Instead, magistrates have been given the power to exercise sentencing discretion for drivers who test positive for the cannabinoid chemical tetrahydrocannabinol (THC), if they hold a valid prescription for medicinal cannabis and are unimpaired while driving.
It's a boon for 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.
The change comes after Legalise Cannabis Victoria secured an amendment in the Upper House on Thursday night.
Legalise Cannabis MP David Ettershank congratulated the government for supporting the change, 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.
He said the change meant a user who has taken their medication as directed, can appear before a magistrate, explain their circumstance and the magistrate can allow them to keep their licence.
Despite the change, it's still an offence to drive with THC in your system - the only change is that magistrates have been given discretionary power.
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