Deputy government spokesperson Traisulee Traisoranakul said the new regulation will override the existing one governing the use of hemp.
She added that the new regulation will allow individuals and juristic entities registered in Thailand to grow hemp for commercial use.
To be eligible, juristic entities must be at least two-thirds owned by Thais or have as many on the executive board.
Once permitted, individuals or juristic entities can produce, sell, possess, import or export hemp. This move aims to have hemp promoted as a cash crop and to improve indigenous Thai varieties.
Similarly, families that traditionally use hemp material to make clothes will be allowed to devote up to 1 rai to the plant, provided they have a licence.
In July last year, the Public Health Ministry granted permission to the Highland Research and Development Institute to grow local hemp strains in Chiang Mai, Chiang Rai, Nan, Tak and Phetchabun provinces.
Most hemp strains in Thailand have outstanding fibre quality with low levels of THC and CBD - two of the main cannabinoids found in cannabis - the Food and Drug Administration (FDA) said. The FDA believes the country will benefit because the plant can be used as a key ingredient in many food and cosmetic products.