Peña Nieto's decision to send landmark legislation to Congress was the result of a national debate on cannabis laws and comes amid a growing debate about drug policy across the Americas.
"Society and the scientific community have spoken. There was a clear consensus that there are limits to the current focus in which Mexico has dealt with the marijuana issue," Peña Nieto said.
The bill sent to Congress would allow the use of medications made with marijuana or its active ingredients, and it would also increase the amount of the drug that can legally be possessed for personal consumption from 5 to 28 grams (one ounce).
But his proposal falls short of a full legalization of marijuana as demanded by activists who won a landmark case last year at the Supreme Court, which authorized 4 individuals to grow and smoke pot.
Peña Nieto said his legislation aims to fix "two types of injustices": The inability of patients to access marijuana-based medicine and the "disproportional" prison sentences against people arrested on pot-related charges.
"Mexicans know very well the scope and limits of the prohibitionist and punitive scheme, and of the so-called war on drugs, which has prevailed for over 40 years at the international level," he said in a speech.
Mexico, a major supplier and transport hub for drug trafficking to the United States, has endured a horrific explosion in cartel violence over the past decade.
More than 100,000 people have been killed or disappeared since Mexican authorities deployed troops to combat drug trafficking in 2006.
"Fortunately, a new global consensus is gradually emerging in favor of a reform of the international drug regime," he said
"With this reform proposal, we take firm steps toward a new paradigm that looks at drugs from the perspective of prevention, health and human rights."
The medical marijuana initiative would allow imports of medicine containing marijuana and tetrahydrocannabinol (THC), the plant's main psychoactive ingredient.
Such medicine would be subject to strict health controls by the authorities, just as any other legal drug. (READ: When medicines fail, marijuana is moms' last hope)
The increase in the amount of pot that a person can possess for personal use would be "in line with international standards," Peña Nieto said.
'It changed our lives'
Mexico’s move follows policy shifts across the region.
Canada’s health minister said Thursday that his government would introduce legislation next year to legalize marijuana, while Uruguay in 2013 became the first country in the world to fully legalize marijuana.
In December, the president of Colombia, another country beset by drug violence, signed a decree legalizing medical marijuana.
In the United States – the biggest consumer of drugs from Mexico – 23 states have legalized medical marijuana use while 4 states plus the US capital city have legalized its recreational use.
Peña Nieto decided to hold a series of 5 public forums on the country's tough marijuana laws after last year's Supreme Court decision.
The ruling was limited in scope, giving permission to just 4 individuals, but activists hopes that either the government would loosen its laws or that the court would issue other similar rulings to set a legal precedent.
Juan Francisco Torres, an attorney who was of the foursome that took its case to the top court, said the president's proposal "falls short."
"They increase the number of grams but there's still a problem in the background, there's nothing that says that supply is legal," he told Milenio television.
But Peña Nieto's initiative was welcomed by another pioneer in Mexico's marijuana debate, Raul Elizalde, who won a lower court battle to get authorization to give his young epileptic daughter medical cannabis last year.
Elizalde, who spoke at Peña Nieto's event, said the quality of life of his daughter, Grace, had improved since she began taking cannabidiol (CBD), a therapeutic oil.
"My daughter is a different person. She has improved with the treatment. It has changed our lives," he said. – Sofia Miselem, AFP/Rappler.com