Arguments for keeping cannabis illegal are smoke and mirrors with the legal system under strain from small personal possession offences that don't align with health benefits, one lawyer argues.

Parliamentarians got into the weeds of Greens senator David Shoebridge's bill on Wednesday, which would allow for cannabis possession for personal use as well as set up a national agency to register strains and regulate the growing of plants.

Young people, particularly First Nations people, were over-policed as were poorer suburbs, Greg Barns SC from the Australian Lawyers Alliance said.

Most cannabis charges before the courts were for small quantities for personal use, which cost the system tens of millions of dollars a year, Mr Barns told an inquiry into the bill on Wednesday.

Just because people don't go to jail "doesn't mean there's not a punitive effect" as it still leads to legal costs and people losing their jobs or not being able to secure employment, he said.

"There is just zero evidence ... a law enforcement approach has any deterrent effect," he said, citing figures that more than a third of Australians had used the plant and one in eight had in the last year.

"I have not met a magistrate or judge, and I've met many over the years, who thinks that the current system whereby... alcohol is legal but cannabis is not legal ... makes any sense."

Liberal senator Paul Scarr questioned whether there could be an increase in mental health issues, particularly in young people, from side effects including anxiety, panic attacks, psychosis or long-term memory loss.

Inadequate mental health services could be put under more strain if there was an increase in use, he contended.

But the answer wasn't criminalisation, Mr Barns said.

"People don't present to mental health services, they don't present to hospitals and one of the reasons they don't is because they are scared," he said.

"To be blunt, it's cruel."

It also caused a lot less harm than alcohol, he added.

Economics Professor Jenny Williams supported the legalisation to minimise health, social, cultural and economic harms of use.

Regulations on weed strength and cutting harmful substances added by illegal growers could also reduce associated health risks, she said.

She also called for low taxes on regulated marijuana to undercut the black market and measures to reduce youth use.

The Australian Medical Association argued legalising cannabis across the board could lead to people self-medicating without presenting to medical professionals, leaving people "unsure of the impact on them individually".

Legalisation would lead to young people seeing cannabis "as a safe and normal thing to do, as opposed to still being a significant psychoactive compound," Dr Michael Bonning said.

But it was ironic the association supported its medicinal use prescribed by their members but raised health impacts of a broader market, Mr Barns said.

The Department of Home Affairs raised multiple concerns with the cannabis proposal, including the potential for the bill to override customs laws.

The inquiry will report by May 31.