CMS program allowing participating health-care organizations to provide qualifying hemp products to Medicare beneficiaries adds new urgency to Michigan’s debate over how CBD should be regulated
LANSING — Michigan hemp growers and CBD manufacturers could gain access to a potentially significant new health-care market as the federal government experiments with allowing certain Medicare beneficiaries to receive qualifying hemp-derived products through their health-care providers.
But Michigan hemp industry leaders warn that state regulations now being developed could help determine whether Michigan companies are positioned to participate in that emerging market.
The Centers for Medicare & Medicaid Services has launched a program allowing participating health-care organizations in certain CMS Innovation Center models to provide eligible beneficiaries with qualifying hemp-derived products valued at up to $500 annually.
The distinction is important: Medicare itself is not paying for or reimbursing seniors for CBD purchases.
Beneficiaries cannot walk into a store, buy CBD and submit the receipt to Medicare.
Instead, health-care organizations participating in specific CMS Innovation Center programs can apply to offer what CMS calls the Substance Access Beneficiary Engagement Incentive. If approved, those organizations can consult with eligible Medicare beneficiaries about whether hemp products could help with symptom control and provide qualifying products directly as part of a clinician-guided care plan.
For Michigan’s hemp industry, however, the significance could extend well beyond the initial experiment.
“This is a great step forward for industrial hemp,” said Dave Crabill, an iHemp Michigan board member, founder and former president of the organization. “We have been asking for fair regulation and although this is a limited trial, it adds credibility to CBD as a solution for better health.”
Crabill said the program could provide Michigan hemp businesses with something the industry has struggled to develop: a pathway into institutional health-care markets.
“Our hemp growers and processors will have a legitimate path into institutional markets,” Crabill said. “It is more important than ever for our members to set high standards for processing and labeling.”
What Kind Of CBD Products Could Qualify?
The CMS experiment is considerably narrower than allowing Medicare beneficiaries to purchase ordinary CBD products at retail.
Eligible products must be federally legal hemp-derived products containing no more than 0.3% delta-9 THC.
CMS specifically excludes inhalable hemp products.
Orally administered products also cannot contain more than 3 milligrams per serving of tetrahydrocannabinols, including compounds such as delta-8 THC and delta-10 THC. Products containing cannabinoids that are not naturally produced, or capable of being produced, by the cannabis plant during cultivation also are excluded.
That could create a significant dividing line between conventional, non-intoxicating CBD products and the intoxicating hemp-derived products that have fueled much of the regulatory fight in Washington and Lansing.
Products also must comply with federal, state and local laws and meet CMS quality and safety requirements.
At a minimum, CMS requires third-party testing for cannabinoid potency as well as contaminants and microbial hazards. Products must come from legally compliant sources and high-quality hemp farms.
The participating health-care organization — not Medicare — is responsible for obtaining and paying for the products.
A qualified physician affiliated with the participating organization must provide the product directly to the patient. Patients cannot purchase products themselves and seek reimbursement.
Which Michigan Companies Could Participate?
CMS does not maintain a list of Michigan CBD manufacturers approved for the program, and participation would not be as simple as getting a product placed on a Medicare formulary.
The health-care organizations participating in the CMS models are responsible for procurement, including contracting, ordering, storage, inventory controls and distribution.
That means Michigan companies most likely to compete for the emerging institutional market would be those already capable of demonstrating pharmaceutical-style consistency and documentation.
That could include growers, processors and manufacturers capable of proving where their hemp originated, how it was processed, what cannabinoids are contained in the finished product and whether every production batch meets established potency and contaminant standards.
Crabill said some Michigan businesses are already positioned for that kind of market.
“Michigan has experienced growers, processors and manufacturers capable of producing high-quality hemp-derived products,” he said.
Businesses seeking to participate in a health-care market, however, would likely need especially strong documentation, he said, including consistent formulations, third-party testing, certificates of analysis, batch traceability, manufacturing controls and reliable records.
“Those types of standards do not concern us,” Crabill said.
In fact, he said, iHemp Michigan has told the Michigan Cannabis Regulatory Agency that the industry supports reasonable standards covering sanitation, manufacturing, testing, labeling, traceability, consumer complaints and product recalls.
The disagreement is over how those standards should be imposed.
“Our concern is applying a marijuana regulatory system to non-intoxicating hemp products simply because they come from the same plant,” Crabill said.
Seniors Could Become An Even Bigger CBD Market
Seniors already represent an important customer base for CBD products, Crabill said, but bringing hemp-derived products into a structured health-care environment could fundamentally change the market.
“Absolutely, although I think we should be careful not to get ahead of the program,” Crabill said when asked whether the CMS initiative could create a meaningful new market.
“A structured health-care pathway could create a much more credible and dependable market than simply selling products at retail.”
Crabill said the bigger development may be CBD’s potential migration from retail shelves toward professional health-care settings where product quality can be documented.
“What interests me most is the possibility of moving legitimate CBD further into a professional health-care environment where product consistency, testing, traceability and manufacturing standards matter,” he said.
“Michigan companies should be able to compete in that market.”
This Is Not Medicare CBD Coverage
There is another important limitation for consumers.
The CMS initiative is not available to every Medicare beneficiary.
It currently applies only through participating organizations in specific CMS Innovation Center models, including the ACO REACH Model and Enhancing Oncology Model. The program also is scheduled to become available through the Long-term Enhanced ACO Design, or LEAD, Model beginning in 2027.
A physician must determine that use of an eligible hemp product is appropriate for the beneficiary.
The process includes discussion of potential risks and benefits, the patient’s goals and preferences, current medications and possible drug interactions, as well as plans for follow-up care.
CMS also says it is not making claims about the therapeutic value of the hemp products.
That makes the program more accurately described as a federal health-care experiment involving clinician-guided access to qualifying hemp products rather than Medicare insurance coverage for CBD.
But for the hemp industry, even that limited step is significant.
For the first time, qualifying hemp products can enter certain Medicare-related care programs under federal clinical oversight.
Michigan Is Writing Hemp Rules Now
That makes the federal development particularly timely for Michigan.
The CRA is working through proposed rules affecting industrial hemp, and Crabill argues state regulators should consider the emerging federal health-care market before establishing Michigan’s final regulatory framework.
“This CMS development is something I hope the CRA considers as it finalizes Michigan’s pending industrial hemp rules,” Crabill said.
“Michigan should be developing standards that allow our businesses to participate in emerging national markets rather than inadvertently regulating them out of those opportunities.”
The debate reflects a much larger fight taking place in Washington over the future of hemp.
Congress has been wrestling with how to address intoxicating products produced from hemp-derived cannabinoids without eliminating the market for traditional non-intoxicating CBD.
That distinction has become one of iHemp Michigan’s central arguments.
CBD Versus Intoxicating Hemp
Crabill said the industry supports restrictions on products that use hemp-derived CBD as raw material that is chemically converted into intoxicating THC compounds.
“This is really the heart of the issue,” he said.
“iHemp Michigan strongly opposes using hemp-derived CBD as feedstock to chemically manufacture intoxicating forms of THC and then treating those products like ordinary hemp.”
But Crabill argues regulators should not treat non-intoxicating CBD the same way.
“The answer to that problem is not to eliminate legitimate CBD,” he said.
The CMS initiative potentially strengthens that argument because federal health officials themselves are establishing criteria separating qualifying hemp products from other cannabinoid products.
“CMS is demonstrating that government can establish qualifications, testing requirements and product standards and distinguish between different categories of hemp-derived products,” Crabill said. “Congress should be capable of doing the same thing.”
“We can protect consumers and children from intoxicating products being sold without reasonable controls while preserving legitimate non-intoxicating CBD.”
Dr. Oz Enters The Hemp Fight
The issue gained additional attention after Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, urged senators to give the government additional time before new federal hemp restrictions take effect.
The unusual intervention highlights a growing contradiction in federal hemp policy.
Congress is trying to close loopholes that allowed intoxicating products to proliferate following legalization of hemp under the 2018 Farm Bill. At the same time, CMS is experimenting with allowing carefully defined hemp-derived products to be incorporated into certain clinician-guided care programs involving Medicare beneficiaries.
Crabill said those goals are not necessarily incompatible.
“On one hand, policymakers are concerned about intoxicating products entering the marketplace under the hemp definition. That is a legitimate concern,” he said.
“At the same time, CMS is recognizing that qualifying hemp-derived CBD products may have value for Medicare beneficiaries.”
The solution, he said, is drawing a clearer regulatory boundary.
“Regulate intoxicating products appropriately. Establish age restrictions and consumer protections where necessary. Require accurate testing and labeling. Address chemical conversion of CBD into intoxicating THC.
“But don’t destroy legitimate hemp and CBD in the process.”
What Michigan Hemp Companies Should Do Now
Crabill said Michigan businesses interested in eventually serving health-care markets should begin preparing for substantially greater documentation and quality-control requirements.
That includes reliable third-party testing, batch and lot traceability, certificates of analysis, good manufacturing procedures, consistent formulations, contaminant testing where appropriate and records capable of tracing ingredients through the finished product.
Those capabilities could become a competitive advantage if health-care organizations begin looking for suppliers capable of meeting CMS requirements.
Crabill said Michigan regulators should be preparing as well.
“If federal health officials are developing standards that recognize qualifying hemp-derived CBD products, Michigan should be careful not to create rules that prevent Michigan growers and manufacturers from participating in that emerging market,” Crabill said.
“The answer to problems created by intoxicating hemp products isn’t to erase legitimate hemp and CBD. It’s to draw the line correctly.”
And with Michigan’s hemp regulations being shaped now, Crabill said the state has an opportunity to make that distinction before the potential health-care market develops.
“Michigan has an opportunity to do that in the rules being written today.”
