However, the territory's law could be overturned if challenged at a federal level
The Australian Capital Territory (ACT) has become the first jurisdiction in the nation to legalize recreational cannabis use.
Lawmakers in the territory passed a landmark bill on Wednesday, allowing adults to possess up to 50 grams of the drug and to grow four plants at home.
Personal cannabis use remains prohibited elsewhere in Australia, but medicinal use was legalized in 2016. However, the territory's law could be overturned if challenged at a federal level.
Recreational cannabis use is legal in countries including Canada, Spain, Uruguay, and several US states including California.
About 35% of Australians aged over 14 have used the drug in their lifetime, health authorities say.
The ACT has almost 400,000 residents and comprises the city of Canberra and surrounding areas.
Under its legislation - to come into effect on 31 January - it will remain illegal to sell cannabis and to consume it in public or around children.
Supporters said the law aims to reduce risk and stigma for users of the drug, while opponents argue it could introduce more people to harmful drug-taking.
Because it is not a state, the ACT is more vulnerable to its laws being overturned by the federal government. This happened in 2013, for instance, when its decision to legalize same-sex marriage was reversed.
Lawmakers who sponsored the bill on Wednesday said they were "very confident" that it would not be challenged by federal politicians.
However, they acknowledged that there were additional legal uncertainties.
"This does not entirely remove the risk of people being arrested under [federal] law, and we are being up front with the community about that," Attorney-General Gordon Ramsay said in the ACT Legislative Assembly.
New Zealand is due to hold a referendum next year on whether it should legalize the drug.