Arizona Tribune - Federal Judge to Decide Whether Medicare Can Distribute Hemp-Marijuana Cannabinoids Without FDA Approval

WASHINGTON, D.C. / ACCESS Newswire / April 25, 2026 / The case, Smart Approaches to Marijuana et al. v. Kennedy, Civil Action No. 26-1081 (TNM), is pending before U.S. District Judge Trevor N. McFadden. Plaintiffs filed a reply brief on April 24, 2026, responding to the government's motion to dismiss and opposition to preliminary injunctive relief. The reply brief, authored by constitutional litigator Ilya Shapiro of Burke Law Group, PLLC, lays out what plaintiffs describe as a straightforward case: CMS adopted an unprecedented product distribution program for Medicare seniors without following the legal procedures Congress required.

Why this matters to investors

For investors tracking the regulated pharmaceutical cannabinoid sector, the outcome of this litigation carries direct market implications. The BEI creates, for the first time, a federally supported pathway for non-FDA-approved cannabinoid products to reach Medicare beneficiaries - the same patient population that companies like MMJ International Holdings have spent years and tens of millions of dollars developing FDA compliant therapeutics to serve.

MMJ has invested over $10 million across eight years building a fully integrated pharmaceutical cannabinoid development platform: active IND applications with FDA, Orphan Drug Designation for Huntington's disease, a DEA Schedule I analytical laboratory registration, GMP-grade soft-gel capsule formulation developed with a Pharmaceutical Solutions company, and a pending DEA bulk manufacturing registration. That investment was made in direct reliance on the established federal framework: cannabinoid therapeutics require FDA approval before Medicare reimbursement eligibility. The BEI circumvents that framework without explanation.

$10M+ invested by MMJ in FDA-compliant cannabinoid development

8 years of regulatory compliance through FDA and DEA pathways

3 mg THC per serving permitted under BEI vs. 0.4 mg federal limit effective Nov. 2026

0 public comments solicited before BEI launch on April 1, 2026

The legal landscape heading into the hearing

Plaintiffs' reply brief makes five independent arguments for why the court should grant preliminary injunctive relief and deny the government's motion to dismiss. First, MMJ satisfies competitor standing as a direct participant in the cannabinoid therapeutics market under Sherley v. Sebelius, 610 F.3d 69 (D.C. Cir. 2010) - which recognized standing for researchers with active regulatory investments even without an FDA approved product. Second, the BEI is a legislative rule requiring notice-and-comment under the Administrative Procedure Act, regardless of its voluntary structure. Third, CMS's own Contract Year 2027 final rule - published just weeks before the hearing with 42,632 public comments - acknowledged that CMS "does not regulate cannabis and hemp-derived cannabis products" and committed to notice-and-comment for future changes. Fourth, the BEI authorizes up to 3 mg of THC per serving, directly conflicting with the 2026 Agriculture Appropriations Act's 0.4 mg per container limit effective November 2026. Fifth, Charlotte's Web and other companies- a hemp company that appears to have received advance notice in shaping the BEI.

The competitive asymmetry argument

Central to MMJ's investor narrative is what the reply brief describes as a two-track regulatory system. Companies following the FDA botanical drug pathway - submitting INDs, completing CMC validation, undergoing DEA registration, conducting clinical trials - face the full weight of federal pharmaceutical regulation. The BEI creates a parallel pathway in which hemp distributors can reach the same Medicare patient populations without any of those requirements. The reply brief argues this regulatory asymmetry constitutes concrete competitive injury, not speculative harm: "The BEI creates a federally supported pathway for non-FDA-approved cannabinoid products to reach the same Medicare patient populations that MMJ Plaintiffs' therapies are designed to serve. Before the BEI, no such pathway existed."

The government's response - that no Medicare beneficiary with Huntington's disease would choose a CBD gummy over an approved pharmaceutical - was directly addressed in the reply brief. Plaintiffs note that the BEI contains no limitations preventing physicians from recommending cannabinoid products for any disease, including those MMJ's pipeline targets. The competitive harm is structural, not transactional.

What a favorable ruling means

A preliminary injunction halting the BEI pending full judicial review would restore the regulatory status quo that existed before April 1, 2026 - one in which FDA approval remained the required gateway to Medicare reimbursement for cannabinoid therapeutics. For MMJ and similarly positioned pharmaceutical developers, that outcome would preserve the investment thesis that has underpinned years of capital deployment: that rigorous federal compliance ultimately yields differentiated market access.

Even a denial of the preliminary injunction but denial of the motion to dismiss - allowing the case to proceed on the merits - would signal that courts are willing to scrutinize CMS's procedural conduct and the inter-agency conflict between CMS's BEI authority and FDA's statutory jurisdiction over drug-class compounds.

About MMJ International Holdings

MMJ International Holdings, Inc. (MMJIH) life sciences company developing pharmaceutical-grade cannabinoid therapeutics for serious neurological diseases, including Huntington's disease and multiple sclerosis, through the FDA's Botanical Drug Development framework. MMJIH holds active IND applications, Orphan Drug Designation, a DEA Schedule I analytical laboratory registration, and has contracted with Pharma Solutions company and completed manufacturing of a GMP soft-gel capsule formulation.

Madison Hisey
[email protected]
203-231-8583

SOURCE: MMJ International Holdings

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