Chief Minister Andrew Barr has acknowledged it would still be risky possessing and growing cannabis even if the drug is legalised in the ACT, because it would still be illegal under Commonwealth law.
However Mr Barr says he will not lobby the federal government to relax the criminal code or seek a memorandum of understanding with ACT Policing to resolve the tension.
A parliamentary committee examining the private member's bill from Labor backbencher Michael Pettersson is due to report back on Thursday.
The bill would remove cannabis possession under 50g as an offence for adults under the ACT's criminal code, thus legalising it.
However cannabis is still a controlled drug under Commonwealth law and the constitution states that where state law is inconsistent with federal law, the latter wins.
In a letter to the committee, Mr Barr admitted it was still uncertain how the legislation would interact with Commonwealth law.
"As is to be expected with an issue as complex as this, the government has identified a number of issues requiring further consideration before the bill can be passed," Mr Barr wrote.
"Even after the passage of this bill, possessing and growing cannabis will carry a degree of risk arising from interaction between territory and Commonwealth law.
"We believe the ACT is able and entitled to make our own laws on this matter. However, we would be the first jurisdiction in Australia to legislate in this way, and the interaction with existing Commonwealth law remains untested.
"There is also uncertainty as to how a Commonwealth Government may react to the ACT passing this Bill and we cannot guarantee a Commonwealth government would not intervene to prevent reforms - as has occurred in the past."
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In a separate letter, ACT Policing told the committee it had advice from the Commonwealth Attorney-General's department that removing cannabis as a criminal offence under ACT law would leave users vulnerable to being charged under the harsher federal laws.
"Various pieces of Commonwealth legislation relate to the control and prohibition of cannabis. These laws will continue to apply to relevant conduct even if it is decriminalised in the ACT," acting Chief Police Officer Michael Chew said.
However Mr Barr said while he would not push the Commonwealth to change its laws, the government was exploring "refinements" to the bill to resolve "perceived or actual conflicts" with federal legislation.
"We will continue to work with stakeholders including the Australian government to understand and resolve any differences in the interpretation of the Commonwealth law as much as possible," he said.
He also said a memorandum of understanding with police was not being considered, despite it being raised as one way of solving the conflict.
"As outlined above the government is working toward a model that would give ACT residents confidence about the type of conduct and circumstances that would be lawful under the proposed amendments," Mr Barr wrote.
The Chief Minister has also ruled out supporting any amendments that would legalise the supply of cannabis, whether through clubs, dispensaries or other channels.
Curtin University's National Drug Research Institute director Professor Simon Lenton had suggested the bill could be amended slightly to allow cannabis social clubs to be set up - not-for-profit organisations that grow cannabis for their members.
The Labor frontbench would bring forward amendments setting different limits depending on whether the cannabis was fresh and dried, Mr Barr said.
Individuals would be able to legally possess 150 grams of cannabis that has been harvested but not dried under the changes.
Mr Barr also ruled out changing the legal definition of cannabis to include oils.