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Benefits Strategy

Employer Considerations for Medical Cannabis

With a shifting coverage and regulatory landscape, there is an opportunity for employers to consider how medical cannabis fits into a comprehensive benefit strategy.

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January 24, 2025

Key Takeaways

  • The first cannabis-derived pharmaceutical in the United States was approved by the Food and Drug Administration (FDA) in June 2018; there have since been a handful of synthetically derived tetrahydrocannabinol (THC) therapies approved.1 These are covered and provided using the same process as any other specialty medications.
  • Dozens of countries regulate legal medical cannabis. Many others are considering doing so.2
  • Evidence for the effectiveness of medical cannabis is mixed, with clear risks—and potential benefits—for people with cancer, epilepsy, multiple sclerosis (MS), HIV/AIDS and other conditions.3
  • Since cannabis compounds can stay in the body for weeks, employees may fail a drug test without being under the influence of cannabis while working.4
  • The anticipated “rescheduling” of cannabis in the U.S. may spur new vendor benefit offerings that connect eligible patients with medical cannabis under clinical supervision.

Introduction

The growing number of countries and states legalizing medical cannabis may cause employers to explore several decisions related to benefit coverage, approaches to address substance use disorder (SUD) and drug testing. While cannabis remains illegal at the federal level in the U.S., 47 states, Washington, DC and three U.S. territories have legalized some form of it.5 State laws on prospective and current employee drug testing vary widely.6 Outside the U.S., there is similar variation by country. For example, in the Asia-Pacific (APAC) region, medical cannabis is approved for use in New Zealand, Thailand and Australia, and it is anticipated that India, Japan and China will do the same in the coming years.7,8

Glossary of Terms

  • Cannabis: Refers to all products derived from the plant Cannabis sativa. It’s regularly called marijuana, particularly in the context of medicinal uses.9
  • Medical cannabis: Use of “regular” cannabis or its chemical components (i.e., THC and/or CBD) for medicinal purposes, such as pain and symptom management for certain medical conditions like cancer. Generally obtained at a dispensary.
  • Pharmaceutical cannabis: FDA-approved medications that contain cannabis-derived components like THC and CBD. There are four such medications that are generally covered by PBMs like any other specialty drugs for conditions including pediatric epilepsy and anorexia.
  • THC (tetrahydrocannabinol): A psychoactive chemical, or cannabinoid, present in cannabis that causes intoxication (i.e., a “high”) and is potentially addictive.10
  • CBD (cannabidiol): One of between 80 and 100 cannabinoids found in the cannabis plant. Unlike THC, CBD doesn’t cause intoxication in users or cause dependency.11
  • Recreational cannabis: Consumption of cannabis for non-medical purposes.
  • Hemp: Any part of the cannabis plant with a THC concentration no greater than 0.3%, significantly lower than other forms of cannabis.12

Medical Cannabis, Explained

There are two general categories of cannabis used medicinally: Pharmaceutical treatments prescribed by a clinician and “regular” cannabis obtained independently of a prescriber. The first contains extracts of CBD or THC that are specifically formulated for medical treatment and covered by most PBMs. As of January 2025, there are four such FDA-approved treatments in the U.S.1 One medication treats pediatric seizure disorders; three others are prescribed to cancer patients to treat chemo-related symptoms and people with anorexia or HIV/AIDS to increase appetite.1,13

The second category is what is commonly understood as “regular,” THC-containing cannabis taken for medicinal purposes. This medical cannabis can come in the form of plants, oil extracts, pills and gummies. State laws vary, but in many states with comprehensive medical cannabis laws, patients can obtain a medical recommendation/certification for regular cannabis that can then be purchased out of pocket at a cannabis dispensary. In states with legalized recreational cannabis, a person could purchase cannabis directly and use it for medicinal purposes without clinical guidance.

Is Using Cannabis Safe? It Depends.

The National Institutes of Health (NIH) notes that CBD and THC in cannabis can help relieve pain and nausea and reduce inflammation, anxiety and paranoia in some people with cancer.14 Research suggests it can also aid in symptom management for multiple sclerosis (MS), reducing pain, tremor and spasticity.15 In comparison to other drugs for pain/symptom management (e.g., opioids), cannabis is seen as a safer treatment.16

At the same time, cannabis use carries real risks as THC can cause drowsiness, mood changes, altered senses and impaired memory, and when taken in large doses, hallucinations, delusions and dependency.17 Smoke inhalation and eating high-calorie foods in abundance, both associated with many users’ experiences with cannabis, are harmful.18 Recreational cannabis and CBD-based products, though widely available, are mostly unregulated; therefore, any use should be done with extreme caution. Since individual responses to cannabis vary, any use for medicinal purposes should be done with clinical guidance, considering patients’ personal circumstances, employment impact, treatment goals and risk tolerance.19

Three out of 10 cannabis users in the U.S. are dependent on it, and research suggests that recreational use is associated with a greater prevalence of cannabis use disorder (CUD).20,21 Pharmaceuticals with THC or CBD extracts can be titrated so that a person knows the dose they’re taking, but people using it recreationally do not necessarily know the potency of what they’re ingesting. See Business Group on Health’s Substance Use Disorder: An Employer’s Strategy Resource for more detail on employer-facing strategies for helping prevent and treat SUD.

Employer Considerations


#1How can employers ensure appropriate utilization of pharmaceutical and medical cannabis?

To ensure proper usage of medical cannabis, employers should work with their vendor partners to determine appropriate coverage for FDA-approved pharmaceuticals that contain cannabis or synthetically produced CBD or THC. It is also important to stay informed about new vendor offerings tailored to cannabis. For instance, at least one new company has begun approaching employers about a medical cannabis benefit targeted at plan members impacted by cancer, with a strict focus on tailored formulations to reduce risks for harm (though these may not be FDA-approved). Such benefits should be limited to cases with some clinical evidence of efficacy, such as those outlined by the American Cancer Society.22 In addition, offering robust programs for SUD treatment, including CUD, is important. While FDA-approved medications with CBD or THC have very low risk for CUD, some studies have shown increased risk for people using other forms of medical cannabis without clinical supervision.23,24

#2 How might medical cannabis impact drug testing approaches?

For some industries, safety considerations require a zero-tolerance approach to drug testing. Someone taking cannabis for medicinal reasons could trigger a drug test without ever being intoxicated at work. This is due to the fact that THC metabolites can stay in a person’s body in measurable amounts for months, even among individuals taking FDA-approved specialty medications.4,25 Employers may want to take a nuanced approach to drug testing, factoring in clinically guided use of medical cannabis.

The legality of drug testing varies by country. In some countries, it may be illegal for an employer to drug test, while in other countries, identifying an employee using an illicit drug may put that individual at serious legal risk.26

#3 Do employers need to provide coverage for non-pharmaceutical, a.k.a. “regular,” medical cannabis?

In the U.S., FDA-approved pharmaceutical cannabis-derived treatments are generally covered by PBMs and provided using the same process as any other specialty medications, with a standard medical review before making a coverage determination. Given the lack of FDA approval for most regular medical cannabis treatments and illegality on the federal level, PBMs generally consider medical cannabis—both THC-containing and CBD-only forms—unproven and experimental, precluding coverage.

Global coverage by employers and public health systems for medicinal cannabis use varies by country. In many countries, as in the U.S., there is private and/or public insurance coverage for the four cannabis-related pharmaceuticals that are FDA-approved, just like other specialty medications. Where cannabis is completely illegal, coverage and use are prohibited.

#4 What should we expect to see from vendors providing a medical cannabis benefit?

There is a new type of vendor providing a medical cannabis benefit to employers to offer to their employees. This offering serves employees with cancer or other acute conditions, with tools to help employees use medical cannabis appropriately. The vendor may also provide access to an online store for people whose conditions qualify them to buy specifically formulated medical cannabis. The benefit of these formulations is that it can give patients and their providers better control over titrating levels of THC to improve effectiveness and reduce potential harms, but they may not have FDA approval. As noted above, cannabis generally has fewer risks than opioids, which are commonly prescribed for cancer.

If cannabis is rescheduled by the U.S. Drug Enforcement Agency, acknowledging potential medical benefits, this could lead to requests for coverage from employees and open up paths for vendors to provide services related to medical cannabis.

Conclusion

As the regulatory landscape surrounding medical cannabis evolves, employers should assess their strategy to maximize potential benefits and minimize risks. With increasing provider recognition of medical cannabis as a legitimate treatment for certain conditions, employers and providers may see a growing number of vendors offering products and services related to medical cannabis. Ultimately, employers should consider how medicinal cannabis fits into drug testing strategies as well as broader benefits strategies related to SUD, mental health, oncology and other medical conditions.

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