Politics
Marijuana Opponents And Pharma Company File Brief Asking Court To Block Trump’s Hemp CBD Medicare Coverage Plan
A coalition of anti-marijuana groups and a cannabis-focused biopharmaceutical corporation have filed a new brief in their lawsuit challenging the Trump administration’s initiative to cover up to $500 worth of hemp-derived products each year for eligible Medicare patients.
In May, Judge Trevor N. McFadden dismissed the challenge to the Centers for Medicare & Medicaid Services (CMS) program that focuses largely on CBD but also allows a certain amount of THC in products. The opponents of the CBD Medicare effort then asked the U.S. Court of Appeals for the District of Columbia Circuit to reconsider the decision.
In the new brief submitted to the appeals court on Monday, lawyers for Smart Approaches to Marijuana (SAM), Cannabis Industry Victims Educating Litigators (CIVEL), Hillsborough County Anti-Drug Alliance and MMJ International Holdings and its subsidiaries (MMJ) argued that the lower court judge erred in finding that they do not have standing to bring the challenge.
While the immediate issue at hand focuses on standing, the brief also argues that the Medicare hemp program itself is “both procedurally defective in its adoption and materially harmful to market competitors, healthcare providers, and elderly Americans.”
McFadden had determined that MMJ lacks standing because it has not yet brought a product to the market and is “not a direct and current competitor with anyone selling hemp to Medicare beneficiaries.”
“In short, MMJ has no product on the Medicare-beneficiary market and no sense of when it may,” he said.
But the new brief argues that the company is “not a speculative future entrant” in the market and has “invested over $10 million across more than eight years, obtained Orphan Drug Designation, submitted IND applications for two cannabinoid therapeutics, and holds a DEA Schedule I analytical-laboratory registration.”
Having standing as a competitor “does not require an approved product,” it says.
“The government also cannot credibly label MMJ a ‘speculative future entrant’ when the government’s own unreasonable delay of nearly eight years on a bulk-manufacturing application at DEA is the primary cause of MMJ’s pre-approval status. The government should not profit from its own obstruction.”
The brief additionally says McFadden, the lower court judge, erred on aspects of procedural standing and organizational standing with respect to the broader pool of plaintiffs.
The government’s opening brief before the appeals court is due by November 4.
The lower court judge in his ruling said that each plaintiff “claims an injury too abstract or too remote to open the courtroom doors.”
In April, lawyers for Health and Human Services Sec. Robert F. Kennedy Jr. and CMS Director Mehmet Oz filed a brief arguing that the anti-cannabis organizations that filed the suit against the Medicare hemp coverage policy do not have standing to bring the case against the hemp-focused Substance Access Beneficiary Engagement Incentive (BEI).
“No organizational Plaintiff shows enough for an injury-in-fact,” McFadden said in his ruling. “All claim that they diverted resources in response to the BEI’s implementation, but none established that such resource diversion ‘interfered’ with its core activities or prevented it from ‘pursuing its true purpose.’”
Outside of the challenge to the CMS hemp program, SAM, MMJ and others filed separate lawsuits challenging the Trump administration’s move to federally reschedule marijuana.
Beyond the advocacy organizations and pharmaceutical company, the hemp CMS case involves individual plaintiffs, including anti-marijuana lawyer David Evans, who claims he had standing to challenge the program as a Medicare recipient—but the federal agencies reject that argument.
“If Evans’s worst-case-scenario—his doctor recommends hemp to him—came true, Evans would lack a concrete harm,” McFadden wrote.
“In sum, no matter the theory, Plaintiffs have failed to establish an Article III injury from the BEI’s implementation,” the judge said. “The use and regulation of hemp are important matters, and Plaintiffs understandably have strong views on these topics. But while they may not like the BEI, they have not been injured by it. The case will thus be dismissed for lack of subject matter jurisdiction.”
Previously, McFadden had rejected the plaintiffs’ request for a temporary restraining order to halt the program from launching on April 1.
Notably, the government’s motion to dismiss the case 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, which is now underway, 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 White House has called on Congress to take action to amend the planned ban to maintain legal access to hemp-derived full-spectrum CBD products.
Oz, the CMS director, recently pressed senators to support provisions to delay the effective date of the hemp product ban in order to provide more time to craft a regulatory structure as an alternative to prohibition.
Keeping the ban on schedule “would undo significant gains that have been made to make clinically-appropriate full-spectrum hemp-derived CBD accessible to the senior citizens and individuals with disabilities that rely on the Medicare program for their healthcare,” Oz wrote in a letter.
In a brief in the CMS hemp lawsuit, federal agencies noted 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.”
A bipartisan group of members of Congress recently sent a letter to Trump and other federal officials pressing for guidance on whether medical cannabis would be covered by Medicare.
Meanwhile, the White House Office of Management and Budget held a series of meetings this year 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 the new brief in the lawsuit challenging the Medicare hemp program below:
Photo courtesy of Kimzy Nanney.
