The Government Pharmaceutical Organisation (GPO) will start clinical trials of marijuana soon as a preliminary step to producing medicines for four diseases, it said Tuesday.
It will also build a special greenhouse in which to grow the premium-grade cannabis, it added.
The trial project will use 100 kilogrammes of confiscated marijuana provided by the Office of the Narcotics Control Board (ONCB), the state agency overseeing the current crackdown on narcotics.
Sophon Mekthon, chairman of the GPO's board committee, said the research team expects to extract 10-15 litres of pure oil from the supplied plant.
The oil will be used to develop medicines for the treatment of epilepsy and peripheral nephropathy, and others aimed at reducing the side-effects of chemotherapy and morphine substitutes, according to Mr Sophon.
The first phase of the trial starts this month and will be completed by December, he said.
"This trial is definitely a great leap forward for our country to develop medical marijuana," Mr Sophon told media.
The GPO, meanwhile, has asked the Food and Drug Administration (FDA) to approve its plan to build the greenhouse to grow the marijuana. This is expected to produce several tonnes of the plant every year.
GPO director Withoon Danwiboon said the office has its eyes on a site in Chon Buri and it will work with Kasetsart University in developing a premium strain.
"We will then cultivate the plant upstream and send it to our laboratory research centre to get the best by-product for medical treatment so Thai people can have affordable access to good medicine," Dr Withoon said.
The Ministry of Public Health is also now promoting marijuana as an alternative form of treatment.
A raft of peer-reviewed studies suggest the plant can help to reduce pain associated with a number of diseases and could also be used by patients afflicted with Alzheimer's and Parkinson's.
The medical trial and greenhouse project are considered exciting new milestones in Thailand, where the terrain and climate are well-suited to cultivating the plant. However, it has been labelled a Class 5 narcotic since 1979, meaning it is illegal to grow or sell the drug.
In May, the cabinet approved draft legislation permitting more research into the effects of medicinal marijuana.
It can already be legally used for medical purposes in Canada, Austria, Belgium, the Czech Republic and France, as well as a number of American states. Patients in the Netherlands can even be reimbursed for purchasing medical cannabis given the right health insurance policy.
Over 72% of Thais support the move to legalise marijuana for medical purposes, according to an opinion survey by the National Institute of Development Administration, or Nida Poll.
But more than half of respondents said it should be restricted to hospitals.