Anti-cannabis groups sue over U.S. plan allowing hemp products in healthcare programs

A coalition of anti-cannabis groups has filed suit in federal court seeking to block what it characterizes as the coverage of non-FDA-approved hemp products under Medicare-linked programs.

The lawsuit, led by Smart Approaches to Marijuana and other groups, challenges a Medicare pilot program that lets providers give certain items—including CBD—to patients under flexible care rules.

Plaintiffs argue the Centers for Medicare & Medicaid Services is effectively opening a pathway for cannabinoid products that have not been approved by the U.S. Food and Drug Administration (USDA).

The lawsuit names Mehmet Oz, CMS Administrator, and Health and Human Services (HHS) Secretary Robert F. Kennedy, Jr. as defendants.

The usual suspects

The plaintiffs are part of a long-running anti-cannabis advocacy network that has consistently opposed the normalization of cannabis-derived products in medical settings.

The underlying program is narrower than both critics and proponents suggest. Under current guidance, providers participating in certain CMMI models may use a tool known as a Beneficiary Engagement Incentive to purchase items for patients using their own funds.

There is no Medicare reimbursement, no product approval, and no formal supplier list. Providers—not the federal government—decide whether to offer such products, and they bear the cost.

Early positioning

Some companies, including CBD giant Charlotte’s Web Holding (CW), have moved quickly to align themselves with the CMMI opportunity.

CW has described itself as a “launch partner” in the initiative, while Vlasic Labs, a part of Chicago-based Conagra Brands, said its products “meet the current qualifications” under the program. Cornbread Hemp, Louisville, Kentucky, said it has a supply deal with a purchasing group that serves providers in CMS programs.

What it means

Companies are not approved by CMS; rather, providers in the models may choose to offer CBD products that meet federal hemp standards. At this stage, the benefits to producers are mostly indirect and strategic. Companies can position themselves as healthcare-adjacent in a sector that has struggled for regulatory legitimacy. That signal may carry weight with investors, partners and providers.

There is also a potential pathway into provider networks such as accountable care organizations and oncology groups. Even without reimbursement, being seen as an “acceptable” option could influence purchasing decisions at the clinic level.

Early movers could gain an advantage if the model evolves. Firms already engaged would be vetted and integrated into provider workflows, giving them a head start if broader acceptance or reimbursement emerges.