Wait, what about Portugal? Didn't they also legalise it?
Production and sale are still criminalised in Portugal, and possession is still considered illegal, but with no penalties to first time offenders and considered a health issue for repeated offenders.
The major difference - Decriminalisation complies with their international obligations as per signed international treaties, Legalisation does not.
State of Luxembourg thinks they will get away with that, and I would bet this has been thoroughly vetted with their international partners.