A coalition of anti-marijuana organizations filed a federal lawsuit Monday against the U.S. Department of Health and Human Services and the Centers for Medicare & Medicaid Services, while also asking a judge to immediately block the agency’s new Substance Access Beneficiary Engagement Incentive before it takes effect April 1.
The case was filed in the U.S. District Court for the District of Columbia by plaintiffs including Smart Approaches to Marijuana, Cannabis Industry Victims Educating Litigators, North Carolinians Against Legalizing Marijuana, Drug Free America Foundation and several other groups, along with David Evans, a Medicare beneficiary. The defendants are HHS Secretary Robert F. Kennedy Jr., CMS Administrator Mehmet Oz, HHS and CMS.
At the center of the challenge is CMS’s new BEI program, announced March 20. Under the policy, certain providers participating in ACO REACH and the Enhancing Oncology Model can elect to furnish eligible beneficiaries with orally consumed hemp-derived products containing up to 3 milligrams per serving of total tetrahydrocannabinols, with a $500 annual cap per beneficiary. The program is scheduled to begin April 1 for ACO REACH and EOM participants, and January 1, 2027 for the LEAD model.
The lawsuit argues CMS created the program without going through formal rulemaking, without publishing it in the Federal Register, and without allowing public comment. Plaintiffs also say the agency failed to explain why the policy departs from a 2025 CMS final rule stating that medical marijuana or derivatives such as cannabis oil cannot be covered by Medicare Advantage organizations because they remain illegal under federal law.
Plaintiffs are asking the court to declare the BEI unlawful, vacate it, and permanently block its implementation. In a separate emergency filing, they are requesting a temporary restraining order, a preliminary injunction and a stay of agency action pending judicial review, arguing that allowing the program to take effect would cause immediate and irreparable harm.
The complaint also claims the BEI conflicts with federal law by allowing products with THC limits that exceed a 2026 agriculture appropriations provision set to take effect in November, and argues CMS exceeded its authority by using a payment and care delivery model to facilitate access to hemp-derived cannabinoid products.
