Kava users have welcomed the permanent lifting of a ban on the drink at the National Multicultural Festival, but have called for further exemptions for other cultural events.
Kava is treated as a prescription-only medicine in the ACT, and traditional forms of the drink are not legally permitted.
That meant the drink, an important part of many Pacific island cultures, could not be consumed at the National Multicultural Festival, something that had angered local communities.
The ACT government bowed to community pressure last year and overturned the ban, allowing a trial of kava for Pacific islanders, but only at the 2012 National Multicultural Festival.
The ACT government announced on Wednesday that the trial was a success and would be continued permanently.
Australian Kava Movement spokesman Siua Tofua'ipangai welcomed the announcement, saying it had come after a long struggle by kava users.
But he said bans on kava should be exempted at other significant events as well.
"It's good after our struggle and discussion with them back and forth since 2011," Dr Tofua'ipangai said.
"We are happy with this decision but we would be more happy if they give us exemption for our cultural and religious kava activities."
Dr Tofua'ipangai said federal laws restricting the importation of kava to two kilograms should also be changed.
ACT Chief Health Officer Paul Kelly said the drink could now be consumed for "cultural purposes" only, within the confines of the National Multicultural Festival.
"The cultural use of traditional kava preparations poses a low health risk and clear limits have been placed on the exemption," Dr Kelly said.
"Kava may only be legally prepared, possessed or consumed in accordance with the customs of the Pacific islands, such as serving from a traditional kava bowl as part of a traditional kava ceremony or kava circle."