People will vote on a proposal for a legal cannabis market in 2020 with tightly controlled rules including special bars for consumption, special outlets for sales, and strict rules for home-grown cannabis.

Justice Minister Andrew Little made the much-anticipated announcement this morning, including proposals to limit the potency of products, and having a licensing regime to control all stages of the supply chain as well as all available products - including edibles and resins.

"Cabinet has agreed there will be a simple Yes/No question on the basis of a draft piece of legislation," Little said.

A bill will be drafted before the 2020 election, but will not be passed into law, calling into question whether the referendum will be binding, as announced by Little last year.

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The bill will aim to reduce cannabis-related harm by protecting young people - whose brain development can be harmed by frequent cannabis use - offering health services to those that need them, and weakening the black market that currently peddles unregulated products to whoever can buy them.

It will not propose a for-profit model with relaxed regulation, which has been described by the Global Commission on Drug Policy as just as harmful as an unregulated black market.

It will not be a not-for-profit, state-controlled model such as in Uruguay.

Details are still being worked on, but the Herald understands the aim will be to have more controls than existing regimes such as the likes of California, where regulations make it easier for corporate players to operate in the market at the expense of small operators.

Little confirmed today that the referendum at the 2020 election will ask about support for a bill that details a regulated legal market.

It will include:

• Allowing products to be bought only in a licensed premise from a licensed and registered retailer, and banning online or remote sales
• A ban on using cannabis publicly, allowing it only in a special licensed premise or on private property
• Controls on the potency of cannabis in available products
• A legal purchase age will be 20
• Rules around private home-grown products and for sharing with those over 20
• A ban on advertising of cannabis products, and requiring products to carry health messages
• A state licensing regime to control the supply chain and the manufacture of all products, such as resins and edibles
• A ban on all imports of cannabis unless through a state-licensed wholesaler

Other details still being worked include the limit of potency, the rules of the licensing regime, the level of taxation and how much of that should fund health and addiction services, and whether cannabis-related convictions should disqualify a person from working in a legal market.

Finding the right balance will be critical, as too many restrictions, such as high prices or too high a purchase age, would be unlikely to weaken the black market.

National Party spokeswoman on drug law reform Paula Bennett agreed with the goal to reduce harm, but there were still many unknowns.

She had concerns that edibles would be legal, and asked how a ban on consuming them in public places would be enforced if they were, for example, gummy bear edibles.

She acknowledged that people currently used alcohol-soaked lollies.

"[But] you're not going to be absolutely drunk off a couple of vodka-soaked lollies, but you can get absolutely wasted on a few concentrated marijuana [edibles]."

She said it was too early to have a debate about legalisation.

"We should have waited to see the evidence from Canada who only legalised in October. Since a referendum has been promised, we believe the public should have as much information and certainty as possible. This option does not deliver that."

Green Party drug law reform spokeswoman Chloe Swarbrick said the draft bill would give voters clarity about what they will vote on.

"The Green Party supports a legal framework for cannabis - to bring it out of the shadows and the black market. We will take a practical, evidence-informed, health-based approach to reduce as much as possible the harm caused by drug use and addiction.

"We want to displace the black market. We will not stand to see it simply replaced with corporate control, like alcohol or tobacco."

Little said a draft bill should be ready towards the end of the year or the beginning of next year, with stakeholder experts invited to contribute.

The referendum is separate from medicinal cannabis, for which a law was passed last year and a regulatory regime is expected to come into force at the end of this year.