A secret Victorian laboratory is successfully growing medicinal cannabis ahead of the drug being made legally available in 2017.
Victoria will be the first state to roll out medicinal cannabis early next year with hundreds of eligible children to access the product.
The cannabis is being grown in a clandestine indoor laboratory somewhere in Victoria.
"It's very secure, there are very few people who know the location, and I'm not going to be drawn on that at all," Agriculture Minister Jaala Pulford told reporters on Tuesday.
Ms Pulford said the seeds had germinated and Victoria was growing three crops with different medicinal properties.
The first roll-out will be for children with severe epilepsy - but future versions of the drug will be used to treat MS, HIV/AIDS and cancer.
Ms Pulford said Victoria could supply other states if it developed a large enough supply.
Premier Daniel Andrews says $11.8 million will be available through a hardship fund for families who might struggle with the cost.
"We want to keep the cost down, and we also know and understand that many families face hardship, so a hardship fund will help them," he said.
Mr Andrews believes cannabis could eventually be listed on the federal Pharmaceutical Benefits Scheme (PBS) which provides subsidised drugs.
"If you can demonstrate you've grown, manufactured and dispensed a safe product, the efficacy of which is clear, the therapeutic benefits of which are clear, then there is all sorts of opportunities for us to speak to the Commonwealth about the PBS," he said.
As part of an overall $28.5 million package, Victoria will establish the Office of Medicinal Cannabis, which will be responsible for clinical and manufacturing oversight.
It will also work with doctors and pharmacists to help them understand their role in prescribing the drug.
