The NRL Integrity Unit commenced an investigation into Holmes after he posted a photo on Instagram of himself with a white bag in his mouth.
The Sydney Morning Herald is now reporting Holmes could be fined up to $30,000 and suspended for one game.
The NRL has yet to confirm the sanction, with a final decision expected in the coming days.
Holmes may also face further punishment from the Cowboys.
Speaking previously on Nine’s 100% Footy, Paul Gallen predicted a heavy fine for his former Sharks teammate.
“The photo’s absolutely damning, it’s not a good look for him, it’s not a good look for the game and I imagine it’d be a big fine,” Gallen said.
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“When you consider Mitchell Pearce copped a $120,000 fine, apparently you can’t get fined that much anymore but this is exceeding that.”
Holmes was left out of the Prime Minister’s XIII squad to take on Papua New Guinea’s Prime Minister’s XIII in the wake of his Instagram post.
The 28-year-old has played 19 Tests for the Kangaroos scoring 19 tries, and played a starring role in last year’s Rugby League World Cup win.