The annual Taste of Tasmania in Hobart is set to be scrapped this year.
It began in 1988 and is regarded as Australia's biggest and longest running food and wine festival.
The Hobart City Council will vote on Monday night whether to accept a recommendation from officers to scrap this year's Taste because of COVID-19 and the financial implications for council.
In the officer's report it says between 30,000 to 50,000 people attend the Taste each day.
"It is difficult to forecast how an event the scale of the Taste could practically work in an environment where social distancing is likely to be mandated," the report said.
"While not impossible to develop a process for a large event like the Taste, it is the firm recommendation of officers there are too many unknowns at this stage to be able to effectively plan for the Taste
The report said that due to uncertainty about whether it could be held, no planning had begun.
"... it is difficult to justify budgeting $900,000 to $1 million on an event that is unlikely to proceed when at this time the Council really needs the money elsewhere.
"Accordingly it is recommended that the Taste not proceed this year due the number of uncertainties for large events coupled with Council's need to reprioritise funding for the coming year."
The report also says there is not the financial ability to budget for a cash sponsorship of Dark MOFO in 2020-21.
Tourism Council of Tasmania chief executive Luke Martin said he was disappointed but understood why the council was likely to scrap this year's event.
"It's several months away and i hope we have the potential to have something else in its place," Mr Martin said.
"I realise there are budget issues for the council but I'm sure stall holders and others will try to come up with something.
"We will kick ourselves if in December we don't hold the biggest event in December when Australians will be looking to get out and about."
The Taste coincides with the annual Sydney to Hobart yacht race and runs from December 28 to January 3.
Hobart Alderman Simon Behrakis said he was disappointed at the officer's recommendation but understood it was "the right thing to do".
"I am however extremely disappointed that the Council's hand has been forced to take a position that will not only mean the cancellation of an iconic part of Hobart's holiday season, but something that will impact so many small operators whose livelihoods rely on events such as the Taste of Tasmania," Alderman Behrakis said.
"I will note that it is recommended that a smaller celebration event for New Years' Eve, and would hope that such an event would in some way help soften the impact of this news, and help us as a city bring some closure to what has already proven to be the most challenging years we have faced in generations."
Destination Southern Tasmania chief executive Alex Heroys said the cancellation would "leave a huge hole in Tasmania's summer".
"The tourism, events and hospitality industry have been hit hardest by the pandemic and many businesses are struggling just to survive," Mr Heroys, said.
"There is no doubt that a summer without the Taste of Tasmania - perhaps the key event and rallying point for the Sydney to Hobart Yacht race finish - will leave a huge hole in the State's event landscape.
"The Taste of Tasmania has been a great success for 30 years - showcasing so many fantastic Tasmanian food and beverage providers and offering a chance to build revenue and brand to a huge audience - for which the City of Hobart, businesses involved and funding partners deserve ongoing praise."