Under the new proposals, people over the age of 18 could cultivate up to five plants at home and growers could set up social clubs involving a maximum of 50 people and 250 plants.
The scope of such social clubs would be to provide spaces for growers to consume and share their product, but would prohibit them from profiting from the sale of cannabis.
The general sale of the drug would instead be under the control of a state monopoly that would licence dedicated shops similar to those found in The Netherlands, or the US state of Colorado, where the drug was legalized early last year.
New possession laws would allow people to store 15 grams of marijuana at home and carry around up to five grams of the drug, figures which would be higher if the marijuana was being held for medical use.
However, smoking cannabis in public would be banned, as would smoking the drug while driving.
If approved, people found violating laws would likely face fines over jail sentences – with money from fines being used to fund other state-run anti-drug programmes.
The proposed legislation was drafted by the parliamentary intergroup, Cannabis Legale, and presented to parliament on July 15th.
Within two weeks it gained the support of over 25 percent of Italy's 946 MPs - mosty from the left and centre-left parties - but also from the centre-right and Forza Italia.
However, the far-right Northern League is firmly against the proposals, with party leader Matteo Salvini telling Ansa: “I personally am in favour of legalizing prostitution because, until proved otherwise, sex isn't bad for you, but cannabis is.”
Salvini aside, the widespread support for the draft bill seems surprising as recent legislation on drug use in Italy has often been severe.
The controversial Fini-Giovanardi law passed in 2006 removed the distinction between hard and soft drugs, meaning those found in possession of cannabis were sentenced as harshly as those found with heroin or cocaine.
But the law was repealed last year and political opinion surrounding cannabis legalization is quickly changing too.
But what is behind the change in the attitude among Italian MPs?
The shift in attitude towards legalization is largely motivated by the county's €2.17 trillion debt, which stands at 132 percent of Italy's GDP.
Politicians hope that by legalizing cannabis use they can collect money through taxation as well as divert resources that are currently being used to fight illegal cannabis use.
A recent study published by research group lavoce.info suggested that legal cannabis use could boost Italy's GDP by between 1.30 and 2.34 percent. But more than money, legalization is also seen as a useful step in Italy's fight against the mafia.
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The International Business Times reported that the estimated value of the marijuana market in Italy is currently €30 billion a year – the vast majority of which ends up lining the pockets of mafia drug cartels.
So is Italy about to legalize marijuana?
The draft bill will need to be approved by the Senate before passing to the house of deputies.
“It is a long process and lots of legislation never makes it past the first chamber," a spokesperson for the Italian parliament told The Local, adding that the speed at which a proposal could become law depends greatly on the support it received from the ruling party, and that ultimately "the government decides how long it takes."
So far at least, Italy's Prime Minister Matteo Renzi hasn't backed the proposals, meaning cannabis shops are unlikely to be appearing in Italy any time soon.