From March 1, NSW festivals will be classed from low to high-risk categories with the requirements of those deemed high more onerous and expensive. The regulation is still being written, though will be policed by the Independent Liquor and Gaming Authority despite some events not serving alcohol.

More than 67,000 people have already signed a petition against it.

Mr Scully said everyone wants to see safe and well run events but the changes were being rushed through by the Berejiklian government without proper research or consultation with the industry.

Read More: Yours and Owls will be protesting against new regulations in Sydney's Hyde Park

He said if festivals had to cease because of expensive "safety measures" it would impact not only the organisers and those employed by them but also the local economy and businesses who benefit from events. Local musicians also looking for an avenue to develop their craft would also be significantly impacted, he said.

"We are hearing so many different versions of what the new regulations may or may not mean," Mr Scully said.

"It seems the government is blundering through this with no clear view in mind about what it wants to get to. But also they don't appear to have spoken to anyone whose involved in [organising festivals]."

Last year the Yours and Owls festival boosted the Illawarra economy by around $4.3 million while the Corona Sunsets a further $1.9 million, according to Destination Wollongong.

The incoming regulations are a reaction to several drug-related deaths at music festivals in recent months.

Pill-testing may be a solution, the Wollongong MP said, though a summit on drugs may provide more answers on how to tackle the problem.

Read More: ‘Unfair’ - Illawarra Folk Fest in same class as dance music festivals

The NSW Government released a "message for music festival operators" on Wednesday, stating their target was events with a "poor track record and/or heightened risk".

"If you are a good operator with a good track record, the new licensing scheme will not unduly impact you," the statement said.

"We appreciate there has been some confusion and misunderstanding about the way the new scheme will operate, particularly in relation to the initial self-assessment matrix that was circulated to some festival organisers.

"We have sought to clarify how that matrix should be used, and are currently reviewing this tool.

"With the new regime commencing on 1 March 2019, we will continue to consult with industry and are available to meet one-on-one with music festival organisers for detailed discussions, to ensure we get the balance right between great entertainment and festival safety."

You can read the full NSW Government statement HERE.

A public rally is being held at Hyde Park in Sydney on Thursday February 21 at 6pm with festival organisers, artists, touring agents, promoters and music fans to be in attendance.