U.S. judge lets Medicare hemp pilot program proceed as critics escalate opposition

A federal judge has ruled that certain hemp-derived products can initially be used in Medicare pilot programs, pending resolution of a lawsuit by anti-marijuana groups seeking to block the policy.

The decision clears the way for the initiative, under the Centers for Medicare & Medicaid Services (CMS), to launch as the legal challenge moves forward.

The ruling denied an emergency request from the plaintiffs seeking to halt the program before it got rolling, but the case itself remains active in a legal process that could take months.

In addition to anti-cannabis groups, drug developers are pushing back against the narrow federal pathway that allows some non-intoxicating hemp-derived products in select CMS pilots. The ruling is especially of interest to CBD producers, who are potentially the biggest beneficiaries of the CMS program.

‘Regulatory arbitrage’

“This is not innovation; it is regulatory arbitrage,” said Duane Boise, CEO at D.C.-based MMJ International Holdings, which is developing cannabinoid-based drugs. “By creating a funding pipeline for retail hemp while keeping the pharmaceutical door locked, the government is signaling that shortcuts are more profitable than science.”

Boise said the federal government is creating two parallel systems: one requiring years of clinical trials and regulatory review, and another allowing consumer hemp products into care settings through CMS-backed models.

The network of anti-cannabis organizations which brought the lawsuit say the policy undercuts the U.S. Food and Drug Administration’s drug approval system, while other critics frame it as a public health risk and an overreach of federal authority.

Smart Approaches to Marijuana, the leading plaintiff, called the CMS initiative “anti-science, likely in violation of federal law,” and warned the program “will seriously damage public health.”

Scope matters

Federal officials say critics are mischaracterizing the program, emphasizing that it applies only to a small number of pilots, and does not constitute direct Medicare reimbursement for hemp products.

In court filings, the government also argued opponents are conflating hemp with marijuana and ignoring the legal distinction established under the 2018 Farm Bill, which removed hemp from the list of controlled substances. Officials also challenged claims of commercial harm, saying some plaintiffs are asserting damage in markets they have not yet entered.