The landscape of cannabis and its derivatives is constantly evolving, as we’ve seen over the past month. Now, another major development could be on the horizon. The Centers for Medicare & Medicaid Services (CMS) has proposed a rule change that could authorize coverage for certain CBD products under some Medicare programs starting in 2027. This signals a potential major shift in how the federal government views the therapeutic applications of cannabis-derived products, particularly for seniors.
This proposal has generated considerable buzz, partly fueled by a video shared by President Donald Trump earlier this year, that highlighted the potential health benefits of CBD. While the political undercurrents are hard to ignore, the core of this development lies within a formal rulemaking process.
The Proposed Rule in the Federal Register
The potential change stems from a notice published in the Federal Register by CMS. Titled “Medicare Program; Contract Year 2027 Policy and Technical Changes to the Medicare Advantage Program,” this proposed rule outlines several adjustments to programs it oversees. Among these is a key amendment concerning cannabis products.
Currently, Medicare regulations prohibit reimbursement for “cannabis products.” The new proposal seeks to refine this restriction. Instead of a blanket ban, coverage would be denied only for “cannabis products that are illegal under applicable state or federal law, including the Federal Food, Drug, and Cosmetic Act (FFDCA).”
This distinction is crucial. It opens the door for Medicare Advantage (Part C) plans to cover hemp-derived products that comply with both federal and state laws. The 2018 Farm Bill federally legalized hemp and its derivatives, including CBD, as long as they contain no more than 0.3% delta-9 THC.
This created a “loophole” that allowed intoxicating hemp products to enter the market. However, a recent spending bill signed into law aims to close this loophole, effectively banning intoxicating hemp products unless new legislation is passed in the upcoming year.
What Does This Mean for Medicare Beneficiaries?
If the rule is finalized, the most direct impact will be on beneficiaries enrolled in Medicare Advantage plans. These plans could begin to offer certain hemp-derived products as part of their supplemental benefits for the chronically ill (SSBCI).
The CMS notice specifically mentions that MA organizations could offer items like hulled hemp seed, hemp seed protein powder, and hemp seed oil. The Food and Drug Administration (FDA) already classifies these as Generally Recognized as Safe (GRAS). While these may not be the CBD oils or tinctures many people think of, it’s a foundational step.
For a product to be covered as an SSBCI, the Medicare Advantage organization must demonstrate that it has a “reasonable expectation of improving or maintaining the health or overall function of the chronically ill enrollee.” This means plans would need to provide evidence to support the inclusion of these products in their benefits packages.
An early version of the plan, as reported by Bloomberg, suggested that the initial focus could be on seniors in oncology and palliative care settings. This suggests that the first wave of coverage may focus on patients with the most critical needs, prioritizing CBD’s therapeutic benefits for pain management, appetite stimulation, and improving quality of life.
The Larger Implications of CBD Coverage by Medicare
The authorization of CBD coverage by Medicare, even in a limited capacity, would have significant ripple effects across the healthcare system and the cannabis industry.
First, it would grant a new level of legitimacy to CBD as a therapeutic option. For years, patients, particularly seniors, have been using CBD products and paying out of pocket. Medicare coverage would make these treatments more accessible and affordable, removing a major barrier for a large demographic.
Second, it could spur a new wave of research and product development. With a clear pathway for reimbursement, companies would have a strong financial incentive to conduct clinical trials and develop FDA-compliant, medical-grade CBD products. This could lead to higher standards for product quality, safety, and consistency across the industry.
The economic impact could also be substantial. Following the news, stocks for several major cannabis companies saw a notable increase. According to a Fox News video promoted by Trump, fully integrating cannabis into the U.S. healthcare system could generate an annual economic benefit of $64 billion. While this figure encompasses the entire cannabis plant, the inclusion of CBD in Medicare is a significant move in that direction.
Looking Ahead
The proposal is not yet law. It is part of a proposed rule for the contract year 2027, and it will undergo a public comment period before any final decisions are made. The public, stakeholders, and industry experts will have the opportunity to provide feedback, which could shape the final version of the rule.
Furthermore, the legal landscape for hemp is still evolving. Upcoming changes to federal hemp legislation could alter the definitions and regulations surrounding hemp-derived products, potentially affecting the scope of what Medicare could cover.
Nonetheless, this proposal from CMS represents one of the most significant steps toward integrating cannabis-derived medicine into the mainstream federal healthcare system. By shifting the focus from a complete ban to a nuanced, law-based approach, the government is acknowledging the growing body of evidence and public demand for access to these products.
