Medicare covers CBD without FDA approval and faces a lawsuit

If you’re one of the roughly 65 million Americans enrolled in Medicare, there’s a recent update you should be aware of. The Centers for Medicare & Medicaid Services launched a first-of-its-kind pilot program that reimburses eligible beneficiaries for certain hemp-derived CBD products.

That alone would be major news for a federal health insurance program that has historically refused to cover cannabis-related products. But hours before the April 1 launch, a coalition of drug safety advocacy groups filed a federal lawsuit to block the entire initiative.

The case pits CMS Administrator Dr. Mehmet Oz and HHS Secretary Robert F. Kennedy Jr. against critics who argue the program violates federal law.

The lawsuit targeting Medicare’s CBD pilot program

Smart Approaches to Marijuana and 10 other plaintiffs filed the case, SAM et al. v. Kennedy et al. (Case 1:26-cv-01081), in the U.S. District Court for the District of Columbia, the Marijuana Moment reported.

The plaintiffs are seeking a permanent injunction to block the Substance Access Beneficiary Engagement Incentive, or BEI, from moving forward. Their core argument is that CMS bypassed the Administrative Procedure Act and violated the Federal Food, Drug, and Cosmetic Act.

The program never went through the standard notice-and-comment rulemaking process that federal regulations typically require, the complaint states. The plaintiffs also point out that CMS issued a final rule just last year explicitly barring cannabis and CBD products from Medicare coverage.

What the CMS pilot program covers for beneficiaries

The program allows participating health care organizations to furnish eligible Medicare beneficiaries with hemp-derived CBD products at no out-of-pocket cost.

Each beneficiary can receive up to $500 annually in eligible hemp products through three CMS Innovation Center models, CMS confirmed on its website. The three participating models are the ACO REACH Model, the Enhancing Oncology Model, and the Long-term Enhanced ACO Design Model.

Key eligibility rules you should knowProducts must contain no more than 0.3% delta-9 THC and no more than 3 mg per serving of other THC compounds.Inhalable products are completely excluded from coverage under the pilot program.A physician must determine that the product is appropriate and document a shared decision-making conversation with the patient.Beneficiaries must be at least 18, cannot be pregnant or breastfeeding, and cannot have certain disqualifying conditions.All products must be third-party tested for potency and contaminants before they can be distributed to patients.

Medicare itself does not directly pay for these products, and beneficiaries should not submit a Medicare claim for them. The cost is covered entirely by the participating organization, while CMS collects data on patient outcomes and product performance.

The CMS pilot program provides eligible beneficiaries with CBD products at no cost, under strict rules, while collecting data on safety and outcomes.

Rido/Shutterstock

Critics say the program bypasses the FDA’s drug approval process entirely

The plaintiffs argue that reimbursing CBD products through Medicare effectively treats them as validated pharmaceuticals without FDA approval.

Only one CBD medication, Epidiolex, has ever received full FDA approval after going through rigorous multi-phase clinical trials, according to the FDA. Epidiolex is a prescription-only oral solution approved to treat seizures in patients with rare epilepsy conditions like Dravet syndrome.

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Its active ingredient is nearly 100% pure CBD, manufactured under strict Good Manufacturing Practices with guaranteed dose consistency. The products eligible under the CMS pilot are not prescription drugs and have not undergone the same level of clinical evaluation.

SAM President Kevin Sabet described the eligible products as items commonly found at gas stations and convenience stores, the Washington Examiner reported. Consumer-grade CBD products vary widely in potency, purity, and ingredient accuracy, which creates real safety questions for older Americans.

Dr. Oz calls the pilot a research-driven initiative for Medicare beneficiaries

CMS Administrator Dr. Oz described the program as the first government-led quality and outcomes testing for hemp-derived products, the Washington Examiner reported. CMS plans to collect data from participating organizations and make the findings publicly available for independent analysis.

If the pilot shows promise, the agency has signaled it could expand access to additional conditions for Medicare and Medicaid beneficiaries.

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An estimated 14.3 million Medicare beneficiaries currently receive care through ACOs as of January 2026, a 4.4% increase from 2025, according to CMS participation data.

That number gives you a sense of how many people could eventually be affected if this pilot program survives legal challenges. The ACO REACH model alone covers roughly 1.7 million traditional Medicare beneficiaries across 74 participating ACOs nationwide.

A November deadline could make the entire pilot program illegal

The CMS pilot defines eligible hemp products using the 2018 Farm Bill framework, which legalized hemp products containing up to 0.3% delta-9 THC. But the 2026 Agriculture Appropriations Act, signed into law last year, cuts the allowable THC limit to 0.4 mg per container, NORML reported.

“The stakes of the November deadline for ACO participants and patients couldn’t be higher,” said Jim Higdon, chief communications officer of Cornbread Hemp. “That’s why Cornbread is committed to engage in the policy debate on their behalf, and we are confident that the program’s clinical momentum will help make the case for a workable federal definition before the November deadline.”

That change takes effect on Nov. 12, 2026, and industry experts say it would make most currently available CBD products illegal. The hemp industry has described the upcoming threshold change as an extinction-level event for the $28.3 billion U.S. hemp sector.

Why this timeline creates real risk for youIf you enroll in the pilot now, the products you receive could become federally noncompliant in roughly seven months.Congress has introduced several bills to delay the Nov. 12 deadline, but none have passed as of this writing.CMS has acknowledged the legal landscape is shifting and says it will update its rules if federal hemp definitions change.

The contradiction creates genuine uncertainty for beneficiaries, doctors, and CBD suppliers, all of whom are participating in the same pilot. You could start receiving a product in April that technically becomes illegal to manufacture by November without any congressional action.

How Medicare beneficiaries should think about the CBD pilot right now

If you’re enrolled in Medicare through an ACO REACH or Enhancing Oncology Model provider, you may be eligible for CBD coverage. But eligibility alone does not mean you should enroll without fully understanding the risks, limitations, and open legal questions.

Questions to ask your doctor before enrollingIs my specific provider participating in the Substance Access BEI, or is the program just available in theory?Will the CBD product interact with any of the prescription medications I currently take on a daily basis?What happens to my access if the November 2026 federal hemp law change takes effect as currently scheduled?Has the specific product been third-party tested for potency and contaminants, and can I review the lab results?

You should also keep in mind that Medicare itself is not directly paying for these products under the current pilot structure.

The participating health care organization covers the cost up to $500 per year, and CMS collects outcome data in return. If the lawsuit succeeds and a federal court blocks the program, beneficiaries who have already enrolled would lose access immediately.

The bigger issue this lawsuit raises for federal drug policy

This lawsuit is not just about CBD products or a single Medicare pilot program with a $500 annual cap per beneficiary.

It raises a fundamental question about whether federal health care dollars should flow to products that have not completed FDA approval. Epidiolex, the only FDA-approved CBD medication, went through years of clinical trials and is manufactured under strict pharmaceutical standards, according to Jazz Pharmaceuticals.

Consumer-grade CBD products vary widely in quality, potency, and purity, and there is no single federal standard for consistency. Whether you support broader CBD access for seniors or prefer a stricter regulatory approach, the outcome will shape Medicare’s posture on alternative treatments.

The federal court in Washington, D.C., now has the responsibility of deciding whether this pilot can move forward or must be halted. For now, the program is live, the lawsuit is filed, and beneficiaries are caught somewhere in the middle of a rapidly shifting landscape.

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