Murchison & Cumming LLP

San Diego Cannabis Manufacturer Pleads Guilty In Federal Court

June 9, 2021

WellgreensCA, Inc., a San Diego-based cannabis oil manufacturer, it’s owner, and manager all pled guilty in federal court last week to violating various offenses related to the transportation and dumping of hazardous waste ethanol. Under federal law, businesses transporting hazardous waste are required to accompany that waste with a uniform hazardous waste manifest. Failure to do so, can subject persons to up to two (2) years of imprisonment, or a maximum fine of $50,000 for each day of violation, or both.

The owner of WellgreensCA, Inc., Lunar Louissa admitted that the business engaged in extracting oils from cannabis which generated various waste, including 55-gallon drums full of waste ethanol. According to a Dept. of Justice press release, the waste ethanol generated by WellgreensCA was a federally-regulated hazardous waste that exhibited the characteristic of ignitability, because it had a flashpoint of less than 140 degrees Fahrenheit.

As a large quantity generator of hazardous waste,1 the business was required to transport all hazardous waste from their site accompanied by a uniform hazardous waste manifest. On multiple occasions in 2018, the business contracted with R.U. and others to transport and dispose of a total of seven (7) 55-gallon drums of waste ethanol – without the required uniform hazardous waste manifest. R.U. then proceeded to transport and dispose of the 55-gallon drums of waste ethanol in various locations around San Diego County, including behind a Vons supermarket in El Cajon.

“The defendants knowingly ignored legal requirements for the proper transportation and disposal of hazardous waste, putting local communities in the San Diego area at risk,” said Special Agent in Charge Scot Adair of EPA’s criminal enforcement program in California said in the press release. “This case demonstrates that EPA will hold accountable those who intentionally violate laws that endanger human health.”

At the time of the incidents, WellgreensCA Inc. held a Type 6 Manufacturing License with the State of California’s Manufactured Cannabis Safety Branch, which has since expired as of April 19, 2021. It’s unlikely the business will be able to obtain another cannabis manufacturing license. Under the State of California’s cannabis laws and regulations, applicants are required to disclose criminal convictions prior to obtaining a state cannabis license and certain convictions will be grounds for denial of a state cannabis license. Furthermore, licensed operators have a duty to notify the applicable State licensing agency in writing within 48 hours of any new criminal convictions.

On June 3, WellgreensCA Inc. and Lunar Louissa plead guilty to Transportation of Hazardous Waste Without a Manifest under Section 6928(d)(5) of Title 42 of the U.S. Code, with a maximum penalty of 2 years in prison, fines greater than $250,000 or ($500,000 for the corporation) or $50,000 per day of violation. Manager, Nadia Malloian plead guilty to Accessory After the Fact to Transportation of Hazardous Waste Without a Manifest, 18 U.S.C. §3 and 42 U.S.C. §6928(d)(5), with a maximum penalty of 1 year in custody, fine of greater of $50,000 or $25,000 per day of violation.

As part of the plea agreement, WellgreensCA, Inc. agreed to pay a $45,000 fine and restitution of $26,482 for the costs of emergency response and restoration of the sites where the hazardous waste was abandoned. The Defendants are scheduled to be sentenced in federal court on August 3, 2021.

  • Under federal regulations, both small and large quantity generator of hazardous waste generators are required to comply with the hazardous waste manifest requirements.
  • Small quantity generators generate more than 100 kilograms, but less than 1,000 kilograms of hazardous waste per month. Large quantity generators generate 1,000 kilograms (2,200 pounds) per month or more of hazardous waste or more than one kilogram per month of acutely hazardous waste.
  • However, some states, including California, have different categories of hazardous waste generators than the federal regulations. For instance, California also requires small-quantity generators to also prepare and keep manifests, in addition to other requirements.

 

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