Manufacturing retail-ready marijuana is a messy business. Companies use various methods to extract the cannabinoids or psychoactive ingredients such as THC oil from the raw plant material. One company that used ethanol to remove the THC was charged with the illegal disposal of this hazardous waste. After being indicted, the company has now reached a plea agreement with the government.

The company involved is WellgreensCA. It does business as Trade Street and is a cannabis manufacturer whose website states it is “an industry-leading manufacturing and distribution company that develops innovative cannabis products using best-in-class technology and formulation techniques.” It states that it makes “great cannabis products and that “you can trust us to produce consistent, quality product while being transparent about what goes in it.”

Apparently, the company was not that transparent about its hazardous waste disposal operations. In 2019, two employees, part-owner Lunar Loussia and administrator Nadia Malloian were charged with illegal transportation of hazardous waste and knowingly transporting hazardous waste without a manifest from November 2017 to June 2018. They allegedly hired an unlicensed refuse hauler to transport the ethanol waste. They paid for this service in cash, and the transaction left no paper trail. According to the indictment, 18 illegal dumps in five different locations followed.

Because of its hazardous nature, the EPA created a “cradle to grave” system to track hazardous waste, such as ethanol, from its creation to its disposal. The EPA requires manufacturers to complete a comprehensive “waste manifest” form that details the amount, composition, origin, routing and destination of the waste. The form must be signed by the “generator, transporter, and disposal site operator.” At its final destination, a copy of the manifest must be sent to the EPA to assure proper waste management. No such manifest was created by WellgreensCA’s employees.

The plea agreement between WellgreensCA and the U.S. Attorney’s Office for the Southern District of California will be filed on June 3, according to a telephone conversation with Gene Iredale of Iredale & Yoo, attorney for defendant Malloian. It will consist of a felony for the corporation and Loussia and a misdemeanor charge for Malloian. The felony charge carries a two-year maximum sentence.

According to the WellgreensCA website, Loussia is the CEO of the company he co-founded in 2016. The company was licensed that year and began operating in 2018. Its current website states that “Wellgreens is a state-of-the-art operational manufacturing and distribution facility, “demonstrated by the fact that WellgreensCA is the only licensed manufacturing facility currently operating in the entire City of San Diego.” Malloian, an administrator for the company, has no biography on the company website.

A seven-page indictment filed in June 2019 charged Loussia and Malloian with the illegal dumping of more than 1,500 pounds of contaminated ethanol on both public and private property in Southern California.

The indictment that followed a 2017 grand jury finding explains that the criminal activity by WellgreensCA occurred in violation of the Environmental Protection Agency’s (EPA) Resource Conservation and Recovery Act ("RCRA") that 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.” Ethanol is an ignitable hazardous waste.

Way of Leaf, a website that gives “Medically-backed information on all things cannabis” describes the dangers of using ethanol during the manufacturing process. In discussing the three types of extractions, it states that “Ethanol is a highly flammable liquid that is volatile and colorless. One of the main reasons it is used is that it mixes well with water and other solvents. People have been using it for centuries after its discovery as a by-product of fermentation for alcohol. Its common uses include household items such as perfumes, biofuel, beauty products, and various solvents. You may think since manufacturers use it widely, ethanol must be perfectly safe. However, this is not the case. Ethanol is a dangerous chemical.” Way of Leaf goes on to say that it is safe as long as “high-quality extraction equipment,” is used.

At the time the indictment was filed, WellgreensCA’s attorney Vikas Bajaj told NBC7 San Diego that the company did not know the material was being illegally dumped. He said Wellgreens was caught in a conflict between state and federal hazardous disposal regulations that caused them to hire a consultant and that the consultant was to blame for the illegal dumping.

During its story on the indictment, NBC News7 also commented that San Diego County is quite plagued with illegal dumping, having to respond to about 30 incidents of “fires, explosions, and endangerment to the public” each year. WellgreensCA is one of 40 cannabis production facilities permitted in the City of San Diego. WellgreensCA’s dumping allegedly occurred before it obtained its manufacturing permit.