The Dragon Dreaming Festival, held beside Lake Burrinjuck in Wee Jasper, has been postponed this year amid "political pressures".
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Organisers recently announced the news on the festival's website and Facebook page: "Working as a not-for-profit collective takes a lot of dedication and commitment, and we have struggled of late. It has impacted on us both mentally and physically.
"The intensity of delivering this work, along with the current political pressures from the NSW Government, have impacted on and fractured us to a point where we need to take a step back and let the Dragon rest."
Refunds are offered to those who bought 2019 tickets.
The NSW Government introduced a music festival licence in March, required for festivals that have had past deaths or been flagged by authorities.
A drug death inquest into festivals was also launched. The findings are expected to be released soon.
In 2015, a 23-year-old Sydney woman died from drug-related causes at Dragon Dreaming; and drug detection rates were higher than ever before last year.
Emergency services also said they wouldn't support the festival again in its present location after last year.
It takes an hour to reach the nearest hospital from Wee Jasper and emergency vehicles must take long, potentially treacherous roads. On site, emergency services rely on a single-lane track to enter and exit, enclosed by hills and heavy shrub that pose a bush fire threat.
But the lifestyle festival has been attracting thousands of people from across the country since 2007 and is well-known for its strong community, creativity and beautiful location near the lake.
More than 500 festival-goers took to the festival's Facebook post to express their sadness and understanding that the event had been postponed.
"The first Dragon Dreaming introduced me to doofing and changed my life forever. Thank you for all your support through the years and providing us the opportunity to play and grow," wrote one festival-goer.
"Dragon Dreaming, you have grown so beautifully in the last ten years and definitely found your groove and magical home. It has always held me in awe of how such a great energy and space can be created," wrote another.
But locals have previously been divided on what the festival offers to the region.
Helen Cathles of 'Cooradigbee', where Dragon Dreaming is held, said she was disappointed to hear the news.
"The festival offers a lot to the community, important cultural and economic benefits," she said. "A lot of the organisers hold important jobs in Canberra. They make sure their patrons have the best experience in a safe environment."
Festival-goers provide an annual financial boost to local petrol stations, supermarkets, cafes and pharmacies. The festival also gives collected recyclables to Wee Jasper Public School to raise money through the Return and Earn scheme.
A food stall run inside the festival has also contributed more than $53,000 in six years to Wee Jasper, including its community hall.
On the other hand, the community has worn the consequences of drugs taken at the festival.
More than 50 drug-related charges, including drug-driving to and from the festival, have been heard in Yass Local Court since last November.
Organisers are hoping to get the necessary approvals to awake the dragon in 2020.
