The Senate has passed an amendment bill removing kratom from the narcotics list during its third reading in the Upper House, Justice Minister Somsak Thepsutin said on Tuesday.
It means households were one step closer to being allowed to grow up to three kratom trees for personal use, he said.
The Senate's approval followed that of the Lower House that voted to pass the bill last month.
Mr Somsak said the bill will be sent to the cabinet which would forward it to His Majesty the King for his signature.
The bill will become law 90 days after it is published in the Royal Gazette.
Mr Somsak said supplementary laws would regulate the cultivation, possession, use and sale of kratom. The draft regulations were being considered by the Council of State, the government's legal advisory body.
Once the supplementary laws were in effect, people in custody for using and selling kratom will be freed, he said.
Kratom, or Mitragyna speciosa, is a tropical tree, part of the coffee family, with medicinal, stimulant and psychotropic properties. It is currently categorised as a Class 5 narcotic, meaning it cannot be legally cultivated, imported, exported, sold, possessed or consumed without a permit.
Kratom has long been used in traditional medicine. However, its effects has made it popular with young people as a recreational drug -- one of the main reasons why it was put on the narcotics list.
To grow kratom, people would be required to notify local administrative officials, who include village and tambon chiefs, Mr Somsak said.
Each household would be allowed to grow no more than three kratom trees.
If cultivation is for industrial or commercial purposes, they would have to seek permission from the relevant government office.
About 400 fresh leaves equals a kilogramme of kratom, he said.