The push to legalise cannabis will be examined in a new inquiry, with regional hearings to be held this year including in Newcastle.
A NSW Upper House committee will examine cannabis regulation, including the effects of the laws in regional areas and disadvantaged communities.
Committee chair Jeremy Buckingham said "this inquiry is the first of its kind for NSW and long overdue".
"This inquiry is a recognition by the NSW Parliament that prohibition on cannabis hasn't worked," Mr Buckingham said.
"We intend to have regional hearings, with one in Newcastle in the next two to three months."
Mr Buckingham, a Legalise Cannabis Party NSW MP, said cannabis was "a working class drug".
"Working class and disadvantaged communities are more adversely impacted by the enforcement of cannabis laws," he said.
NSW crime statistics show 803 incidents of cannabis use or possession in the Hunter - among 14,644 across NSW - in the year to December 2023.
Mr Buckingham said cannabis laws "unnecessarily criminalise people".
Mayfield's Kerry-Ann Taylor had a cannabis charge dismissed from court last year, after she said the plant helped her treat pain.
Police had charged her over possession of one cannabis plant, which they found in her home after she contacted them about a domestic violence incident.
"They shouldn't be picking on people who are trying to heal naturally," Mrs Taylor, 62, said.
She uses cannabis to treat pain from degenerative discs in her back, neuropathy, sciatica and COPD.
"I also use it for mental wellbeing. It helps my PTSD, anxiety and depression."
The Australian Medical Association said at a Senate inquiry last month that cannabis caused "reduced brain function, anxiety, panic attacks, paranoia and memory loss".
It said cannabis users were more likely to develop psychosis or schizophrenia.
Mr Buckingham said legalising the drug would help more people get access to health treatment for cannabis.
He said it would also reduce "the incredible cost that taxpayers bear in terms of policing, the criminal justice system and incarceration".
He added that cannabis laws were more likely to affect "areas like the Hunter and Newcastle than the north shore of Sydney".
"There is discrimination written into the enforcement of the laws."
The rate of cannabis offences per 100,000 people in the Hunter last year include Muswellbrook [322], Newcastle [157], Singleton [130], Port Stephens [129], Maitland [128], and Cessnock [109].
This was much higher than Sydney areas such as Northern Beaches [85], Lane Cove [61], Hornsby [68], Ryde [52], Mosman [49] and Kur-ing-gai [35].
More than 24,000 people in the Hunter voted for the Legalise Cannabis Party at the state election in March, with the largest proportion of votes coming from the mining belt.
The Legalise Cannabis Party has a bill before the NSW Parliament to "make it lawful for an adult to possess small quantities of cannabis for personal use".
"Our policy is that adults should be able to grow six plants and gift cannabis to friends," Mr Buckingham said.
Under the party's policy, under-18s would continue to be outlawed from using cannabis.
"Young people do use cannabis. We support the cannabis cautioning scheme," he said.
"We don't want to see young people criminalised, but receive advice on the impacts cannabis can have on cognitive development [and other health factors]."
A federal bill to legalise recreational cannabis would also allow six cannabis plants per household.
The Australian Medical Association opposed the plan, saying "decriminalisation would be a significant step forward, but we do not at this point support any form of legalisation".
