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Sacha Lord founder of Parklife, says the Home Office informed him that a special licence would be needed for this year's Parklife 48 hours before the start of the event, but the application process takes three months.
The requirements of the licence would have made it hard to carry out tests in a portable cabin - which is usually where festival testing is done - according to Sacha.
The BBC reported that he says the festival previously worked with police and the local council to allow drug testing to go ahead, and accused the government of doing a "u-turn" on the issue.
Sacha, who's also Manchester's nightlife economy adviser to Labour mayor Andy Burnham, believes that this will affect all UK festivals this year. He said:
"As it stands now, there is no testing this summer. It's Glastonbury this weekend, the biggest festival of the year."
"I am really, really concerned about the safety of many, many customers."
His worries were backed up by the Night Time Industries Association (NTIA) - which represents businesses like nightclubs, bars and festivals.
CEO Michael Kill called for clarity and said the apparent "unexplained u-turn" could put lives at risk and have "considerable ramifications for the current festival season".
The Home Office says its position hasn't changed and testing has always required a licence.
BBC Newsbeat asked the Home Office to respond to Sacha Lord's suggestion it had u-turned on back-of-house testing.
"Our position hasn't changed. Drug testing providers must have a licence to test for controlled drugs, including at festivals," a spokesperson said.
"We have consistently made this condition clear, and law enforcement have always had a responsibility to uphold this legal requirement.
"We have not received any applications for drug testing at the major festivals this summer. We continue to keep an open dialogue with any potential applicants."
But Sacha says it's "ridiculous" to claim that nothing has changed, and the industry is considering taking legal action against the government.