Can diabetes cause a false positive alcohol or drug test?

Yes. If the sugar level in the urine is high, and if there is yeast present in the urine, the yeast can ferment the sugar to alcohol, especially if the urine sits for a while before the drug test is done. Of course there are a lot of other causes for false positive alcohol or other drug screens, which could occur in a diabetic, but not be related to the Diabetes. Another possibility is that it is actually a true positive, and the person is not being truthful about their drug intake. This is much more common than a false positive.