The award-winning violinist suggested he was a regular user of the drug and that he could not work without it.
He is understood to be one of two people facing charges after police raided the hotel, in the Bavarian town of Bad Wörishofen, following complaints of a raucous late night celebration.
Kennedy, 53, told Germany's Bild newspaper: "I smoked a little grass.
"I can't do this job without it, I need it to relax."
The self-proclaimed "bad boy of classical music"was among 20 people questioned after the raid at the Steigenberger Sonnenhof hotel at 3.15am on September 26.
Two were reported to the public prosecutor on suspicion of having used either marijuana or heroin.
Kennedy, however, denied any knowledge of the presence of heroin.
Officers are understood to have found equipment used to smoke illegal drugs in rooms rented out by other guests at the party.
Police have said they believe traces of heroin were on the paraphernalia they took away.
Johan Kreuzpointer, the local prosecutor, is awaiting the results of toxicology reports on the drugs found in the pipes, expected this week, before he decides on charges.
While neither he nor local police will confirm whether Kennedy is in line for prosecution, the Augsburger Allgemeine newspaper said its sources state he is one of the two who may be charged.
Kennedy, widely considered one of Britain's finest ever musicians, has previously admitted using drugs. The Birmingham-born star, whose interpretation of Vivaldi's Four Seasons remains the best selling classical record of all time, has told how he occasionally smokes marijuana to help him unwind after concerts.
But he is believed to have calmed down since the wild days of the 1980s and early 1990s when he was famed for conducting interviews whilst swigging champagne.
