In a criminal case that says significantly more about the prosecution than the indictment on its face, the Federal government is prosecuting a leading cannabis industry manufacturer and distributor for criminal transportation of hazardous waste.
The Resource Conservation and Recovery Act (“RCRA”) was enacted in 1976 to ensure that all hazardous waste generated in the United States was managed in a manner that would minimize the threat to human health and the environment.
The U.S. Environmental Protection Agency established a cradle to grave tracking system for tracking hazardous waste under RCRA. EPA regulations require generators of hazardous waste to prepare a hazardous waste manifest to transport hazardous waste from their site. A hazardous waste manifest is a form used for identifying the quantity, composition, and the origin, routing, and destination of hazardous waste during its transportation from the point of generation to the point of disposal, treatment, or storage. The manifest form is in triplicate, and is to be signed by the generator, transporter and disposal site, as the waste progresses throughout its journey. When the waste reaches its final destination, a copy of the completed manifest is to be sent to both the generator and the regulatory authorities to demonstrate that the waste was properly managed.
Wellgreens, that self describes as the California cannabis industry’s leading contract manufacturer and distributor, is among other matters, engaged in the business of extracting oils from cannabis at a location on Trade Street in San Diego, California. As part of the manufacturing process, a Federal True Bill dated June 27, 2019 alleges that Wellgreens generated various wastes, including 55 gallon drums of waste ethanol. The waste ethanol generated by Wellgreens was a federally regulated hazardous waste that exhibited the characteristic of ignitability, because it had a flashpoint of less than 140 degrees Fahrenheit.
Wellgreens and its principals are charged in concert with other defendants, beginning as November of 2017 and continuing up to and including on or about June 8, 2018,
As a method and means of the conspiracy, the defendants telephoned R. U. (deceased), a refuse hauler not licensed to transport hazardous waste, and requested that he come to their facility to remove waste, including drums of spent ethanol. Defendants paid R.U. and his assistants in cash for the disposal of the drums, in an amount approximately half the cost of lawful disposal. No invoices, manifests, receipts or other paperwork associated with these transactions was prepared by any party.”
The Indictment continues to allege in great particularity,
“On or about December 26, 2017, defendant Nadia Malloian rented a Penske truck used to conceal drums of waste ethanol from inspectors. ..
On or about January 30, 2018, in response to a request for information about the disposal of the hazardous waste generated at the facility, defendant Lunar Loussia sent an email stating “I’ll handle today.” .. On or about February 7, 2018, co-conspirators transported 3 drums of waste ethanol from the Wellgreens facility on Trade Street in San Diego and dumped them at Hill Street in El Cajon, without a hazardous waste manifest. On or about February 13, 2019, co-conspirators transported 10 drums of waste ethanol from the Wellgreens facility on Trade Street in San Diego and dumped them at the intersection of California state routes 52 and 125, without a hazardous waste manifest.”
The facts averred on the face of the Indictment allege an illegal transportation of hazardous waste that might not make this criminal prosecution noteworthy, but that it involves the manufacturer and distributor of cannabis and the government has not charged a violation of the Controlled Substances Act or other Federal drug laws.
U.S. Attorney General William Barr said on April 19, 2019, the Department of Justice is “operating under my general guidance that I’m accepting the Cole Memorandum for now, but I’ve generally left it up to the U.S. Attorneys in each state to determine what the best approach is.” The Cole Memorandum is a 2013 policy that deprioritized the enforcement of federal marijuana laws in states where marijuana had been legalized. Barr’s pronouncement was a reversal of the January 4, 2018, determination by then Attorney General Jeff Sessions rescinding the Cole Memorandum.
United States v. WellgreensCA, Inc., et al, in the United States District Court for the Southern District of California, case no. 19 CR 2439WQH, is significant beyond being a criminal prosecution of a RCRA violation because it may be the first public application of the current Trump Administration policy on Federal cannabis prosecution in states with legal cannabis.