NSW Scheme Update
The NSW Government has removed a proposed blanket exclusion of medicinal cannabis from its workers compensation regulations, meaning injured workers prescribed cannabinoid medication can continue to seek reimbursement, subject to the existing reasonable and necessary treatment test.
What changed in the final regulation
Draft reforms released earlier this year proposed excluding cannabinoid medication from treatments that employers and insurers were required to fund, grouping it alongside therapies such as crystal therapy, shamanic healing and aromatherapy. That exclusion did not appear in the final Workers Compensation Legislation Amendment Regulation 2026. The practical effect is that medicinal cannabis reverts to the existing framework, where a treating practitioner and insurer assess whether it is reasonable and necessary, the same test applied to every other treatment in the scheme.
Why was the exclusion dropped?
The Australian and New Zealand College of Cannabinoid Medicine opposed the proposed exclusion during consultation, arguing it conflicted with the regulation's own clinician-led assessment framework. The College also pointed to a growing body of clinical evidence and multiple NSW Personal Injury Commission decisions supporting reimbursement for prescribed cannabinoid treatments where reasonably necessary. SIRA has been contacted for comment on the final position.
Does this mean insurers must now fund medicinal cannabis?
No. NSW has not endorsed medicinal cannabis as an effective workers compensation treatment, and it has not directed insurers to fund it. The government has simply chosen not to prohibit it outright by regulation. The operative phrase in the framework remains "where it is considered a reasonable and necessary treatment," which has always been the legal test in the NSW scheme. Nothing about that test has changed.
What this means operationally for claims managers
Case managers and insurers still need to work through the same questions for every cannabinoid claim: is the treatment evidence based, is it clinically appropriate for this individual, have first-line therapies been adequately trialled, are there objective functional goals, do the benefits outweigh the risks, is ongoing treatment justified, and is the cost reasonable. Without a blanket exclusion to lean on, each decision now needs a clear and defensible clinical rationale rather than a regulatory shortcut.
Why independent clinical oversight matters more, not less
A blanket exclusion would have made decisions simple by removing judgement from the equation. Without one, every claim involving medicinal cannabis requires a defensible, evidence-based assessment covering diagnosis and indication, prior treatments trialled, concurrent medicines, opioid and sedative burden, impairment and driving risk, psychiatric history, treatment duration, evidence of functional improvement, adverse effects, and a clear deprescribing or exit strategy. These are precisely the elements an independent medication review is built to address, and the case for applying that scrutiny consistently is now stronger, not weaker.
Should medicinal cannabis be assessed like any other prescribed medicine?
Advocates for removing the exclusion argued medicinal cannabis should be treated like any other prescribed medicine rather than singled out. That principle holds in both directions. If it is to be treated like any other medicine, it should also face the same ongoing scrutiny applied to other high-risk medications such as long-term opioids, benzodiazepines or ketamine, where prescribing alone has never been sufficient justification for continued funding. The question is not whether a doctor prescribed it, but whether it remains reasonable, necessary and evidence based over time.
Key Takeaways
- NSW has removed the proposed blanket exclusion of medicinal cannabis from the final Workers Compensation Legislation Amendment Regulation 2026.
- The change does not endorse cannabis funding; it returns the decision to the existing reasonable and necessary treatment test.
- Claims managers face the same clinical questions as before, but without a regulatory shortcut to fall back on.
- Every cannabinoid claim now needs a defensible, individualised clinical assessment.
- This strengthens the case for independent pharmacist review as the governance layer supporting funding decisions.
Frequently Asked Questions
Has NSW approved medicinal cannabis for workers compensation claims?
No. NSW has not endorsed medicinal cannabis as an effective treatment or directed insurers to fund it. The government has simply removed a proposed blanket exclusion, leaving medicinal cannabis subject to the same reasonable and necessary test that applies to all other treatments.
What was the proposed exclusion that NSW removed?
Draft regulations released for consultation had proposed excluding cannabinoid medication from treatments employers and insurers were required to fund, grouping it alongside therapies such as crystal therapy and aromatherapy. This exclusion was not included in the final Workers Compensation Legislation Amendment Regulation 2026.
Does this change how claims managers should assess medicinal cannabis claims?
The legal test has not changed. Claims managers must still assess whether the treatment is evidence based, clinically appropriate, and reasonable and necessary. Without a blanket rule to fall back on, each case now requires a more defensible, individualised clinical assessment.
Why does this increase the need for independent medication review?
With no exclusion to simplify decisions, insurers must justify funding decisions on a case by case basis. An independent pharmacist review can assess diagnosis, prior treatments, concurrent medicines, impairment risk and functional outcomes, providing the defensible evidence base claims managers need.
Primary source: NSW Workers Compensation Legislation Amendment Regulation 2026; State Insurance Regulatory Authority (SIRA)
