A renewed debate in New South Wales over drug-driving laws is prompting the insurance industry to review how claims and liability may be affected if reforms proceed. Independent Sydney MP Alex Greenwich is set to introduce a motion in Parliament that will allow drivers prescribed medicinal cannabis to present a legal defence if they return a positive roadside test for THC but are not impaired at the time.
The proposal, which is also supported by Legalise Cannabis MLC Jeremy Buckingham, would enable drivers to demonstrate lawful medical use, the absence of other illicit substances, and no signs of impairment when stopped by police. Greenwich, who has publicly shared his own use of medicinal cannabis for post-traumatic stress disorder, said: “Medicinal cannabis is a useful, prescribed medicine … we are just seeking for medicinal cannabis to be treated fairly at the roadside.”
Under existing law in NSW, any detectable level of THC in a driver’s system is considered a drug-driving offence, regardless of whether the person is impaired. This presence-based approach means that people using prescribed cannabis can test positive for days or weeks after use, even if they are not functionally impaired.
Other states, such as Victoria and Tasmania, have adopted partial reforms that allow courts or police to consider prescription status and impairment, resulting in a patchwork of legal standards across Australia. NSW, however, continues to enforce a zero-tolerance policy.
Health Minister Ryan Park said the government awaits recommendations from an expert working group. Police Minister Yasmin Catley has emphasised that any changes must not undermine road safety, especially in light of increasing road fatalities. “We need to make sure we get it right, and we must do that because lives could be at risk. Our road toll is increasing, and we want to make sure we put in place a process or a policy that will address those people who we know use medicinal cannabis to assist them,” Catley said, as reported by ABC.
If NSW moves to an impairment-based defence, the insurance sector will need to adapt its approach to motor, compulsory third party (CTP), and commercial insurance lines. Under the current regime, claims assessment is relatively straightforward: a positive THC test is a clear breach. However, if impairment must be proven, insurers may face more contested claims, requiring additional evidence such as medical records, timing of dosage, and witness statements.
Policy exclusions for drug use may also need to be revised. Many policies currently exclude claims for “driving under the influence,” a term that becomes less clear if impairment must be demonstrated rather than simply detected. Underwriting practices may also shift, as more drivers with prescribed THC remain legally able to drive. Insurers may need to distinguish between CBD-only products, low-THC medicinal products, and higher-dose formulations. Telematics and other data sources could become more important in assessing actual impairment.
The issue is also relevant for workers’ compensation and life insurance, as more Australians use THC for chronic pain or mental health conditions. Underwriters will need to evaluate whether stable medicinal use affects long-term injury or claim risk.
Scientific studies have shown that acute THC consumption can impair driving by slowing reaction times and affecting lane-keeping, with effects sometimes similar to low-range drink-driving. However, THC can remain detectable in the body long after impairment has passed, especially among regular users. Blood and saliva concentrations do not consistently correlate with real-world driving performance, and some drivers with measurable THC perform no worse than those given a placebo several hours after dosing.
Epidemiological studies have produced mixed results regarding crash risk at low THC levels, with some finding little or no increase in crash responsibility and others reporting wide variation.
Earlier this year, NSW Greens MLC Cate Faehrmann introduced the Road Transport Amendment (Medicinal Cannabis-Exemptions from Offences) Bill 2025, which seeks to exempt medical cannabis patients from driving offences where THC is present but no impairment is detected.
In September, Greenwich and other independent MPs, along with Buckingham, sent a letter to NSW Premier Chris Minns and Minister for Regional Transport and Roads Jenny Atchison, urging an exemption for patients with valid prescriptions who are not impaired.
Greenwich argued that medical cannabis ought to be regarded in the same way as other prescription medicines – patients should not face penalties for adhering to their healthcare provider’s recommendations while managing their health needs. “Under our proposed model, police will still be able to charge anyone driving while impaired. But if a patient is not impaired and THC is only lingering in their system, they shouldn’t be dragged into court or lose their license,” he said.
As NSW considers a potential hybrid model – maintaining presence testing but allowing a defence for unimpaired medicinal users – the insurance sector is preparing for increased complexity in claims assessment and underwriting. The challenge for lawmakers, regulators, and insurers will be to design a system that balances road safety with the rights of legitimate medicinal cannabis patients.
