A coalition of anti-marijuana organization is suing the Trump administration over a novel initiative set to launch this week to widen the availability of CBD and THC for certain patients by covering hemp-derived products under select federal health insurance programs.
Smart Approaches to Marijuana (SAM) and nine other drug prevention groups on Monday filed a lawsuit in the U.S. District Court for the District of Columbia, challenging the legality of the cannabis program—which is being facilitated by the Centers for Medicare & Medicaid Services (CMS)—and seeking a temporary restraining order to immediately halt the process.
The filing names CMS Administrator Mehmet Oz and U.S. Department of Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr. as defendants in the lawsuit. The lawsuit comes as CMS is set to start covering CBD and THC products as a Substance Access Beneficiary Engagement Incentive (BEI) beginning on Wednesday.
Under the BEI, patients enrolled in specific federal health insurance programs could have up to $500 worth of hemp-derived products covered each year. The CBD-focused plan will also allow a certain amount of THC in products, but the agency said earlier this month the rules are subject to change if federal hemp policy changes, as is currently expected under a law set to take effect later this year.
SAM and the other organizations—including the Cannabis Impact Prevention Coalition, Drug Free American Foundation and Save Our Society From Drugs—made several arguments in support of legal intervention to prevent the cannabidiol BEI from moving forward. Much of the complaint focuses on alleged violations of administrative rules to provide the treatment, which they point out has not received Food and Drug Administration (FDA) approval.
CMS didn’t publish a notice of proposed rulemaking for the cannabis BEI that would have afforded the public with a comment period to weigh in, and the agency’s initiative runs counter to a separate final rule it issued last year that “declared cannabis products ineligible for supplemental Medicare coverage for chronically ill patients,” the prohibitionist plaintiffs said.
Beyond those alleged violations of the Administrative Procedure Act (APA), the groups noted that CMS described a BEI for CBD containing a maximum THC concentration that exceeds what would constitute federally legal hemp under a policy that’s set to be implemented in November.
The filing says the program would additionally violate the Social Security Act (SSA), which “does not allow CMS to sanction the possession and use of illegal and dangerous Schedule I substances by Medicare patients without clear congressional authorization.”
“CMS’s action represents an unprecedented and unlawful assertion of binding decision-making authority that will profoundly affect the health of elderly Americans,” SAM and the other organizations said in their complaint. “CMS took this action without the guardrails imposed by the administrative process, without any reasoned explanation, in conflict with the agency’s own recent APA-compliant determination, and without statutory authority.”
Therefore, the plaintiffs are asking the federal court to vacate the BEI, deem in unlawful and permanently enjoin the implementation of the policy. In the interim, they are seeking a temporary restraining order, preliminary injunction and stay of agency action amid the judicial review.
As far as legal standing is concerned, SAM said the BEI “provides marijuana products via a medical source,” so its expenses related to efforts opposing a separate cannabis rescheduling process “has been rendered essentially moot.”
“SAM’s injury is not abstract policy disagreement but concrete impairment of specific programmatic activities with a consequent drain on organizational resources,” it said. The filing adds that one of the plaintiffs in the case—SAM donor and consultant David Evans—would also be personally injured by the CMS policy action because he’s a Medicare recipient who was deprived of the ability to submit a public comment on the BEI and whose “healthcare relationship” with CMS is altered by the initiative.
The prayer for relief section of the lawsuit requests that the court 1) declare that the BEI was adopted in violation of APA notice-and-comment requirements, 2) declare the BEI is “arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with the law,” 3) declare the BEI exceeds CMS’s statutory authority, 4) vacate the BEI, 5) permanently enjoin the implementation or enforcement of the initiative and 6) award legal fees to the defendants.
“Let’s be perfectly clear: raw marijuana—especially in the form of non-FDA approved products like tinctures and gummies—is not medicine,” SAM CEO Kevin A. Sabet said in a press release. “While there are some FDA-approved medical uses for CBD and THC, like Epidiolex, these prescription medications are already covered under insurance.”
“What CMS will cover, if this is allowed to go through, are products sold at gas stations and convenience stores that are nothing more than snake oil. These are not regulated or tested by the FDA and do not fall under the [generally recognized as safe] standard,” he said. “It is unclear how they would be regulated, if at all, and how patients would be educated about potential side effects or medication interactions.”
The CBD initiative is being implemented in response to a directive Trump signed in December that also called on the attorney general to expeditiously complete the process of moving marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA). That wouldn’t federally legalize it, but it would remove certain research barriers associated with Schedule I drugs and also allow state-licensed marijuana businesses to take federal tax deductions.
For its part, CMS posted an update earlier this month detailing how certain of its “Innovation Center” models will facilitate the pilot program providing coverage to regulated, hemp-derived cannabidiol.
Participants would be required to ensure that CBD is sourced from “a legally compliant source and high-quality farm,” prepared as an oral solution and tested for cannabinoid content so that available products contain no more than 0.3 percent delta-9 THC by dry weight and up to 3 milligrams of total THC per serving.
CMS said that centers participating in one of three models that receive substance access BEI will be able to “consult with eligible beneficiaries about the possible use of eligible hemp products to improve symptom control.”
“Participants implementing this BEI may elect to furnish such hemp products up to $500 a year, per eligible beneficiary, subject to model requirements and safeguards,” it said, while emphasizing that Medicare “does not pay the participant for the products, and beneficiaries should not be asked to submit a Medicare claim for the product.”
The three eligible innovation center models are CMS’s ACO REACH Model, Enhancing Oncology Model and Long-term Enhance ACO Design (LEAD) Model. For the first two, participants can elect to utilize the BEI for CBD coverage starting on April 1. For LEAD participants, the start date is January 1, 2027.
Participating organizations under those models must first elect the substance access BEI and then produce a CMS implementation plan that describes “the specific eligible hemp product(s) and dosing information, the amount/frequency of distribution, beneficiary eligibility criteria, safeguards/oversight, and other requirements outlined in participation agreements.” Those plans would need to receive CMS approval before participants could offer cannabidiol coverage.
After initial details about the initiative were revealed this month, CMS faced questions about the potential impact of a law set to take effect in November that would redefine hemp in a way that would strictly limit the types of cannabis products that are currently permitted under the 2018 Farm Bill that Trump signed in his first term. That law expressly prohibits hemp derivatives containing more than 0.4 milligrams of total THC per container, which industry stakeholders say would effectively eradicate the consumable hemp market.
Here’s how CMS is defining hemp products allowed through its substance access BEI:
“Eligible hemp products are limited to federally legal hemp-derived products containing no more than 0.3 percent delta-9 THC and expressly excludes inhalable products, any products containing more than 3 mg per serving of tetrohydrocannabinols (such as delta-8-tetrahyrdocannabinol, delta-10-tetrahyrdocannabinol, and tetrahydrocannabinolic acid) in an orally administered form, and any products containing cannabinoids not naturally produced or capable of being produced by or in the cannabis plant during its cultivation.”
The agency acknowledged that its definition complies with the 2018 Farm Bill provisions and noted that its coverage plan “does not override the Controlled Substances Act or authorize Schedule I substances.”
“To be eligible, hemp products must also comply with applicable state and local laws,” CMS said, raising additional questions about potential regulatory complications as multiple states have proactively moved to restrict hemp product availability in anticipation of the pending federal policy change. “If the legal limits on hemp-derived products changes…CMS will adjust its definition in accordance with the law.”
CMS further explained that cannabinoid products “must be furnished and provided directly by a qualified physician affiliated with the participant organization, as specified by the model participation agreements,” and model participants “cannot instruct beneficiaries to purchase retail products and submit receipts for reimbursement under the BEI.”
To be approved to provide CBD coverage, model participants must 1) meet federal, state and local “production, quality and safety laws and other mandated standards,” 2) be sourced from legally compliant farms “consistent with 2018 Farm Bill hemp requirements” and 3) be tested for cannabinoid content, as well as “contaminants and microbial hazards.”
The details about the rules for the CBD pilot program came weeks after a co-founder of the hemp company Charolette’s Web, which has been collaborating with CMS, said the agency had already finalized its plans for federal health insurance coverage of cannabidiol.
Bill Morachnick, CEO of Charlotte’s Web, said in a press release on Monday that they are “grateful for CMS’s thoughtful approach in expanding access and creating space for responsible, evidence‑based hemp wellness conversations in clinical settings.”
“This program aligns with our mission to advance safe, high‑quality, science‑backed hemp options for consumers, and we remain committed to supporting sensible legislation that protects patients and strengthens the integrity of our industry,” he said.
“The updated guidance from CMS represents an important step in strengthening how hemp-based options are considered within care settings,” Morachnick said in a separate statement. “By reinforcing a science-driven framework centered on safety, quality, and transparency, it creates a clearer path for responsible integration into patient care. We see this as meaningful progress toward expanding access to trusted, non-intoxicating hemp solutions in a way that aligns with both clinical standards and patient needs.”
Oz, the CMS administrator, explained in December that the policy change will “allow millions of Americans on Medicare to become eligible to receive CBD as early as April of next year—and at no charge if their doctors recommend them.”
He added that Medicare Advantage insurers CMS has contacted are “also agreeing to consider CBD to be used for the 34 million Americans that they cover.”
As previously described by the administrator, the plan would involved those 65 and older who qualify for Medicare, but the specific qualifying conditions weren’t detailed. There were repeated mentions of chronic pain, specifically related to cancer, but it’s possible the CBD eligibility criteria includes additional conditions.
In its latest update, CMS said patients with disqualifying conditions under the Innovation Center models, as well as those who are pregnant or breastfeeding, could not receive CBD. They must also be at least 18 years old to participate.
At the signing ceremony for the marijuana and hemp executive order Trump signed in December, Oz also gave kudos to Howard Kessler, founder of The Commonwealth Project, which produced a video about the benefits of cannabidiol for seniors that the president shared on Truth Social last year and who apparently has pressed Trump to enact reform to expand cannabis access.
CMS had already announced certain changes as part of a rulemaking process that was unveiled late last year, affecting “marketing and communications, drug coverage, enrollment processes, special needs plans, and other programmatic areas” for insurance programs it oversees. One of those changes dealt with cannabidiol coverage.
The rule as proposed would amend regulations, which currently state that any “cannabis products” cannot be covered. The policy would prevent coverage for only “cannabis products that are illegal under applicable state or federal law, including the Federal Food, Drug, and Cosmetic Act.” Since hemp and its derivatives like CBD are federally legal, the change suggests patients in states where such products are legal could make valid insurance claims to pay for the alternative treatment option, as long as the product is also federally legal.
Meanwhile, following the White House announcement in December, Oz spoke with NewsNation about the policy change, responding to a question about how the broader marijuana rescheduling decision squares with the Trump administration’s aggressive efforts to stymie the flow of other illicit drugs, particularly fentanyl.
“We think they fit hand in hand,” he said. “This is really about researching—specifically CBD, which is hemp-derived endocannabinoids [sic]—are actually worthy of Americans using them,” he said. “It’s hard to do some of this work, especially with medical marijuana. And this is not about legalization of marijuana.”
“There is no legalization language at all,” he added. “It’s about rescheduling this class of product so that it can be researched more readily.”
The idea that marijuana has no medical value, as its currently defined as a Schedule I drug, is “just patently wrong for marijuana,” he said, noting that FDA has approved certain cannabis-based drugs for conditions such as epilepsy “that work quite nicely.”
“That belief that it should be Schedule I is just an incorrect place to put it,” he said. “Schedule III seemed to make sense to the president. He argued that it allows us to do the research more readily.”
“We’re finding a way to allow Medicare beneficiaries to get access to some of these products. And so, within Medicare, we have the ability, for the first time ever—and we delivered on this promise to the president today—to allow doctors to recommend hemp-derived CBD for patients who have cancer, for example, and have a lot of pain from that.”
The administrator said surveys show a majority of seniors who take CBD for pain management find it beneficial, and the White House wants to “make it easier for patients to access this” and allow them to access the cannabinoid at “no charge” through the federal health insurance program.
Oz took a different tone last month when he warned that “there are going to be consequences” as more Americans choose marijuana over alcohol—including problems caused by “high-dose hemp and CBD.”
In the background, HHS and FDA recently submitted proposed regulations concerning CBD enforcement and compliance with the White House Office of Management and Budget’s (OMB) Office of Information and Regulatory Affairs (OIRA). Multiple cannabis industry stakeholders have been granted meetings with OIRA to discuss the proposal this week.
Read the federal lawsuit concerning the CMS cannabidiol health coverage initiative 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.
