If approved, those caught with less than 30 grams (one ounce) of marijuana would pay a $250 fine and the incident would not appear on their criminal record.
Buying marijuana for recreational purposes would remain illegal.
Officials said licenses for cultivation, retail, transport and religious use would only be granted to companies that are entirely Bahamian-owned.
Licenses for research, testing and manufacturing would be awarded to companies that are at least 30 per cent Bahamian owned.
Attorney General Ryan Pinder told reporters Thursday that marijuana for religious purposes could only be smoked on the premises of a licensed organisation.
The government envisions creating a Cannabis Authority to regulate the industry.
Public hearings on the issue are scheduled for September, and legislation could be approved before next year.
Other Caribbean nations have relaxed their marijuana laws. Antigua decriminalized marijuana use for the general public.
Jamaica also decriminalised small amounts of marijuana, while the US Virgin Islands recently authorized its recreational and sacramental use.
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