to Thailand just because you heard that cannabis or marijuana is legal ... [or] come to Thailand to smoke joints freely, that's wrong," Health Minister Anutin Charnvirakul summed up in his quote to CNN.
(With inputs from BBC and CNN)