Magistrates have instead been given discretion in sentencing drivers who test positive for tetrahydrocannabinol (THC) if they hold a valid prescription for medicinal cannabis and were unimpaired while driving.
The change helps those who use the drug to manage cancer treatment, multiple sclerosis and other medical conditions.
Cannabis has been a prescription drug in Australia since 2016.
It comes after the Legalise Cannabis Victoria party secured an amendment in the state parliament's upper house on Thursday night.
Legalise Cannabis MP David Ettershank congratulated the government for supporting the reform, which comes into effect on March 1.
"Roadside saliva tests can detect tiny traces of THC more than a week after consumption, but these minuscule remnants have negligible impact on driving ability," Mr Ettershank said on Friday.
"Under the old law the mere presence of this remnant chemical meant a compulsory loss of licence for six months and a steep fine, but the driver had only taken their medicine as directed by their doctor."
It means a user who took their medication as directed can appear before a magistrate, explain their circumstance and be allowed to keep their licence, he said.
A Victorian government spokesperson described the amendment as an "interim measure" to give the courts discretion while further work proceeds.
"We're working with researchers from Swinburne University to see whether people can safely drive with any level of medicinal cannabis," they said.
Despite the amendment, it's still an offence to drive with THC in your system. The only change is that magistrates have been given discretionary power.
It means Victoria will join Tasmania as being the only Australian states that allow an unimpaired driver prescribed medicinal cannabis to drive.
With AAP.
Image: Getty