Oregon Secretary of State Shemia Fagan poses for a photo.
Courtesy of Oregon Secretary of State's office
Secretary of State Shemia Fagan has abandoned a $10,000-a-month contract consulting for an Oregon cannabis company, amid mounting pressure that could pose a threat to her political future.
In a meeting with reporters on Monday, a subdued Fagan said she’s come to understand that she broke public trust by agreeing to work for a cannabis industry player — and political donor — that stood to gain from an audit the Secretary of State’s Office was carrying out. Fagan recused herself from that audit before signing the contract, but the report was already largely complete.
“Clearly this contract raises questions,” Fagan said in a press conference. “Upon painful reflection, taking that contract was poor judgment, and for that I am sorry.”
Fagan first issued a lengthy written apology Monday morning, then held a 30-minute news conference at which she answered questions from reporters and acknowledged she had made a significant mistake. She also said she “faithfully followed Oregon’s ethics rules and laws,” though she showed poor judgment in the process.
“I am not here today to defend my rule-following,” Fagan said during the Zoom session where she, at times, paused to maintain her composure. “I’m here today to own that there’s a difference between following all the rules and doing nothing wrong.”
Alongside releasing a copy of the contract — after days of ignoring calls to do so — Fagan offered the most details yet about how she got lucrative work for the owners of the La Mota chain of cannabis dispensaries, Rosa Cazares and Aaron Mitchell.
The pair have been the subject of a string of stories by Willamette Week, which detailed how they failed to pay millions of dollars in taxes and were accused of stiffing vendors even as they became influential political donors. The newspaper also broke news about Fagan’s consulting contract.
Fagan told reporters on Monday she began looking for work earlier this year to supplement her $77,000 salary as secretary of state.
“I’m starting over financially after a divorce. I have two young kids. I have student loans and other bills. I’m a renter in the expensive Portland metro area, and I’m the sole income earner in my household,” Fagan said.
Fagan several times said she was a former attorney who took a pay cut to work in the public sector. She also started working another side job earlier this year teaching a course at Willamette University Law School, she said, to supplement her full-time job.
The secretary said she met Cazares and Mitchell at an event in 2020, as she was running for secretary of state. She and the couple have children of similar ages, and Fagan said she had “seen them socially from time to time.”
Fagan would go on to recommend that her auditors speak with Cazares as they worked on auditing the OLCC, public records show. Fagan said Monday that was not out of the ordinary.
This February, Fagan said she mentioned to Cazares that she’d be teaching a class at Willamette University to make extra money, and Cazares offered a job.
“Rosa mentioned that her company was looking to expand outside of Oregon and looking for contractors to do research on the industry and U.S. states and territories,” Fagan wrote. “This opportunity interested me because it was something I was highly qualified to do.”
The terms of Fagan’s contract are vague, stating only that Fagan will “serve as a Consultant” for Veriede Holding, LLC, an affiliate of La Mota. For that work, the secretary was paid $10,000 a month beginning on Feb. 20. She was eligible to receive a $30,000 bonus if La Mota secured licenses in any state besides Oregon and New Mexico.
It was not immediately clear on Monday why New Mexico was singled out in the contract, but it may be because the company was already making inroads there. La Mota CEO Rosa Cazares met with New Mexico’s Lieutenant Governor Howie Morales several times. ”They were here asking questions about doing business in New Mexico, asking about the cannabis industry, the recent changes to our laws,” said Jim Farrell, a spokesman for the lieutenant governor. Farrell said Cazares did not ask for specific help, but she did contribute to Morales’ campaign fund.
La Mota purchased three properties in New Mexico in the summer of 2022, according to reporting by Willamette Week.
One property was a small bakery in the tiny town of Deming. The neighbors raised concerns about La Mota’s plan to convert the bakery and due to the location of a nearby daycare, the local city council refused the company’s permit, according to the Deming Headlight.
“They have never asked me to do anything other than gather information on expanding their cannabis business to other states,” Fagan said.
Fagan estimated she spent 15 hours a week working on the contract, describing that effort as largely tedious research. But Fagan acknowledged that she’d had at least one conversation with a high-ranking official, Connecticut Lt. Gov. Susan Bysiewicz, “just to ask who would be someone for a cannabis company to talk to if they wanted to get the lay of the land.”
Stores in Connecticut just started selling recreational marijuana in January.
“Approximately three weeks ago, the Lieutenant Governor received a phone call from Shemia Fagan inquiring about Connecticut’s cannabis license process for a client Fagan had as part of her consulting business,” Bysiewicz office said in a statement. “The Lieutenant Governor pointed Fagan to public information of the appropriate state agency contact to learn Connecticut’s lottery process. There was no further communication beyond the one phone call.”
Fagan said it was “not an expectation” that Fagan tap her contacts in other states, and that she didn’t contact anyone in her official capacity. As secretary of state, Fagan is second to the governor in the line of succession and often likens herself to the state’s version of a lieutenant governor. In her role, she has met both secretaries of state and lieutenant governors around the country.
Fagan said she never landed the $30,000 bonus and was compensated for two months of work. She was expected to receive a third payment but notified the cannabis business owners she was terminating the contract this weekend.
The apology came days after Fagan had defiantly proclaimed she welcomed an investigation into her decision to take on another job while overseeing Oregon’s elections and serving as first in line to replace the governor.
On Friday, Gov. Tina Kotek, House Speaker Dan Rayfield and Senate President Rob Wagner had all issued statements expressing concern about Fagan’s side gig. Republican leaders called for Fagan to resign.
While Fagan set a far more contrite tone on Monday than she had in a statement on Friday, she maintained she had done nothing to break ethical guidelines around accepting private work.
Fagan said she went above and beyond state requirements by recusing herself from her office’s audit of the Oregon Liquor and Cannabis Commission before she signed a contract. And pressed on Monday, she flatly denied the suggestion she was chosen for the lucrative work because of the position of influence she holds, which could violate ethics laws.
“It’s something I’m qualified to do,” Fagan said. A former lawyer, she noted she has been working to get her law license reinstated, and had planned on potentially doing legal analysis as part of the contract.
Fagan’s actions will soon be the subject of dual investigations — one by the Oregon Government Ethics Commission, which will look into her private work, and one by the Oregon Department of Justice, which will vet her office’s OLCC audit for bias.
Like other Democrats that have received donations from Cazares and Mitchell, Fagan indicated on Monday she would take steps to distance herself from the money. She plans to donate all of the money sitting in her campaign account to the Oregon Humane Society.
State campaign finance records show that Fagan’s political action committee has $16,248, though that tally could be missing transactions that have not been reported yet. Fagan accepted $45,000 in political contributions from Mitchell and Cazares, much of it after she’d already won the election.
Fagan was twice asked whether she would release her tax returns to shed further light on her financial situation. She said she would not release those tax documents. Monday’s press conference concluded as a journalist asked the question again.
Lauren Dake contributed to this report.