Cannabis stocks enjoyed another spike last week following reports that the Centers for Medicare & Medicaid Services is preparing to authorise insurance coverage for CBD products under certain Medicare programs, even as the same products face an existential threat from recently passed federal legislation.
Tilray led gains among major cannabis companies on November 26, climbing 3.7%, while Curaleaf Holdings advanced 2.2% and Innovative Industrial Properties rose 2.4%. Aurora Cannabis, Cronos Group, and Canopy Growth also moved higher, gaining 1.5%, 1.4%, and 0.7% respectively.
The rally came after Bloomberg reported that CMS was planning an initiative that would make some Medicare patients eligible for CBD coverage, with an early version focused on seniors in oncology and palliative care.
The proposed rule, set to come into effect in 2027, would allow Medicare Advantage providers to cover hemp-derived CBD products that comply with state and federal law.
A sharp reversal
The proposal represents a significant reversal from CMS’s position earlier this year.
In April, the agency implemented a 2026 final rule that explicitly prohibited marijuana and CBD, even CBD derived from federally legal hemp, from Medicare coverage.
The new rule would amend those regulations to prohibit coverage only for ‘cannabis products that are illegal under applicable state or federal law, including the Federal Food, Drug, and Cosmetic Act.’
Behind the shift sits Howard Kessler, a longtime Trump family friend who founded The Commonwealth Project.
His organisation produced a video Trump shared on Truth Social in September that promoted CBD coverage as ‘the most important senior health initiative of the century,’ claiming it would generate ‘cost savings of $64 billion a year if cannabis is fully integrated into the healthcare system.’
That video sparked a dramatic rally that saw Tilray surge 40% in a single day. Last week’s rally, while significant, proved more measured, reflecting actual regulatory action rather than a social media post.
According to Bloomberg, Kessler met with Health and Human Services Secretary Robert F. Kennedy Jr. about a month before the CMS rule was circulated, advocating for expanded CBD access.
The federal contradiction
The expanded coverage proposal arrives alongside legislation threatening to eliminate most CBD products from the market.
Just two weeks before the CMS news, on November 12, Trump signed a government funding bill that is set to redefine hemp under federal law in ways that could devastate the industry, insiders have warned.
The legislation prohibits ‘any intermediate hemp-derived cannabinoid products containing more than 0.3% combined total of total tetrahydrocannabinols and any other cannabinoids that have similar effects.’
The provision takes effect November 13, 2026, giving the industry some runway to adapt.
However, the critical issue is that during extraction and refinement, almost all CBD crude and distillate routinely exceed 0.3% total THC on a weight basis, even when the final product falls well below the limit.
Under the new definition, these intermediate materials would be treated as controlled substances, making legal CBD production effectively impossible under current processes.
CMS acknowledged this contradiction, noting that hemp products meeting the current 2018 definition remain legal ‘through November 11th, 2026,’ with those meeting the amended definition remaining legal thereafter.
As such, medicare will cover CBD products for barely a year before they potentially become illegal to manufacture.
“Instead of creating clarity and responsible regulation for hemp-derived products, this ban destabilises an entire sector that has generated jobs, tax revenue, and safe access for millions of Americans,” said Jasmine Johnson, CEO of GŪD Essence.
“It only pushes consumers toward unregulated markets.”
Paula Savchenko, founding partner of Cannacore Group and PS Law Group, warned that ‘the hemp sector may begin to resemble the cannabis market, with a fragmented supply chain cut off from the benefits of interstate commerce.’
In October, the American Council of Cannabis Medicine announced a nationwide initiative with major insurers and healthcare systems to expand medical cannabis access.
More than 400 associations joined the program, while healthcare systems gained access to patient referral networks.
Patient advocate Sasha Kalcheff-Korn, executive director of Realm of Caring, welcomed the Medicare policy but warned: “Without a clear federal regulatory pathway for these products within the next 11 months, millions of Americans who rely on them could lose access.”
