The Australian Sex Party wants to make Tasmania the nation's cannabis-growing hub.
The party says it can boost the island state's ailing economy by $100 million a year with a fully costed plan for growing the drug.
The scheme would legalise and tax marijuana in a similar way to alcohol.
Large-scale cultivation could occur alongside Tasmania's lucrative poppy crops, party president Fiona Patten says.
"Tasmania spends $88 million a year on prohibition of drugs with a little more than half of this being spent policing marijuana in particular," Ms Patten said in a statement.
"This could all be freed up for general revenue."
Ms Patten said two US states were regulating and taxing marijuana and New Zealand was doing the same with synthetic cannabis.
She said Tasmanian conditions were ideal for growing the crop, which could be worth billions of dollars for both medical and recreational uses.
"When Australian laws change to meet the demands of a new generation, Tasmania needs to be in the vanguard of that movement and position itself to create some large revenue streams from it," Ms Patten said.
"If it misses out it will be a wasted opportunity."