It will introduce legislation in weeks to allow farms to grow hemp, the fibres and oil of which can be used in food and clothes, biofuels and skin-care products.
The state’s first legal hemp crop has been approved by police and will contain only tiny amounts of tetrahydrocannabinol, the psychoactive compound that some people smoke for recreation. It will be planted later this year, with farmers no longer needing their licences to be approved by the NSW Health Department.
"Industrial hemp fibre produced here in NSW could pave the way for the establishment of a new viable industry that creates and sells textiles, cloth and building products made from locally grown industrial hemp," said the Primary Industries Minister, Ian Macdonald, who will oversee the licences for the new crop.
"There is growing support from the agricultural sector for the development of such a new industry. This is a direct result of the environmentally friendly nature of industrial hemp and a perceived interest for hemp products in the market."
Trials in the state’s west had yielded 10 to 12 tonnes of dry stem per hectare, which was similar to yields reported from crops in other states and in Europe, Mr Macdonald said.
Some farming groups cautiously welcomed the move, although the National Farmers Federation said it was not aware of large numbers of farmers clamouring to grow hemp.
"If it meets all the safety and health requirements, then farmers should have the option of growing whatever crops that best fits their business," Ben Fargher, the federation’s chief executive officer, said. "There are farmers who look for innovative specialist crops, and this may fit that category."
By contrast, industrial hemp campaigners were on a high.
Klara Marosszeky, who holds a licence to grow industrial hemp under a trial program, said it was "fantastic" news.
"I’ve seen really big interest from all sorts of farmers in growing industrial hemp," she said. "The market couldn’t be very competitive when you couldn’t grow in NSW, but if that changes then you will see a new industry occur."