Trump CBD reimbursement program launches amid legal challenge from rescheduling foes

A familiar coalition of cannabis reform’s most dedicated foes sued the Trump administration in federal court on Monday, seeking to stop federal healthcare reimbursements for CBD treatments.

The plaintiffs include some of same organizations that sought to thwart the Biden administration’s marijuana rescheduling push in late 2024, suggesting the lawsuit is the first in a promised salvo intended to block any weakening of federal cannabis law under President Donald Trump — including rescheduling.

First promised in December, the Trump administration’s plan to offer certain seniors on federally subsidized healthcare plans up to $500 per year to cover hemp-based CBD treatments began Wednesday.

Offering any federally subsidized healthcare coverage for a cannabis product, such as hemp-derived CBD, is a potentially revolutionary advancement for cannabis in the U.S., where federal prohibition means such coverage is outlawed.

But the Center for Medicare &  Medicaid Services’ plan to allow seniors to seek coverage for hemp-based CBD formulations should be halted because it violates federal administrative law, plaintiffs led by Smart Approaches to  Marijuana claimed in a complaint filed March 30 in U.S. District Court in Washington, D.C.

Specifically, the Trump administration’s rapid rollout of the reimbursement program violates the process laid out in the federal Administrative Procedure Act as well as the federal Controlled Substances Act and CMS’s own position on cannabis products, the lawsuit claims in part.

Trump administration CBD plan went too far too fast, lawsuit claims

“We and a group of our trusted partners are suing to stop (CMS) from implementing its terrible pilot program to cover some CBD and THC products,” Smart Approaches to Marijuana said Tuesday in a post on X.

“The program is anti-science, likely in violation of federal law, and will seriously damage public health. Lose-lose-lose . . . except for the addiction industries who pushed for it,” SAM added.

The suit names both Health Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz, and the federal Department of Health and Human Services and CMMS.

Court records show a request for an immediate temporary restraining order was denied by U.S. District Judge Trevor McFadden, a Trump appointee.

A hearing in the case is scheduled for April 20.

In a statement to MJBizDaily, Jim Higdon, a cofounder of Kentucky-based Cornbread Hemp, so far the only hemp company to publicly announce its participation, said he welcomed McFadden’s denial of a temporary restraining order blocking the program.

“We  now appear clear to move forward with this historic opportunity to provide full spectrum hemp products to qualified patients,” Higdon said.

Why is Trump’s CBD Medicare program drawing a legal challenge?

The CBD reimbursement program was first announced in the same Dec. 18 executive order in which the president directed marijuana be reclassified as a Schedule 3 drug.

CMS released further details about the program, called the “Substance Access Beneficiary Engagement Initiative” (BEI) on March 20 – just 11 days before an April 1 launch date.

Somewhat complicated, BEI promises participants in “accountable care organizations,” which are voluntary collections of doctors, pharmacies and healthcare providers, up to $500 per year to cover eligible hemp-based CBD treatments.

It’s still unclear how many patients the program could reach and how many hemp companies might eventually participate.

And as the lawsuit points out, hanging over all of this is a redefinition of hemp under federal law, set to take effect in November, that renders most existing hemp-derived cannabinoid products illegal.

“As such, the BEI is facially arbitrary, capricious, and not in accordance with law,” the lawsuit claims in part.

Further, federal law does not allow “CMS to sanction the possession and use of illegal and dangerous Schedule I substances by Medicare patients without clear congressional authorization,” it adds.

Marijuana rescheduling likely to face same legal challenge

The plaintiffs’ lead attorney is Patrick Kenneally, who as a county prosecutor in Illinois sued marijuana multistate operator Green Thumb Industries for allegedly using medical claims to market its products.

In addition to SAM, which took credit for bankrolling ballot initiatives that would roll back adult-use cannabis sales in three states, plaintiffs include nine other anti-cannabis organizations, among them the Drug Free America Foundation and an outfit called “Cannabis Industry Victims Educating Litigators.”

The latter, along with SAM, was one of the anti-legalization organizations selected by the U.S. Drug Enforcement Administration to participate in marijuana rescheduling hearings canceled on the eve of Trump’s second inauguration last year.

At the time, critics within the cannabis industry faulted the Biden administration for its slow progress on advancing moving marijuana to Schedule 3, as first recommended by the Department of Health and Human Services in August 2023.

But, observers said at the time, the Biden Justice Department did appear to be carefully following the law and creating an administrative record – steps that would prove useful if cannabis reform were ever challenged in the courts.

What’s the latest with Trump cannabis rescheduling?

Trump announced the CBD reimbursement program on the same day he directed Attorney General Pam Bondi to move quickly to downgrade cannabis to a Schedule 3 drug, a designation that would unlock tax benefits and research opportunities for legal cannabis companies.

However, there’s been no outward progress on cannabis rescheduling since.

The president embraced CBD in part because of the influence of Howard Kessler, a billionaire and Mar-a-Lago Club member who used CBD during a bout with cancer.

Kessler was present in the Oval Office for the rescheduling and CBD reimbursement executive order.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.