On April 23, 2025, a U.S. District Court judge dismissed a class-action lawsuit filed by a group of patients and a New Mexico medical cannabis provider. The plaintiffs sought to compel insurers to reimburse costs associated with medical cannabis treatments for conditions such as post-traumatic stress disorder and autism.
The lawsuit argued that New Mexico’s Behavioral Health Services Act and related insurance statutes should mandate coverage for medical marijuana. However, the court concluded that state law does not explicitly require insurers to cover the costs of medical cannabis. Even if it did, the court emphasized that any such state-level mandate would be preempted by federal law, which continues to classify cannabis as a Schedule I controlled substance with no officially recognized medical use.
The decision illustrates the persistent legal challenges faced by cannabis advocates attempting to integrate medical marijuana into mainstream healthcare and insurance systems.
Implications for Insurers and Patients
The ruling confirms that insurers operating in New Mexico, including those providing Medicaid-managed care services, are not legally required to cover medical cannabis. This decision has significant financial implications for patients who depend on cannabis as part of their behavioral health treatment, leaving them responsible for the full cost of their medication.
The court also clarified that insurers could face legal risks if they voluntarily covered a federally prohibited substance. Even though medical marijuana is legal under New Mexico law, federal prohibition creates potential conflicts that insurers are understandably reluctant to navigate.
As a result, patients will continue to bear the financial burden of medical cannabis treatments, while insurers maintain protection against federal liability concerns.
Legislative Efforts to Mandate Coverage
In response to the ruling and the broader insurance gap, New Mexico legislators have introduced House Bill 527. The proposed law aims to require private insurers and Medicaid programs to cover medical cannabis in the same manner they cover prescription medications for behavioral health conditions.
While the bill represents an important step toward expanding access, implementation challenges remain. Medicaid is jointly funded by state and federal governments, and federal prohibition could complicate reimbursement for medical cannabis under federal healthcare guidelines. Lawmakers must navigate complex legal and regulatory landscapes if they hope to make mandatory insurance coverage for cannabis a reality.
Broader Context and Future Outlook
The New Mexico ruling highlights the broader national conflict between progressive state cannabis laws and rigid federal drug classifications. Even as more states expand access to medical marijuana, federal law continues to act as a significant barrier to full integration of cannabis into regulated healthcare and insurance frameworks.
Advocates continue to push for both state-level reforms and federal rescheduling or legalization measures to resolve these conflicts. Until changes are made at the federal level, however, insurers are unlikely to alter their current policies, and patients will continue to face substantial out-of-pocket costs for their medical cannabis treatments.
The outcome in New Mexico could serve as a model for similar legal challenges in other states, further emphasizing the need for comprehensive federal cannabis reform.
