Can you use FSA funds for CBD products?

With the rise of natural and organic remedies and the change in public perception surrounding cannabis, it's no surprise that CBD has become increasingly popular in the last few years. You'll see its benefits touted by everyone from professional athletes to the arthritic elderly, promoting it as a milder alternative to prescription pain medication.

But the legality surrounding CBD is still undefined by the IRS, which has implications for FSA eligibility. Regardless, here's what you might want to know about CBD (after speaking with your doctor, of course).

What is CBD?

CBD or cannabidiol is extracted from a specific variety of cannabis, usually hemp. Hemp plants contain little to no traces of THC, the psychoactive element found in marijuana.

A common misconception is that since CBD is related to marijuana, it will get you "high." But because most forms of commercial CBD have no THC in them, you won't feel that traditional sense of high after ingestion.

CBD is technically legal in all 50 states as long it's derived from hemp. THC-derived CBD is legal in the following states: Alabama, Georgia, Indiana, Iowa, Kansas, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Texas, Virginia, Wisconsin and Wyoming.

Of course, there are experts with more details on the subject. The National Organization for the Reform of Marijuana Laws (NORML) has more information on what CBD products are legal in your state.

What is CBD used for?

Proponents of CBD claim its benefits include reduced anxiety, inflammation, arthritis and overall pain relief. Unlike prescription medication, there are few adverse side effects from CBD. Patients generally cannot become addicted to CBD, which can make it preferable to traditional pain pills. In 2018, the FDA approved a CBD-based drug to treat seizures for people with a rare type of epilepsy.

CBD usually comes in a few different forms, including oil, tablets and creams. Many veterinarians even sell CBD products for animal anxiety.

Where to find CBD

You can find CBD products anywhere from gas stations to health food stores. Unfortunately, regulation of CBD products can be lax in many states, leading to questions about the quality and purity of individual products.

To find quality CBD products, some people suggest buying products manufactured in Colorado, where regulation is stricter. You can also look up a CBD product's certificate of authenticity to make sure it's been properly tested.

(Again, we're not medical professionals - always speak with your doctor before making any changes to your medical routine.)

So, can you use an FSA for CBD?

CBD products are probably not considered HSA- or FSA-eligible, though there hasn't been any formal guidance from the IRS on the matter. This is similar to medical marijuana, which is also not HSA or FSA-eligible even if you're taking it for a diagnosed disorder or to reduce the effects of chemotherapy.

While medical marijuana is legal in 33 states and the District of Columbia, including the 10 states where both recreational and medical marijuana are legal, it is not yet federally legal, and therefore not eligible for reimbursement. It appears that CBD products -- even if they're not derived from marijuana -- are being categorized similarly.

As of today, if you use your HSA for medical marijuana or CBD, you'll pay income tax and an extra 20% penalty on any forbidden distributions from your account. If you use an FSA, you'll likely be asked to pay back your account. Because of this, remember to always buy CBD products with your regular debit or credit card to avoid any confusion and penalties.

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