A leaked Cabinet paper on the cannabis referendum says a legal market could include specially designated cafes or bars where adults could safely use cannabis.
It also says a legal regime should allow cannabis to be used at home but not in public places, and suggests allowing for a small amount of home-grown product, given that users in remote or rural areas may not live near a licensed cannabis store.
Cabinet was expected to discuss the referendum today, but a Cabinet paper has been leaked to the National Party ahead of any announcement - though Green Party drug law reform spokeswoman Chloe Swarbrick has dismissed the paper as an old version.
How the referendum will be run has been keenly anticipated since it was announced as part of the Labour-Green Party confidence and supply agreement in October 2017.
Further extracts of the leaked Cabinet paper seen by the Herald stated that a proposed legal market could include licensed premises that offer a safe place for cannabis use away from home.
"Permitting use at specifically licensed premises recognises that some people, such as tenants and people with children at home, cannot or may not wish to use cannabis at home," the paper said.
"Licensed premises may also provide an opportunity for staff to monitor and promote safe consumption behaviours."
It added that cannabis should be regulated to ensure its use was not promoted or encouraged.
"Permitting cannabis use in public places, especially around areas frequented by children and young people, may normalise the behaviour and expose more people to cannabis and its effects (eg second-hand smoke which can have psychoactive effects)," the paper said.
"Therefore, I propose that cannabis use should be restricted to individuals' home, including their outdoor areas, and in the homes of other people with their permission."
Further details noted that people grow cannabis at home at the moment, even though it is illegal.
"Private cultivation of cannabis could be permitted [in a proposed legal market]. It acknowledges that people already grow cannabis plants in New Zealand and provides an alternative way of accessing cannabis other than through a physical store, which may be preferable for people in rural and remote communities."
National drug law reform spokeswoman Paula Bennett said the paper also mentioned looking at legalising other consumer products such as edibles and lotions.
"I don't get how they can stop people actually taking edibles because they won't know. They look like lollies."
She said the paper showed that a lot of work still needed to be done.
"And it's all highly contentious. There's at least two sides to pretty much every decision you have to make, both of which have validity, but need to debated in the most open, transparent way.
"That's what my concerns are."
Yesterday Bennett released four referendum options in the paper, only one of which would pass a law putting in place a regulatory regime to be enacted if there was a 'yes' vote.
The other options would put the next Government under no obligation to legalise cannabis for personal use.
Bennett said that National didn't agree with having the referendum in the first place, but if it was going to happen, then she preferred a putting a law in place before the referendum as it was "open and transparent".
"Full legislation is also the only way it's binding."
The Labour-Greens confidence and supply agreement contains no wording about making the referendum binding, though Justice Minister Andrew Little has said that it will be binding.
He has since added that he will explain what "binding" means when an announcement is made.
The Cabinet paper also supported a legal purchase age for cannabis of 20 to deter young people from using cannabis, noting that frequent use by young people can be harmful for brain development, which continues until the age of 25.
The paper considered an age of 18, the current purchase age for alcohol and tobacco, but said that it would create more chances of 18 -year-olds buying cannabis to supply younger people, and could normalise using cannabis for secondary school students.
Bennett said the proposed age of 20 seemed to have been "plucked" from nothing, but she did not have a preference for what the age should be, saying it should be up to the public to decide.