Workers' Compensation: Hemp, Medicare, and Workers' Compensation

A federal district court in the District of Columbia has dismissed a challenge to a novel Medicare hemp-access program, ruling that the plaintiffs lacked standing to sue. The decision in Smart Approaches to Marijuana v. Kennedy (D.D.C. May 22, 2026) has significant implications for healthcare providers, insurers, and workers' compensation practitioners navigating the rapidly evolving landscape of cannabis-related medical treatment.

Background: The CMMI Hemp Pathway

In April 2026, the Center for Medicare and Medicaid Innovation (CMMI), the federal agency created by Congress in 2010 under Section 1115A of the Social Security Act to test innovative payment and delivery models, established a new optional pathway allowing qualifying Medicare providers to furnish hemp-derived products to eligible beneficiaries. The program is voluntary; providers who choose to participate sign participation agreements with CMS that define quality benchmarks, spending targets, reporting obligations, and payment methodologies.

The pathway was immediately challenged by a broad coalition, Smart Approaches to Marijuana and other plaintiffs spanning anti-drug advocacy organizations, patients, healthcare providers, and pharmaceutical companies, who argued that CMMI exceeded its statutory authority, that the pathway conflicted with federal drug law, and that CMMI failed to follow required rulemaking procedures under the Administrative Procedure Act (APA).

The Court's Rationale: Standing Is the Threshold

The court did not reach the merits of the plaintiffs' sweeping legal challenges to the hemp pathway. Instead, it disposed of the case on jurisdictional grounds: none of the plaintiffs demonstrated the concrete, particularized injury required for Article III standing.

The standing analysis turned on three familiar requirements:

• Injury-in-fact — a concrete, particularized, actual or imminent harm;

• Causation — a traceable connection between the plaintiff's injury and the defendant's conduct;

• Redressability — a likelihood that a favorable decision would remedy the harm.

The court concluded that, although the plaintiffs were numerous and diverse, each alleged injury was either too abstract or too remote. Objections to cannabis policy, generalized competitive concerns among pharmaceutical interests, and philosophical opposition to hemp-based medicine do not satisfy the constitutional minimum. Because the court dismissed for lack of standing, the motion for a preliminary injunction was denied as moot, and the underlying APA and constitutional claims were never adjudicated on their merits.

Workers' Compensation Dimensions

For workers' compensation practitioners, this decision matters on several fronts.

1. Medical Treatment and the Schedule I Problem

Workers' compensation carriers and self-insured employers have long grappled with whether cannabis-based treatment is compensable. The federal Controlled Substances Act continues to classify marijuana as a Schedule I substance, creating a structural barrier to reimbursement under most state workers' compensation frameworks. The CMMI pathway is limited to hemp-derived products (which fall outside the CSA's marijuana definition post-2018 Farm Act). represents a federal agency's first major step toward integrating cannabis derivatives into a government-funded healthcare model.

To the extent injured workers receive Medicare benefits and also have workers' compensation claims, the CMMI pathway interacts directly with Medicare Secondary Payer (MSP) obligations. Under the MSP framework, workers' compensation is the primary payer for medical treatment of work-related conditions. If Medicare begins covering hemp products through the CMMI pathway, conditional payment obligations and Set-Aside allocation questions may follow, a potentially significant compliance burden for claims adjusters and structured settlement professionals.

2. Intoxication Defenses and CDS Issues

State workers' compensation statutes often contain intoxication or CDS-use defenses that can bar or reduce benefits when an employee's injury is causally linked to cannabis use. As hemp-derived products become more normalized in mainstream Medicare coverage, the line between legally-recognized therapeutic use and impairment-related defenses will become more difficult to draw, and will require updated guidance from state compensation courts and administrative agencies.

3. Occupational Disease and Toxic Exposure Nexus

Workers employed in hemp cultivation, processing, and retail, a rapidly expanding sector, may face novel occupational exposure claims. Respiratory irritants, pesticide co-exposures, and dermal contact issues are emerging areas. As courts and agencies sort out how hemp fits within federal and state regulatory frameworks, workers in this industry will need access to established occupational disease jurisprudence for adequate protection.

Impact on Workers' Benefits

The immediate practical impact of the Smart Approaches decision is that the CMMI hemp pathway remains in effect. No injunction was issued; the program was not halted. This means:

• Medicare providers who have opted into the pathway may continue to furnish qualifying hemp products to eligible beneficiaries without legal interruption from this litigation.

• Injured workers who are Medicare beneficiaries may increasingly encounter hemp-based treatment options as part of their federally funded care, raising reimbursement, coordination, and set-aside valuation questions for workers' compensation stakeholders.

• The door remains open for future challenges brought by plaintiffs who can demonstrate concrete, particularized harm, meaning this legal battle is not over; it has merely been delayed.

• State legislatures and workers' compensation administrative agencies will face increasing pressure to clarify their own rules regarding hemp-derived treatment reimbursement as the federal framework evolves.

Conclusion

Smart Approaches to Marijuana v. Kennedy is a harbinger of more litigation. The court's standing-based dismissal leaves the substantive legal questions, congressional authorization, federal drug law preemption, and APA procedural compliance entirely unresolved. For workers' compensation practitioners, the case underscores the urgency of developing clear protocols for hemp-related medical treatment, MSP compliance in the context of hemp-covered Medicare services, and occupational disease claims in the expanding hemp industry. Practitioners and employers should monitor both the appellate trajectory of this case and any regulatory guidance that CMMI or CMS issues in the months ahead.