The City’s business licensing staff recently received an inquiry regarding whether the sale of cannabidiol (CBD) products with a concentration of 0.3% or less delta-9-tetrahydrocannabinol (THC) is legal in the City under a general business license.  THC is the compound in marijuana responsible for most of its intoxicating or psychoactive properties.

For background, in 2016 Nevada voters approved Ballot Question 2, The Initiative to Tax and Regulate Marijuana, which legalized the purchase, possession, and consumption of recreational marijuana in Nevada for those over 21 years of age.  The passage of Question 2 became effective on January 1, 2017. 

The Sparks City Council adopted several ordinances later in 2017 establishing the City’s regulatory framework for the retail marijuana industry.  As part of the 2017 framework, the City established the current definition of “marijuana” within Section 5.80.010(E) of the Sparks Municipal Code that largely tracked a prior definition of marijuana under Nevada law. 

In December of 2018, the 2018 Farm Bill was signed into federal law. (Agriculture Improvement Act of 2018, P.L. 115-334).  It removed hemp – defined as cannabis (Cannabis sativa L.) and derivatives of cannabis with a THC concentration of no more than 0.3 percent on a dry weight basis – from the definition of marijuana under the Controlled Substances Act (CSA).  21 U.S.C. § 802(16)(B)(i); 7 U.S.C. § 1639o(1).  Therefore, under federal law, production and sale of hemp and its extracts is now legal under Food and Drug Administration oversight, whereas production and sale of anything above 0.3% THC is still illegal under the CSA. 

The 2019 Nevada Legislature updated the State’s hemp statutes to reflect this change in federal law, amending the definition of hemp to include any part of a plant, including “extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a THC concentration that does not exceed the maximum THC concentration established by federal law for hemp.”  NRS 557.160.  The definition of marijuana was also updated to clarify that hemp, as defined in NRS 557.160, or any commodity or product made using hemp is not marijuana.  NRS 453.096(2)(a).  As a result, under Nevada law, the sale of CBD oil that is made from hemp (less than 0.3% THC) is legal because it is an extract of the cannabis plant that does not exceed federal THC concentration limits. NRS 557.160; NRS 453.096(2)(a). 

However, Sparks Municipal Code does not currently have the same distinction between marijuana and hemp.  The existing definition of marijuana largely tracks the prior state definition of marijuana but does not include NRS 453.096(2)(a)’s exemption of hemp that was enacted in 2019.  In light of the fact that the City’s definition of marijuana does not exclude hemp, any sale of CBD oil and other products made from hemp would technically constitute the sale of marijuana under City Code and would require a cultivator, producer, or seller to obtain a marijuana business license rather than just a general business license.

As described above, the sale of CBD oil and other products made from hemp does not constitute the sale of marijuana under federal or state law.  Sparks Municipal Code does not include the same distinction between marijuana and hemp, meaning that the sale of hemp or hemp-based products, including CBD oil, technically constitutes the sale of marijuana under City Code.  Accordingly, any seller of CBD oil or other hemp products would be required to obtain a marijuana business license rather than a general business license. 

City staff request clarification from the City Council regarding recent changes in federal and state law and recommends that the City Council adopt Ordinance No. XXXX to clarify that hemp and hemp-based products are excluded from the definition of marijuana, thereby remaining consistent with State law.  Under the updated definition, the sale of hemp and hemp-based products, including CBD oil, would not constitute the sale of marijuana and would not require a seller to obtain a marijuana business license.

This is the first reading of the Ordinance to amend Section 5.80.010(E) of the Sparks Municipal Code.

This is a first reading.  No motion is required.