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Federal health officials are asking a court 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.
Lawyers for Health and Human Services Sec. Robert F. Kennedy Jr. and CMS Director Mehmet Oz filed a brief on Thursday 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 prohibitionist groups, led by Smart Approaches to Marijuana (SAM), are “are unregulated parties in every sense” and CMS has “not required them to do or refrain from doing anything,” the government brief says, arguing that the plaintiffs have not actually been harmed by the policy.
Beyond the advocacy organizations, the case’s sole individual plaintiff is anti-marijuana lawyer David Evans, who claims he has standing to challenge the new Substance Access Beneficiary Engagement Incentive (BEI) as a Medicare recipient—but the federal agencies reject that argument.
“Mr. Evans opposes hemp products and will not use them. He says so himself,” the brief says. “No one will force Mr. Evans to consume a hemp product. No one will force his provider to offer him one. His alleged injury is thus not that the [Medicare hemp program] will cause him any physical, monetary, or regulatory harm. His alleged injury is that he might be offered a product he will decline. That is not an Article III injury. It is an offense to his sensibilities.”
“Plaintiffs are anti-cannabis advocacy organizations and one Medicare beneficiary. None participates in any Centers for Medicare and Medicaid Services (“CMS”) Innovation Center, also known as the Center for Medicare and Medicaid Innovation (“CMMI”), model. None administers the program they challenge. None faces any regulatory obligation from CMS. Their complaint is that CMS announced a voluntary component of existing models allowing willing providers to consult with consenting beneficiaries about eligible hemp products—and they object to it. Under [Supreme Court precedent], objection is not injury.
The individual Plaintiff, David Evans, receives care from an ACO REACH participant. He opposes hemp products and says he would never use them. His claimed injury is that his provider might someday elect a voluntary program, might someday offer him a product, and he might be upset. That chain of contingencies is not Article III standing. It is speculation about the independent choices of third parties who are not before this Court.”
The government also rejects the groups’ claims that they have standing to sue because are being forced to waste resources opposing the Medicare hemp initiative that they would otherwise allocate toward fighting reforms like marijuana legalization and federal rescheduling.
“Every organizational Plaintiff exists to oppose cannabis access. The BEI did not divert these organizations from some unrelated core activity. It gave them exactly the kind of government action they exist to oppose,” the federal brief says. “Their expenditure of resources to oppose it is the execution of their organizational missions, not a diversion from them.”
“SAM’s own filings confirm the point. SAM attaches as Exhibit A (ECF No. 4-1) to Plaintiffs’ motion its participation in the ongoing DEA marijuana rescheduling proceedings and alleges in the Complaint that the BEI has ‘rendered essentially moot’ its expenditure of resources opposing rescheduling because the BEI ‘provides marijuana products via a medical source.’ This argument fails twice. For starters, the BEI does not provide marijuana products but concerns hemp products. Hemp is not marijuana. Equally important, even accepting SAM’s mischaracterization, its argument is that a separate government action under separate statutory authority has made SAM’s advocacy in a different proceeding less effective. That is not Article III injury. It is a complaint that law and policy landscape has shifted in a direction SAM dislikes.”
Aside from the question of standing, the federal agencies say the anti-marijuana groups’ argument fails on the merits, citing statute that specifiies Medicare test models are not subject to administrative or judicial review.
The plaintiffs also err, the government says, by conflating their concerns about illegal marijuana with legal hemp.
“Congress drew a bright statutory line between hemp and marijuana in the 2018 Farm Bill. Hemp is not a controlled substance. It is not illegal under federal law,” the brief says. “There is no inconsistency, no reversal, and no unexplained departure. There is a legal distinction that Congress enacted that Plaintiffs fail to acknowledge.”
Additionally, the groups’ claim that CMS failed to conduct proper rulemaking and accept public comments before launching the program also fails, the brief says, because it is “not a legislative rule but an optional component of voluntary participation agreements that has been implemented the same way CMMI has implemented every voluntary model for sixteen years.”
“CMS has added, modified, and removed model components throughout CMMI’s sixteen-year history,” the government said. “It has never conducted notice-and-comment rulemaking for any voluntary model component.”
Judge Trevor N. McFadden late last month rejected the plaintiffs’ request for a temporary restraining order to halt the program from launching on April 1.
The government’s motion to dismiss the case comes as the groups challenging the Medicare hemp program are seeking to add new plaintiffs to the case: cannabis-focused biopharmaceutical corporation MMJ International Holdings and its two subsidiaries, MMJ BioPharma Labs, Inc. and MMJ BioPharma Cultivation, Inc.
While the federal health agencies don’t oppose the expanded plaintiff pool, they do object in a separate filing to the prohibitionist groups’ request to push back scheduled filing dates and a hearing on a motion for a preliminary injunction that is current scheduled for April 20. They also imply that SAM and the other anti-marijuana groups are seeking to add MMJ to the case in a “futile and misleading effort to cure” their own lack of standing to bring the complaint.
The government also says that MMJ itself “cannot show irreparable harm” from the Medicare hemp program.
“MMJ’s claimed injuries—decreased investor confidence, competitive disadvantage, impaired future earnings—are speculative projections about a market MMJ has not entered (and will not enter for years), based on products MMJ has not developed, contingent on authorizations MMJ has not obtained,” the federal brief says.
Notably, the government’s motion to dismiss 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 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 note in their new brief 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.”
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 recent filings in the Medicare hemp program lawsuit below:
Tom Angell is the editor of Marijuana Moment. A 25-year veteran in the cannabis and drug law reform movement, he covers the policy, politics, science and culture of marijuana, psychedelics and other substances. He previously reported for Forbes, Marijuana.com and MassRoots, and was given the Hunter S. Thompson Media Award by NORML and has been named Journalist of the Year by Americans for Safe Access. As an activist, Tom founded the nonprofit Marijuana Majority and handled media relations, campaigns and lobbying for Law Enforcement Against Prohibition and Students for Sensible Drug Policy.
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