NSW Attorney-General Michael Daley said the changes would reduce people attending court for minor offences.
“We want to see people receive the health supports they need rather than see them caught up in the criminal justice system,” he said.
“This approach to personal drug use and possession will also reduce pressures on the Local Court system and free up its resources to deal with more serious issues.”
The changes were recommended by a commission of inquiry into ice usage over three years ago but had not been legislated.
If implemented, it would bring NSW in line with other Australian states and territories.
The proposal comes after the government dismissed called for a pill-testing trial after two young men died after taking drugs at a music festival in Sydney last week.
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