The NSW Cannabis Cautioning Scheme commenced in April 2000 and gave police the discretion to formally caution rather than charge adults detected for minor cannabis offences. Cautioned offenders are provided with information about the consequences of cannabis use and access to treatment and support services. The Scheme was amended in September 2001 with the introduction of a mandatory education session for persons cautioned on a second occasion. This evaluation examines the implementation and outcomes of the Scheme, particularly since it was amended in September 2001. The evaluation provides a statistical overview of the first three years of the Scheme and finds that, as a whole, it appears to be operating reasonably well. Police are using their discretion to issue cautions, rather than charge minor cannabis offenders, and, on the whole, rely on the guidelines in deciding whether to issue a caution. However the evaluation also identifies a number of operational concerns with the Scheme, including misunderstandings by many police about the operation of second cautions. The Scheme appears to be successful in diverting minor cannabis offenders from the court system, and also appears to have produced substantial time and cost efficiencies for both the police and the Local Courts; however it is not clear whether the Scheme has been successful in assisting offenders to consider the legal and health implications of their cannabis use. It has also produced a number of unintended outcomes, including a degree of net-widening. While the Scheme has successfully diverted many Indigenous persons from court, it has not been as effective for Indigenous persons compared with non-Indigenous persons. The evaluation concludes by considering possible options for improving the operation and outcomes of the Scheme.