A federal court in New Mexico has dismissed a lawsuit from a medical marijuana operator and patients, ruling that health plans from Blue Cross & Blue Shield of New Mexico aren’t required to pay for cannabis to treat behavioral health conditions.
Judge Martha Vazquéz of the U.S. District Court for the District of New Mexico wrote in her decision on Wednesday that state law does not require insurance to cover medical marijuana. And if it did, she added, “such a requirement would be preempted by federal law.”
Plaintiffs in the case, New Mexico Top Organics v. Blue Cross and Blue Shield of New Mexico, sought a ruling that medical marijuana “should be fully covered by health insurance, both for individuals with Medicaid insurance and for individuals who have private insurance,” according to Vazquéz’s decision. They argued that the “aggregated effect of New Mexico statutes”—including the state’s medical marijuana law and a state tax law prohibiting insurers from imposing cost-sharing on behavioral health services—created an obligation to cover patients’ medication.
In response to defendants’ arguments that federal law would preempt such coverage, plaintiffs said marijuana was likely to soon be rescheduled from Schedule I to Schedule III under the federal Controlled Substances Act (CSA), and noted an existing federal budget rider prohibits the Department of Justice (DOJ) from interfering with state-legal medical marijuana programs.
Vazquéz wrote that her decision is not intended to weigh in on the medical benefits of marijuana. “Even accepting as true for the sake of argument that cannabis does have medical value,” the decision says, “state law still does not compel Defendants to provide coverage for it.”
State law, she pointed out, includes “some behavioral health treatments that are explicitly covered and some that are explicitly not covered.”
“Tellingly, cannabis does not seem to be included in either category,” her ruling continues. “The fact that medical cannabis is not explicitly covered in the state’s Benchmark Plan signifies that state law does not mandate coverage of it.”
Despite legislative sponsors of an earlier New Mexico insurance bill being quoted in a news article saying that the change would include coverage of medical marijuana, Vasquéz wrote, “the language of the statute does not do so. And this Court is bound by the plain meaning of the statute, not an article discussing the statute.”
Even if state law clearly compelled insurers to cover cannabis, the judge continued, “Defendants would not be able to comply with both federal and state law. Under federal law, the possession of cannabis is a criminal offense.”
While the federal judge acknowledged that some state courts in New Mexico have ruled that medical marijuana should be covered under workers’ compensation law, the ruling notes that federal judges in the state have not agreed with that reasoning.
“Like other federal courts,” it says, “this Court is not bound by the decisions of the New Mexico Court of Appeals.”
As for other federal trial court rulings that involve insurance coverage of cannabis, Vasquéz called them “persuasive rather than controlling cases.”
“They illustrate that federal courts are grappling with the conflicting and somewhat uncertain legal landscape of cannabis regulation at the state and federal level,” she wrote.
“This Court finds that New Mexico state law does not compel insurance coverage of medical cannabis,” the decision concludes, “and that, even if it did, such a law or laws would be preempted by federal law, under which cannabis, as a Schedule I drug, is deemed illegal and not medically useful. For these reasons alone, the Court must dismiss the First Amended Complaint and need not consider the remainder of Defendants’ arguments in favor of dismissal.”
Lead plaintiff in the case, New Mexico Top Organics—also known as Ultra Health—sent a letter in February 2022 to insurance companies and state agencies about the new insurance law. In it, the company argued that the law—which eliminated cost-sharing and out-of-pocket costs for behavioral health services and “all medications” associated with the treatment of mental illnesses, substance abuse disorders and trauma spectrum disorders—should be interpreted to include medical cannabis for the nearly 73,000 New Mexicans who are registered patients for related qualifying conditions.
It filed suit in June of that year.
Separately in New Mexico, Gov. Michelle Lujan Grisham (D) earlier this month signed a bill into law to establish a therapeutic psilocybin program in the state. The Medical Psilocybin Act will allow patients with certain qualifying conditions to access the psychedelic and use it under the guidance of a licensed healthcare provider.
Its stated purpose “is to allow the beneficial use of psilocybin in a regulated system for alleviating qualified medical conditions,” including major treatment-resistant depression, PTSD, substance use disorders and end-of-life care. The state Department of Health would be able to approve additional conditions.
While rule-setting and other initial steps in implementing the program are expected to begin soon, officials have said it could be years before the treatment is available.
Last year, New Mexico lawmakers passed, and the governor endorsed, a resolution requesting that state officials research the therapeutic potential of psilocybin and explore the creation of a regulatory framework to provide access to the psychedelic.
Meanwhile, the U.S. Department of Homeland Security (DHS) and Customs and Border Protection (CBP) are urging a federal court in New Mexico to dismiss a separate lawsuit from licensed marijuana businesses that claim the agencies have been unconstitutionally seizing state-regulated marijuana products and detaining industry workers at interior checkpoints.
Commissioners of New Mexico’s most populous county also recently approved policy details of a plan to stop testing and punishing most government employees for off-hours marijuana use. Bernalillo County, where Albuquerque is located, appears to be the first public body in the state to implement such a reform following the state’s legalization of cannabis in 2021.
Last month, meanwhile, a House committee passed a bill that would further protect medical marijuana patients in the state from being penalized at work for off-duty use of cannabis. A Senate companion version of the legislation also moved through a panel in that chamber.
Read the judge’s ruling in the medical cannabis insurance coverage case below:
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