Speaking at a news conference in Tel Aviv
, Erdan said the plan would usher in a "shift to decriminalization with responsibility."
Some European countries and US states already have embraced this approach, with a few even going as far as to legalize marijuana for recreational use.
The proposal comes on the heels of a Justice Ministry recommendation that marijuana use not be prosecuted criminally, but instead fined or punished by administrative sanctions.
The new policy would apply to users carrying up to 15 grams, roughly a half-ounce. If passed, first-time offenders would face a fine of 1000 shekels (about $265), with the offense not appearing on their criminal record. Those caught for a second time would see the fine double. If caught a third time, the punishment would be at the discretion of the police. On the fourth offense, the suspect could face criminal prosecution.
Minors caught for the first time with marijuana would be criminally prosecuted only if they refused to take part in a treatment program. The second offense would be closed with a special settlement. The third time could trigger criminal proceedings.
"We want to educate our youth that using drugs is damaging," Erdan said. "I have always taken this topic seriously and I would not make irresponsible decisions about it without understanding the policy's consequence."
Israel's cabinet must approve the policy shift before it can be enacted.
Global leader in medical marijuana research
Medical marijuana is already a booming industry
in Israel with the backing of the Ministry of Health. Statistics from 2015 show 23,000 people being treated with cannabis in the country.
Judaism permits ingestion of anything natural that helps people stay healthy. Religious conservatives have even accepted medical cannabis.
iCAN, a cannabis technology incubator in Israel, welcomed the announcement.
"This change will significantly increase entrepreneurship and investment into cannabis in Israel as the old stigma of criminal cannabis disappears," iCAN co-founder Saul Kaye said in a statement.
Israel's political wind has been blowing toward decriminalization for some time. Sharren Haskel, a strong advocate of decriminalization and an MK from the Likud Party, praised the decision in a statement
"We won! The continuous struggle that we lead brought results," Haskel said. "I will continue to keep fighting until the change of law is implemented and justice is achieved (for) a million Israeli citizens."
While officials relax laws regarding marijuana, the nation's crackdown on cigarettes continues to expand.
Israel's Health Ministry recently announced stricter rules, including a complete ban on cigarette advertising, requiring cigarette packaging to include illustrated warnings, and expanding the ban on smoking in public places.