A federal judge has granted the government’s motion to dismiss marijuana legalization opponents’ lawsuit challenging a new Trump administration initiative to cover up to $500 worth of hemp-derived products each year for eligible Medicare patients. The program being implemented by the Centers for Medicare & Medicaid Services (CMS) focuses largely on CBD but also allows a certain amount of THC in products.
Judge Trevor N. McFadden ruled on Friday that prohibitionist groups and activists, led by Smart Approaches to Marijuana (SAM), as well as a cannabis-focused biopharmaceutical corporation MMJ International Holdings and its subsidiaries, “have not established standing to bring this case.”
“Each claims an injury too abstract or too remote to open the courtroom doors,” he said.
“At the outset, the Court notes that it need not tackle the bulk of questions that Plaintiffs raise in their motions,” McFadden wrote. “That is because Plaintiffs’ case suffers from a fatal flaw: the failure to establish Article III standing to bring their claims. The Court addresses only this jurisdictional hole and will dismiss the entire suit and deny Plaintiffs’ motion for a preliminary injunction as moot.”
In April, lawyers for Health and Human Services Sec. Robert F. Kennedy Jr. and CMS Director Mehmet Oz filed a brief saying that the anti-cannabis organizations that filed the suit against the Medicare hemp coverage policy do not have standing to bring the case. The judge has now agreed.
“No organizational Plaintiff shows enough for an injury-in-fact,” McFadden said. “All claim that they diverted resources in response to the BEI’s implementation, but none established that such resource diversion ‘interfered’ with its core activities or prevented it from ‘pursuing its true purpose.’”
When it comes to the company MMJ and its subsidiaries, the judge said it is “not a direct and current competitor with anyone selling hemp to Medicare beneficiaries.”
“In short, MMJ has no product on the Medicare-beneficiary market and no sense of when it may,” he said.
Beyond the advocacy organizations, the case involves individual plaintiffs, including anti-marijuana lawyer David Evans, who claims he had standing to challenge the new Substance Access Beneficiary Engagement Incentive (BEI) as a Medicare recipient—but the federal agencies reject that argument.
“If Evans’s worst-case-scenario—his doctor recommends hemp to him—came true, Evans would lack a concrete harm,” McFadden wrote.
“In sum, no matter the theory, Plaintiffs have failed to establish an Article III injury from the BEI’s implementation,” the judge said. “The use and regulation of hemp are important matters, and Plaintiffs understandably have strong views on these topics. But while they may not like the BEI, they have not been injured by it. The case will thus be dismissed for lack of subject matter jurisdiction.”
SAM, for its part, is pushing back on the dismissal and says it might appeal.
“We fundamentally disagree with the court’s decision today. All parties demonstrated substantial injury that exceeds the threshold required by Article III,” SAM President and CEO Kevin Sabet said. “We are currently reviewing all our options, including an appeal. We will not rest until we ensure America’s seniors are safe from these false medical claims and the harms of dangerous marijuana products.”
Previously, McFadden had rejected the plaintiffs’ request for a temporary restraining order to halt the program from launching on April 1.
Notably, the government’s motion to dismiss the case says it was prepared in part by Matthew Zorn, a lawyer for HHS who before taking on the federal job led numerous cases suing government agencies on behalf of plaintiffs seeking marijuana and drug policy reform.
The CMS initiative comes after President Donald Trump signed an executive order in December calling on the attorney general to finalize a rule federally rescheduling marijuana, which is now underway, that also contained components to “improve access” to full-spectrum CBD products.
Under the program, inhalable preparations are not allowed, and products can contain no more than 0.3 percent delta-9 THC by dry weight and can have up to 3 milligrams of total THC per serving.
The THC limit could potentially change if a law the president signed late last year takes effect as scheduled this November. That policy would strictly limit the types of cannabis products that are currently permitted under the 2018 Farm Bill that Trump signed in his first term, expressly prohibiting hemp derivatives containing more than 0.4 milligrams of total THC per container.
The federal agencies noted in a brief in the lawsuit that “CMS does not pay for hemp products under the BEI.”
“The participating provider furnishes eligible products at its own cost, subject to the $500 annual cap per beneficiary. The BEI operates within the shared-savings framework that defines the underlying models. If a provider’s investment in beneficiary engagement reduces the beneficiary’s total cost of care, the provider and CMS share in the resulting savings. If it does not, the provider absorbs the loss. No new federal appropriation is involved. No new entitlement is created. The BEI is, at its core, a decision by willing providers that a particular intervention can reduce downstream claims.”
SAM has filed a separate lawsuit challenging the Trump administration’s move to federally reschedule marijuana.
Meanwhile, the White House Office of Management and Budget recently held a series of meetings about a Food and Drug Administration (FDA) CBD products enforcement policy.
FDA also issued guidance making clear that it does not intend to interfere with implementation of the Medicare hemp-derived products coverage plan.
CMS separately finalized a rule that will allow coverage of some hemp products as specialized, non-primarily health-related benefits through Medicare Advantage plans.
Read the judge’s order dismissing the lawsuit challenging the Medicare hemp program below:
Photo courtesy of Kimzy Nanney.
Marijuana Moment is made possible with support from readers. If you rely on our cannabis advocacy journalism to stay informed, please consider a monthly Patreon pledge.
