JERUSALEM — Israel, which has been at the forefront of research into medical marijuana and the drug’s commercialization, took a major step on Sunday toward officially decriminalizing its recreational use.

At a time when many American states and European countries are loosening marijuana laws, the Israeli cabinet approved a plan that would impose fines rather than criminal penalties on those caught using the drug in public.

Growing and selling marijuana, which is widely used here recreationally and medicinally, would remain illegal.

“On the one hand, we are opening ourselves up to the future,” Prime Minister Benjamin Netanyahu told the cabinet. “On the other hand, we understand the dangers and will try to balance the two.”

The decision still requires the approval of Israel’s Parliament, the Knesset.

Until the decision on Sunday, people charged with marijuana use could face heavy fines and even incarceration, though the official policy in recent years effectively amounted to decriminalization. There were fewer than 200 arrests in 2015.

About 25,000 Israelis, in a population of 8.5 million, hold permits to use medical marijuana to ease symptoms of cancer, epilepsy and other diseases, but that number is expected to grow rapidly.

Under the new rules, people caught using marijuana publicly a first time would face a fine of about $270 rather than criminal charges. Fines would rise with repeated offenses, with criminal charges filed only after a fourth offense.

The new rules were drafted, after much debate, by Gilad Erdan, the public security minister. “The government’s approval is an important step on the way to implement the new policy, which will emphasize public information and treatment instead of criminal enforcement,” he said after the cabinet’s decision on Sunday.

Israel has been active for decades in studying the use of marijuana for medical purposes, and the government and private industry have been working to turn it into a major business, including for export.

ICan: Israel-Cannabis, a venture fund and technology incubator for start-ups in the medical marijuana business, praised the decision.

“This step, although not legitimizing use, is due to reduce the negative perception of the plant as ‘immoral’ or ‘criminal,’ increasing openness to its outstanding medicinal and wellness properties,” Saul Kaye, a pharmacist and the fund’s chief executive, said in a statement. “The decision will significantly increase entrepreneurship and investment into cannabis in Israel.”

While marijuana use has long been overlooked by the authorities in Israel, the police have continued enforcement against growers and dealers. A campaign is underway for the law to distinguish between those growing small amounts, particularly for medical purposes, and those growing it commercially. The cabinet decision on Sunday did not address that issue.