Reply to Opposition to Motion re 27 Motion for Preliminary Injunction,,, Motion to Stay,, Filed by Americans Against Legalizing Marijuana, Cannabis Impact Prevention Coalition, LLC, Cannabis Industry Victims Educating Litigators, Cannabis Industry Victims Seeking Justice, Drug Free America Foundation, Drug Watch International, David Evans, Kenneth Finn, Hillsborough County Anti-drug Alliance, Illinois Family Institute, MMJ Biopharma Cultivation, INC., MMJ Biopharma Labs, INC., MMJ International Holdings, INC., North Carolinians Against Legalizing Marijuana, Save OUR Society from Drugs, Smart Approaches to Marijuana. (Mighell, Connor)

MARIJUANA, et al.,

Plaintiffs, v. ROBERT F. KENNEDY, JR., in his official capacity as Secretary of Health and Human Services, et al.,

Defendants.

Defendants’ Combined Opposition and Motion to Dismiss confirms what Plaintiffs alleged: they violated the law. The Centers for Medicare & Medicaid Services (“CMS”) adopted the Substance Access Beneficiary Engagement Incentive (“BEI”) on April 1, 2026 without notice, without comment, without any reasoned or reasonable explanation, and without any analysis of the risks the products it incentivized posed to elderly Medicare beneficiaries. This action runs afoul of the Constitution and the Administrative Procedure Act (“APA”). Defendants try to avoid liability by invoking a series of jurisdictional smokescreens and other blustery arguments that evaporate on examination. Plaintiffs address each in turn.

I. Plaintiffs Have Standing

A.

MMJ Plaintiffs have suffered constitutional injury and have competitor standing. Defendants, properly assessing the threat, devote more pages to MMJ Plaintiffs’ standing than to any other issue. Their arguments can be distilled to three propositions: 1) MMJ International Holdings (“MMJIH”) and its subsidiaries have no approved product, Defs. Mem. at 14; 2) MMJIH does not compete in the same market as BEI- approved products, id. at 15; and 3) MMJ Plaintiffs’ injuries are speculative, id. at 16–17. Each of these propositions is wrong.

This Court has made clear that “parties suffer constitutional injury in fact when agencies lift regulatory restrictions on their competitors or otherwise allow increased competition.” La. Energy & Power Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998). A plaintiff need only show “an actual or imminent increase in competition” and that it is “a direct and current competitor” whose “bottom line may be adversely affected by the challenged government action.” Air Excursions LLC v. Yellen, 66 F.4th 272, 280 (D.C. Cir. 2023) (quotations omitted). MMJ Plaintiffs satisfy each element.

First, and with respect to Defendants’ assertion that MMJIH has “no approved product” and remains on Full Clinical Hold, Defs. Mem. at 6, 14, Defendants mischaracterize the standard. Competitor standing does not require a plaintiff to have an approved product on the market; it requires only that the plaintiff be a “direct and current competitor” in the relevant market. Yellen, 66 F.4th at 280; Sherley v. Sebelius, 610 F.3d 69, 73–74 (D.C. Cir. 2010) (granting competitor standing to researchers who had not yet completed the research that would yield an approved product). MMJ Plaintiffs have invested over $10 million and eight years developing pharmaceutical-grade cannabinoid therapeutics through the FDA’s botanical drug pathway. It is undisputed that they hold Investigational New Drug (“IND”) submissions, were awarded an Orphan Drug Designation, and possess a DEA Schedule I analytical laboratory registration. See Defs. Mem. at 36. A clinical hold is a routine, frequently transitory step in FDA review. Without getting into a battle of antitrust experts to delve into granular market analysis, MMJ Plaintiffs can easily be described as “direct and current competitors” in the cannabinoid therapeutics market in both legal and layman’s terms. Defendants’ citation to Incyte Corp. v. Sun Pharmaceutical Industries, Inc., No. 2023-1300 (Fed. Cir. May 7, 2025), is unavailing: Incyte involved a company with no concrete plans to enter a market. MMJ Plaintiffs’ $10 million investment, Orphan Drug Designation, IND applications, and active DEA registrations, in contrast, are concrete competitive engagements.

Second, and with respect to Defendants’ argument that MMJIH does not compete in the same market as BEI-approved products, Defendants argue that no Medicare beneficiary with Huntington’s disease will choose between an FDA-approved therapy and “a CBD gummy.” Defs. Mem. at 15. This framing mischaracterizes the products available under the BEI and misses the point. The BEI creates a federally supported pathway for non-FDA-approved cannabinoid products to reach the same Medicare patient populations that MMJ Plaintiffs’ therapies are designed to serve. Before the BEI, no such pathway existed. The BEI created one, flooding MMJIH’s market in cannabinoid therapeutics with unapproved products and disadvantaging companies like them that followed the FDA’s rules. The BEI contains no requirements or limitations preventing physicians from prescribing CBD gummies or any other non-FDA-approved cannabinoid substance for any disease, including those that MMJIH is targeting.

Third, Defendants’ reliance on FDA v. Alliance for Hippocratic Medicine, 602 U.S. 367 (2024) (“AHM”) to establish that MMJ’s injuries are speculative is inapposite. See Defs. Mem. at 17–18. AHM involved plaintiffs who were not market competitors; the Court held that “sincere legal, moral, ideological, and policy objections” do not by themselves establish a case or controversy. 602 U.S. at 396. MMJ Plaintiffs do not assert ideological objections. They assert concrete competitive and economic injury—the kind this Court has recognized as independently sufficient under the competitor standing doctrine. See Sherley, 610 F.3d at 73–74; Yellen, 66 F.4th at 280. AHM did not address, let alone reject, that doctrine. Defendants’ Clapper argument fares no better. See Defs. Mem. at 16–17 (citing Clapper v. Amnesty Int’l USA, 568 U.S. 398, 414 (2013)). Clapper involved plaintiffs who speculated about surveillance that might never target them. Here, the BEI is already in effect and has already created a federally supported pathway for non-FDA-approved cannabinoid products to reach the same Medicare populations MMJ Plaintiffs are developing products to serve. These are present competitive conditions, not future contingencies. See Yellen, 66 F.4th at 280.

Lastly, Defendants tout MMJ’s public statement that the BEI “confirms what we have said for years” as evidence MMJ cannot claim injury. Defs. Mem. at 16–17. But a company’s attempt to position itself favorably with investors does not negate competitive harm. The factual record, not investor communications, should guide this Court as it evaluates standing.

B.

The Organizational Plaintiffs have standing. Defendants argue the Organizational Plaintiffs (meaning all non-individual Plaintiffs) are indistinguishable from the unsuccessful plaintiffs in Ctr. for Biological Diversity v. DOI, 144 F.4th 296 (D.C. Cir. 2025). See Defs. Mem. at 10–13. Not so. There, the organizations’ alleged injuries were “limited to issue advocacy”—FOIA requests and lobbying—and the court found “no harm to [their] own activities apart from [their] advocacy.” Id. at 314–15. The Organizational Plaintiffs here operate concrete programmatic activities directly impaired by the BEI. For instance, SAM runs educational programs for physicians and the public. DFAF provides victim advocacy and community-based prevention programming. HCADA operates student substance- prevention clubs and safe-rides programs. MMJ Plaintiffs are a pharmaceutical company. And CIVEL provides direct legal training for attorneys representing cannabis-injury victims, litigation support, and educational programming for clinicians. See Doc. No. 28- 6 ¶¶ 22–33 (Evans Decl.); see also Doc. No. 25–2 at 24 (DEA ALJ finding that CIVEL’s “active litigation and litigation support missions provide a sufficient basis to conclude that it would possess knowledge that could be instrumental in an accurate disposition” of marijuana rescheduling proceeding). The D.C. Circuit has held that organizations providing “counseling, referral, advocacy, and educational services” satisfy the Havens Realty threshold. Abigail All. for Better Access to Developmental Drugs v. Eschenbach, 469 F.3d 129, 133 (D.C. Cir. 2006) (quotation omitted); see also People for the Ethical Treatment of Animals v. USDA, 797 F.3d 1087, 1094 (D.C. Cir. 2015) (finding standing where the