California, Cannabis and Telehealth: Part 2


In my last post in this two-part series, I focused specifically on California’s current relationship with telehealth and cannabis. Without a doubt, physicians are free to recommend medical cannabis to qualified patients via telehealth platforms, apps, and tech so long as both Prop. 215 and telehealth laws and regulations are followed by the physician.

This post will zoom in on the legality of the financial and business relationships allowed in California between the telehealth platform, the physicians that use that platform to treat patients, and medical cannabis companies.

As you may know, there are two types of telehealth business models in existence, synchronous (real-time) and asynchronous (“store-and-forward”) platforms and apps usually owned and run by third-party non-physicians. Per my last post, the top question we get in this arena is how the telehealth platform can have a financial or referral relationship with a medical cannabis business — typically a dispensary — so that patients using the platform have a credible and consistent source from which to purchase their medical cannabis in compliance with state cannabis laws. The answer here is multi-layered and complex.

Physicians in California are barred from both providing cannabis to their patients and from helping them acquire it.  Pursuant to Conant v. Walters, physicians have a protected first amendment right (rooted in the doctor-patient relationship) to discuss the use of medical cannabis with their patients. That discussion and/or eventual recommendation is not grounds for the Drug Enforcement Administration to revoke or investigate revoking the physician’s licensure on the basis of aiding, abetting, and/or criminal conspiracy (since cannabis is still federally illegal). At the same time, that case makes clear that:

[a] doctor would aid and abet by acting with the specific intent to provide a patient with the means to acquire marijuana . . . Similarly, a conspiracy would require that a doctor have knowledge that a patient intends to acquire marijuana, agree to help the patient acquire marijuana, and intend to help the patient acquire marijuana.

Further, pursuant to state law and medical board guidance, it is unlawful for a physician who recommends medical cannabis to accept, solicit, or offer any form of remuneration from or to a cannabis business if the physician or his or her immediate family have a financial interest in that facility. “Financial Interest” includes, but is not limited to:

any type of ownership interest, debt, loan, lease, compensation, remuneration, discount, rebate, refund, dividend, distribution, subsidy, or other form of direct or indirect payment, whether in money or otherwise, between a physician and a person or entity to whom the physician refers a person for a good or service.

Further, physicians in California absolutely cannot be employed by a medical cannabis dispensary in order to recommend cannabis to medical cannabis consumers that frequent the store (and don’t even think about having a medical cannabis “doc-in-the-box” as a next door neighbor either). In the end, physicians need to steer clear of any financial or referral relationship with any cannabis company when it comes to patient recommendations.

Now, the relationship between the telehealth platform and the physicians is governed by, among other laws and regulations, the corporate practice of medicine (“CPOM”) bar here in California, which is extremely strict (we wrote here about the CPOM issues created by third party, non-physicians engaging in ketamine business ventures with doctors, and the same issues apply in the telehealth conext, too). In providing services to patients and physicians in California who use the tech, the telehealth company needs to be very careful not to engage in illegal fee splitting, kickbacks, and referrals, and it cannot exercise any medical decision making or undue influence over the physicians regarding the same– including things like patient volume, frequency of medical visits, and how to clinically treat patients.

Knowing all of the above, can the telehealth company (and not the physicians on the platform) have some kind of financial relationship with a medical cannabis dispensary here in California? The answer is “probably not” unless you want to incur the wrath of the medical board and see very serious fines and penalties, some of which are criminal. Why? Because a cannabis clinic or dispensary may not directly or indirectly employ physicians to provide cannabis recommendations. A financial tie-in likely comes dangerously close to indirect employment, and there is likely too much influence over physicians to not only keep recommending medical cannabis but to also send their patients to select cannabis vendors.

The main point of these restrictions in California is to ensure that a physician maintains independent medical judgment and acts in the best interest of their patients. Among other issues, if a telehealth platform is promoting — or has a financial interest in or with — a dispensary, and its goal is to drive platform users to that dispensary, it’s not a stretch that physicians on the platform will be financially motivated to render as many cannabis recommendations as possible. After all, most telehealth physicians are paid per consult/visit. If a physician is working to ensure that patients return to the platform for their services, and that they also go to the dispensary promoted by the platform, this scenario violates cannabis laws, telehealth laws, and CPOM laws.

In the end, telehealth and cannabis is only so lucrative in California mainly because of the CPOM restrictions and because cannabis laws in general prohibit physicians from doing much more than legitimate cannabis recommendations. This certainly doesn’t mean that telehealth companies don’t have other robust opportunities in the cannabis space (like education and intellectual property). But they definitely don’t revolve around referrals and kick backs from cannabis companies in exchange for increased numbers of medical customers created by the telehealth tech.



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