Terminally ill patients in NSW will not be granted a legal exemption to use cannabis to ease pain, with the state government rejecting the proposal.
Last November the NSW government established a parliamentary inquiry into the use of cannabis for medical purposes.
The bipartisan committee recommended AIDS and terminally ill patients be allowed to possess and use up to 15 grams of dry cannabis.
The committee also recommended a register of authorised cannabis patients to protect medicinal users against prosecution.
However the NSW government has knocked back the proposal.
The government believes the potency and safety of the products, which includes cannabis in plant, resin or liquid form, cannot be guaranteed.
Advocacy group Cancer Voices Australia, which urged the committee to recommend legalising medicinal cannabis, said the response was disappointing.
"Some cancer patients at the end of their life are suffering a lot of pain and this is taking an avenue of pain relief away from them now," chair Kathy Smith told AAP.
"I don't imagine it will be taken very quietly, either."
But in a concession, the NSW government will write to the federal health minister to support more patients gaining access to approved cannabis pharmacotherapies.
Ms Smith, a breast cancer survivor with arthritis, says it is a small positive but appears to be the NSW government passing the buck.
The government also stated in its response to the committee there was a risk of illegal diversion of medically authorised cannabis to recreational users.
But Greens MP John Kaye, who was on the committee, said that was "cannabis hysteria at its worse".
"It's absurd to argue that someone dying of cancer should be denied access to a little bit of pain relief because it's the same substance some people use illegally," Mr Kaye said.
Pain Australia chief executive officer Lesley Brydon said while the government's decision would affect a small number of people, they would be "bitterly disappointed".
"It will only affect a small number of people but these people are people we should care about and we should be doing everything we possible can," she told AAP.
"They were hopeful we were seeing a more enlightened approach."
Ms Brydon said Pain Australia was not advocating for people to grow and self-administer their own medicinal cannabis.
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