Colorado’s first-in-the-nation workers’ compensation program evaluation reimbursing medical cannabis may represent more than an isolated state experiment. As federal officials move toward rescheduling cannabis from Schedule I to Schedule III, the trial run offers an early look at how medical cannabis could eventually be integrated into traditional healthcare reimbursement systems.
Today, medical cannabis remains almost entirely a cash expense. Patients—even those with physician recommendations—typically pay out of pocket because federal prohibition prevents most insurers from treating cannabis like other prescription medications.
Rescheduling would not automatically require insurers to cover medical cannabis. However, by recognizing cannabis as a medication with accepted medical use under federal law, it would remove one of the largest legal barriers preventing insurers from developing reimbursement models. It would also expand opportunities for clinical research that insurers often rely on when making coverage decisions.
That shift could ultimately allow medical cannabis to follow a pathway more similar to other prescription therapies, with physician oversight, standardized dosing, insurance reimbursement and broader patient access. And a Colorado study published this spring gives a window into what that could look like, specifically for injured workers.
A peer-reviewed study published in the Journal of Occupational and Environmental Medicine documented what researchers describe as the first formal reimbursement of medical cannabis through a state workers’ compensation program.
Rather than evaluating cannabis itself, the Colorado Division of Workers’ Compensation designed the project to answer a practical question: can medical cannabis be integrated into an insurance reimbursement system?
“This is the first time that someone has attempted a program evaluation to create a reimbursement pathway for medical cannabis from a voluntary insurance carrier,” said Dr. Ethan Moses, the medical director of the Colorado Division of Workers’ Compensation and the study’s lead author.
Using Colorado’s Special Funds Program, a 74-year-old patient with a legacy lumbar spine injury and longstanding opioid dependence purchased physician-directed medical cannabis from licensed dispensaries and submitted receipts for reimbursement. The reimbursement process required no prior authorization, no direct dispensary billing, and no complex formulary system, creating what researchers describe as a relatively simple model that could be replicated elsewhere.
Only oral cannabis formulations—including THC and CBD/CBN gummies—were reimbursed. Vaporized and smoked cannabis products were excluded because of respiratory concerns, inconsistent dosing, and challenges with standardized administration.
The patient reported lower pain levels, improved mobility and quality of life, voluntarily reduced hydrocodone use by 17% over twelve months, and discontinued self-directed vaporized cannabis use. No adverse safety events were reported.
“The patient’s response was unexpected and profound,” Moses said. “Pain levels dropped significantly. Quality of life increased based on the measures that we took… Disability decreased, function increased.”
Still, Moses cautioned that the study was never designed to prove cannabis itself caused those improvements.
“On a patient sample size of one, we cannot say that it was medical cannabis or even the medicalization of the use of cannabis that resulted in these changes,” he said. “It could also be the very close care coordination model.” However, Moses said that prior studies on care coordination models without cannabis did not see such notable patient improvements.
The observation does not establish that cannabis produced the improvements, but it suggests the outcomes may have reflected more than care coordination alone. Whether the results stemmed from medical cannabis, intensive clinical oversight, or the combination of both remains an open question that larger, controlled studies will need to answer.
While Colorado built its own reimbursement system under state authority, widespread insurance coverage will likely depend on federal rescheduling.
Cannabis’ current Schedule I classification places it alongside drugs deemed to have no accepted medical use, creating significant legal and administrative barriers for insurers.
Moving cannabis to Schedule III would acknowledge accepted medical use under federal law while dramatically expanding opportunities for clinical research. More importantly, it would begin moving medical cannabis into the same regulatory framework as many other prescription medications.
Although rescheduling alone would not automatically make cannabis available by prescription or require insurance companies to cover it, it would remove one of the biggest federal obstacles preventing insurers from evaluating cannabis as a reimbursable therapy. Combined with future regulatory action, physician prescribing pathways, and expanded research, rescheduling could lay the groundwork for insurance coverage similar to other prescription medications.
Moses said he expects rescheduling to accelerate research that could ultimately influence insurers’ willingness to provide coverage, while cautioning that it wouldn’t immediately resolve the reimbursement barriers that people are facing right now.
Due to the Colorado constitution saying that insurers do not have to cover medical cannabis, insurers would have to be motivated internally to cover it.
Colorado’s pilot was born out of a problem Moses encountered repeatedly while treating injured workers.
“They would come to me and say, is there any way I could get the insurer to pay for this?” Moses said. “And I had to say, not really, there’s not really a model there.”
He said the program was designed to address two shortcomings in the existing system.
“One was in safety,” Moses said, noting that patients frequently used cannabis without informing their physicians, creating gaps in medication reconciliation and return-to-work assessments. “Secondarily, it created this equity gap, whereby only individuals who could afford to purchase medical cannabis out of pocket could go to the dispensary and get it.”
Today, medical cannabis remains largely a cash-only treatment option. For many patients living with chronic pain, particularly injured workers on disability benefits or fixed incomes, the out-of-pocket expense can place physician-directed cannabis therapy out of reach.
Formal reimbursement not only improves affordability but also brings cannabis use into the patient’s medical record, allowing physicians to monitor treatment alongside other medications and reducing potential safety risks.
“The primary endpoint was, can we figure out a way to integrate reimbursement for medical cannabis in a way that improves safety and equity in our system,” Moses said. “And to me, it was a resounding success.”
Colorado is unlikely to remain alone in exploring reimbursement models. New Mexico incorporated cannabis into its workers’ compensation fee schedule beginning in 2025. The fee schedule itself does not require insurers to cover cannabis or establish clinical eligibility criteria, but it does provide a standardized mechanism for determining reimbursement when medical cannabis is approved as part of a workers’ compensation claim. The efforts differ from Colorado’s program study but reflect growing interest among insurers and regulators in preparing for a future where medical cannabis is treated more like conventional medicine.
If federal rescheduling proceeds, insurers could have greater access to clinical evidence needed to evaluate cannabis alongside other covered therapies.
Colorado’s constitutional prohibition against requiring insurers to reimburse medical cannabis means rescheduling alone would not immediately change coverage within the state. However, nationally, Schedule III status could significantly reduce legal uncertainty surrounding reimbursement for other states without constitutional barriers like Colorado.
While Colorado demonstrated that reimbursement is possible, expanding the model beyond retired patients presents another challenge: workplace safety.
The patient enrolled in the pilot was retired, meaning researchers did not have to evaluate return-to-work decisions, workplace impairment, or fitness-for-duty questions that employers routinely face.
Moses said any future reimbursement program should include actively employed patients to better understand how medical cannabis fits within workers’ compensation systems while addressing return-to-work protocols and safety-sensitive occupations.
The study’s authors identify clinical practice guidelines, return-to-work protocols, impairment guidance, and scalable care-coordination frameworks as critical next steps before reimbursement models can be expanded responsibly.
Colorado’s program study illustrates what medical cannabis could eventually resemble if federal rescheduling leads to broader integration into healthcare: rather than patients navigating treatment largely outside the healthcare system and paying entirely out of pocket, physician-supervised cannabis therapy could become part of traditional medical practice, with standardized prescribing, clinical oversight, and—eventually—insurance reimbursement for eligible patients.
Much work remains before that vision becomes reality. Larger clinical studies, prescribing guidelines, insurer participation, additional federal regulatory change, and workplace safety standards will all be necessary.
Still, Colorado demonstrated that reimbursement is possible.
According to Moses, the research made possible through rescheduling could eventually provide insurers with the evidence they need to view medical cannabis as another valid treatment option that could even save them money.
“That’s my hope,” he said.
As federal cannabis policy continues to evolve, Colorado’s compensation study could ultimately serve as a blueprint for how cannabis could one day be integrated into mainstream healthcare as a physician-prescribed therapy covered by insurance.
Ganjapreneur: Offering daily insights since 2014, the leading digital business journal for cannabis industry professionals. Subscribe to the newsletter to join our community of over 40,000 ganjapreneurs.
