In a sharp policy shift, the Obama administration told federal attorneys not to prosecute patients who use marijuana for medical reasons or dispensaries in states where it has been legalised.
A Justice Department official said the formal guidelines were issued on Monday to reflect President Barack Obama's views. The Bush administration had said it could enforce the federal law against marijuana and that it trumped state laws.
The decision was praised by activists in California, the first state to legalise medical marijuana in 1996. But concern remains among some medical and law enforcement authorities about hundreds of clinics said to be selling pot under the protection of state law and without regard to health.
As a candidate during his presidential bid last year, Mr Obama said he intended to halt raids of medical marijuana facilities operating legally under state laws.
After he took office in January, a Drug Enforcement Administration raid on a dispensary in Lake Tahoe, California, raised questions about whether he would follow that pledge.
A White House spokesman repeated Mr Obama's view that "federal resources should not be used to circumvent state laws."
Stephen Gutwillig, California head of the Drug Policy Alliance, called the move a good first step.
"There is a fundamental need of patients to access marijuana as medicine right now," he said. "While it's great to see the Obama administration radically de-escalate the Bush and Clinton administrations' war on medical marijuana patients, more needs to be done to protect sick people and their caregivers."
About a dozen states have followed California in adopting medical marijuana laws.
Mr Gutwillig called on the Obama administration to support a proposed by Massachusetts Democrat Barney Frank that would give states the right to adopt their own medical marijuana laws.
But the head of a California drug rehabilitation clinic criticized Monday's move as irresponsible.
"The Justice Department is required to enforce all federal laws that are on the books," said Jerrod Menz, president of A Better Tomorrow Treatment Centre, said in a written statement.
"Imagine if the administration took a similar stance on immigration policy. Can you imagine the outrage?"
Attorney General Eric Holder said the Justice Department would continue to prosecute people who claim to comply with state or local law but were concealing illegal operations.
"It will not be a priority to use federal resources to prosecute patients with serious illnesses or their caregivers who are complying with state laws on medical marijuana," he said. "But we will not tolerate drug traffickers who hide behind claims of compliance with state law to mask activities that are clearly illegal."
In California, critics argue that lax regulation of the law has led to the mushrooming of dispensaries operating for profit, rather than for the public good.
Los Angeles County District Attorney Steve Cooley this month announced a crackdown on dispensaries that sell for profit and to people who do not qualify under law.
Mr Cooley said in a statement that he welcomed the new policy as "clarifying the federal government's role in handling illegal medical marijuana dispensaries" and said it was consistent with the position taken by his office.