He made his comments during a somewhat timely visit to Mexico, as legislators in Mexico City plan draft legislation that would decriminalise use of the drug.
Speaking at an event hosted by former president Vicente Fox, the Tibetan leader said "the exception" for smoking marijuana would be if it has medicinal values, AFP reported.
Wearing a churro, the Dalai Lama revealed he supports the use of marijuana for medicinal purposes
"But otherwise if it's just an issue of somebody (using the drug to have) a crazy mind, that's not good," he added, when asked about his position on legalisation during the event on Tuesday in the central state of Guanajuato.
While Mexican President Enrique Peña Nieto has taken a stand against the easing of Mexico's drug policies, lawmakers in Mexico are pushing to make it legal to carry up to 30 grams of marijuana.
TOP STORIES TODAY
The movement to decriminalise marijuana in the Mexican capital has intensified in recent months, following a large pro-marijuana march in May and a three-day forum on drug policy held in September.
In addition to decriminalization, some lawmakers are proposing that Mexico City establish "cannabis clubs," where users can grow and smoke marijuana together.