Oregon Republicans Call For Secretary Of State's Resignation Over Ethics Violation Related To Cannabis Consultant Role

On Friday, the Oregon Liquor and Cannabis Commission (OLCC) released an audit on the regulation of the marijuana industry calling for the modernization of cannabis laws to help grow the economy and ensure social equity. The audit comes on the heels of the Oregon Secretary of State Shemia Fagan publicly confirming she took a side job as a consultant to the troubled marijuana company La Mota this February, which sparked a series of controversies. 

The complexity of the situation lies in the fact that Fagan took the consultant's job while in charge of overseeing the state audit. 

Several hours after the press conference announcing the audit, Republican lawmakers called for Fagan’s resignation. 

“This appears to be an ethics violation and if it isn’t then Oregon’s ethics laws are broken,” Senate Republican leader Tim Knopp and House Republican leader Vikki Breese-Iverson said in a joint statement, reported the Associated Press. 

Governor Calls On Ethics Commission And DOJ 

At a press conference Saturday, Governor Tina Kotek (D) spoke on the issue. "I'm certainly very dismayed by the press reports about what's been going on with the Secretary of State, and her relationship with her outside work," reported KGW8.

Kotek previously called on the Oregon Government Ethics Commission to investigate Fagan's actions and for the Oregon DOJ to look into a recently released audit. 

"It’s critical that Oregonians trust their government. That is why I am urging the Oregon Government Ethics Commission to immediately investigate this situation,” Kotek stated, adding “I want to make sure that when we read that audit, we are confident those results are based on good auditing practices and looking at performance.” 

Fagan Responds, Newly-Obtained Records 

According to Fagan’s statement issued late Friday, she is pleased with the governor’s decision. 

“I am relieved that the Governor has asked DOJ and the Government Ethics Commission to engage in fact-finding because the facts will restore trust in our audits division and in me as your Secretary of State,” Fagan said. 

According to records, Fagan officially removed herself from an audit on Feb. 15. However, according to records obtained by Willamette Week, the Audits Division sent the final draft to the OLCC for its response on Feb. 8, indicating that most of the audit work was already done. The outlet further noted that the OLCC had issued over 50 licenses to the owners of La Mota. Fagan also pushed on several occasions for the auditors to interview one of La Mota's owners, Rosa Cazares, saying there is “a belief that folks who are running cannabis businesses are treated differently.” 

While the Audits Division did interview Cazares as part of their regular process, division spokesperson Laura Kerns told Willamette Week that the interview was not used for the audit. “It’s important to note the team did interview Rosa in the course of scoping the audit, but ultimately decided not to use the interview as evidence for anything that appears in the report,” Kerns said. 

In the interview, Cazares called the OLCC sexist and ageist, adding that it does not "support the people of color.” 

It is also important to note that Cazares and her partner, Aaron Mitchell, and the businesses they control had given $200,000 to Democratic politicians, including $45,000 to Fagan. 

Audit Highlights 

The OLCC regulates businesses in a billion-dollar industry that saw $311 million in tax revenues during the 2019-21 biennium. 

According to the audit report, the OLCC needs to implement changes to improve its services to the state and prepare for federal marijuana reform. While cannabis is considered a Schedule 1 substance under federal law, which means it has no medical value and has a high abuse potential, it is completely illegal in only three U.S. states. 

This federal status of the plant imposes several difficulties on the industry, the audit states, such as a moratorium on new licenses as well as federal restrictions on interstate commerce and banking services. These limitations do not apply in other industries, such as alcohol. 

“Instead of ensuring the state’s cannabis industry receives similar supports provided to other industries that help bolster the economy, many of Oregon’s cannabis regulations are based on repealed federal guidance,” the report reads. These rules are mostly in place to prevent federal intervention.

The auditors recommended the following:

• Identify and reform its rules which are in place primarily to avoid federal intervention; suggest seed-to-sale batch tagging, steel doors and 24-hour video surveillance; 
• Ensure its replacement cannabis licensing system can gather demographic data; 
• OLCC should include an assessment of the impact the mortarium has on individuals that were most negatively impacted by the War on Drugs; 
• Work with the Oregon DOJ to develop clear guidelines and expectations for how state agencies should interact with cannabis businesses;
• Direct Business Oregon to make its programs available to all legal Oregon businesses.

Photo: Benzinga edit with images by Wikimedia Commons and Kym MacKinnon on Unsplash