"I support a clinicial trial because there's certain anecdotal evidence that it does provide relief to people, particularly people who are in the final stages of life," Mr Piccoli said.

His comment came on the back of an announcement the state government will establish a medical trial to further explore the role cannabis can play in providing relief for patients.

However, Mr Piccoli's stance on legalising marijuana is clear.

"Marijuana is a very, very dangerous drug and no one should misunderstand that," he said.

Mr Piccoli said research had shown teenagers who smoked marijuana were seven times more likely to commit suicide.

"It's not a recreational drug and I find it offensive when people suggest it is," he said.

"Often people are lulled into thinking it's a harmless recreational drug, but it has the potential to lead to psychosis."

Mr Piccoli said he would not support a call for Griffith farmers to grow cannabis for a medical trial.

"I would be arguing stongly against any suggestion that Griffith would be involved in something like that," he said.

Mr Piccoli said the clinicial trials proposed were on a small scale.

Premier Mike Baird said the NSW government had formed a working group to set up the clinical trial, set to report back by the end of 2014.

"There are concerns around the issues of supply and distribution and these will be covered in the trial," Mr Baird said.

"I hope the trial will bring some clarity to this area and enhance our understanding of the medical use of cannabis."

Mr Baird also announced NSW police guidelines that would allow police to exercise their discretion not to charge terminally ill adults who use cannabis to alleviate their symptoms.

The guidelines will be similar to the existing arrangements under the Cannabis Cautioning Scheme, which provide police with a formal discretion to caution but not charge adult offenders detected for minor cannabis offences involving personal use.

"By formalising existing NSW police discretion when dealing with a terminally ill patient using cannabis, and their carers, we hope to lighten the burden of stress for sufferers and their carers," Mr Baird said.

"We want the terminally ill to have greater peace of mind. We do not want carers having to watch their loved ones suffer when their stress could be alleviated."

Mr Baird said the government would use the reforms to remind the public that cannabis remains an illegal and dangerous drug.

"Medical cannabis is not a black and white issue but the NSW government's stance on illegal drug use is," he said.

"These reforms are about compassionate care. Recreational use of drugs is illegal and will not be tolerated."

A number of international jurisdictions have approved the use of crude cannabis for medical purposes, including 23 US states, the Netherlands, Canada and Israel.