NSW could follow the lead of other states and territories by trialling free pill-testing sites, with Premier Chris Minns declining to rule it out.
Two men died after leaving a dance music festival at Sydney Showground on Saturday, spurring renewed calls for the rollout of an ACT-style drug-testing regime.
Police on Tuesday charged a Melbourne man with supplying the drug that killed one of the men, a 21-year-old who later died in hospital.
The charge was later withdrawn after the force conceded it "did not have the requisite authority by the DPP as required".
While the precise circumstances of the two deaths were still unclear, Mr Minns said it was a "terrible situation" for the families who had lost loved-ones.
The introduction of pill testing for festivals would not be a perfect solution and the use of drugs like MDMA, or ecstasy, in hot conditions where people were liable to become severely dehydrated was a "toxic and extremely dangerous mix", he said.
"Pill testing is not going to stop that happening and I need to make sure when decisions are made about festival safety - which is our primary concern - it's done with the full information on the table," he said.
The ACT introduced a fixed pill-testing site in July last year as part of a trial due to run until the end of 2024, while Queensland earlier this year paved the way for fixed and mobile drug-testing sites to be introduced.
NSW is due to hold a drugs summit next year to consider the use of pill-testing sites, among other harm-reduction measures.
Advocates for reform have called for immediate changes to prevent more deaths over the summer festival season.
On Monday, Jen Ross-King, whose teenage daughter Alex died after taking a cocktail of two MDMA capsules, alcohol and energy drinks before a festival in 2019, begged for a policy shift to ensure "no one else loses their child".
Mr Minns said NSW would learn from other jurisdictions and he was not ruling out introducing a similar pill-testing trial.
But investigations into previous drug-related festival deaths had shown the cause was not necessarily people receiving a "compromised substance" but rather a dangerously high dose of MDMA, he said.
"If I thought that (introducing pill testing) was a silver bullet that would solve deaths at music festivals, of course I would take it, but when it comes to toxicity, when it comes to MDMA and ecstasy use, there's no safe drug-taking at festivals or anywhere else."
Trong Ha Nguyen, 23, faced a Sydney court on Tuesday, accused of supplying the prohibited drug that caused the death of Edward Lui.
Mr Lui attended the Knockout Outdoor festival at Sydney Olympic Park before an ambulance was called to his city hotel. He died in hospital early on Sunday.
Nguyen was stopped at Sydney Airport on Monday afternoon and later charged with supplying a self-administered prohibited drug causing death.
The charge was later dropped after NSW Police admitted not obtaining authorisation from the Department of Prosecutions to make the indictment.
During an urgent rehearing on Tuesday afternoon, Nguyen, 23, was instead charged with two additional counts of supplying prohibited drug.
He was also accused of dealing with the proceeds of crime after being found with $13,500 cash.
Police said the original charge of supplying a prohibited drug causing death would be referred to the DPP.
Nguyen was refused bail to reappear on October 17.
