Oregon Secretary of State Shamia Fagan announced Monday that she resigned from her $10,000-a-month consulting job and tearfully apologized for her “poor judgment” in her work with a politically connected cannabis company regulated by government agency that her office audits.
Fagan also released a copy of his contract with Veriede Holding LLC, an affiliate of the La Mota cannabis dispensary chain. Fagan began the contract on Feb. 20 while her office was reviewing the state’s regulation of cannabis production.
Fagan stepped down from the audit in early February when he knew he could start working at the company. By this point, the audit was largely complete.
“I owe the people of Oregon an apology,” Fagan told reporters. “I owe an apology to the hardworking professionals at my agency. I am truly sorry. I exercised poor judgment by contracting with a company that is owned by my political donors and regulated by an agency that was audited by my audit department. I am sorry to have broken the trust that I and so many others have worked so hard to build, and I will start working to build that trust today.”
La Mota’s reputation in the cannabis industry is spotty, with media reports of unpaid bills and tax liens, even as he seeks to strengthen his political influence.
Fagan said she was paid for two months of the consulting contract.
Records show she informally consulted with the Oregon Government Ethics Commission on the matter and decided to recuse herself from the audit. Fagan and committee staff exchanged phone calls and emails between Feb. 9 and Feb. 15, documents from her office show.
Commission staff had sent her previous guidance, and Fagan decided to take the step of recusing herself instead of seeking a formal written opinion, which many staffers did.
“One opinion would make me quit,” Fagan said. “Instead, I chose to voluntarily take the most restrictive constraint upon myself.”
Although there was no indication Fagan broke any laws, the settlement raised eyebrows in Salem. Republican lawmakers called on Fagan to resign, while Gov. Tina Kotek called on the Oregon Government Ethics Commission to investigate the matter.
Fagan said he looks forward to the commission investigating the case because “they will confirm that I have faithfully followed Oregon’s ethics rules and laws.”
At the same time, Fagan said, simply following the law is not enough.
“I’m not here today to defend compliance with my rule,” Fagan said. “I’m here today to own that. There is a difference between following all the rules and doing nothing wrong. And I broke your trust. And that was wrong. And I’m really sorry.”
Fagan’s contract with the company was to study the cannabis industry in states outside of Oregon as it looked at possible expansion opportunities.
The three-page contract includes the following:
- $10,000 monthly salary, no hourly rate or minimum hours required.
- Fagan did not have to use government resources, time or his position as an elected official to help the company.
- Fagan was also eligible for a $30,000 bonus if the company obtained a marijuana license outside of Oregon or New Mexico.
Fagan said she would not be eligible for a $30,000 bonus based on her performance in the first two months. She said she spends about 15 hours a week on consulting work, making about $150 to $175 an hour.
The deal was made, Fagan said, when she was catching up socially with Rosa Cazares, CEO of La Mota and mentioned in February that she teaches at Willamette University Law School. This job is about four hours a week and pays the rough hourly equivalent of what she made as a consultant.
“Rosa mentioned that her company is looking to expand outside of Oregon and is looking for contractors to do industry research in US states and territories,” Fagan said. “I was interested in this opportunity because it was something I was highly qualified to do after going through law school and being an attorney for a decade.”
Fagan is no longer a registered attorney with the Oregon State Bar and her work is not legal consulting, she said.
The lucrative consulting job paid her more than her government job at $77,000 a year.
Fagan said it was difficult to survive on his government salary. She made $105,000 in 2009, her first year as an attorney, she said.
“Fourteen years later, I’m starting over financially after the divorce,” Fagan said. “I have two small children. I have student loans and other bills. I am a renter in the expensive Portland metro area and am the only income earner in my household. So, to put it bluntly, my salary as Secretary of State alone is not enough to make ends meet.”
Fagan had included state regulation of cannabis in her 2021 audit plan, two years before the advisory agreement.
Willamette Week, which first reported the consulting agreement, also broke the news that Fagan had suggested the auditors speak to Khazars.
“I proposed Rosa along with another person I knew personally,” Fagan said, saying it was “customary.”
“I believe they interviewed about a dozen people,” Fagan said. “I did not participate in the interviews. I didn’t follow up after the interviews. My role is very much as a high-level audit supervisor.”
The audit made several recommendations, including that Oregon better track marijuana license demographics and prepare the federal government to approved marijuana, which is currently classified as a Schedule 1 substance. This means that federal authorities believe it has no medicinal value and has a serious potential for abuse.
Asked if her position led to the deal — given her lack of experience in cannabis production — Fagan said she had other qualifications as a seasoned researcher.
“I’ve never been asked to do anything but look at the ordinances in the area,” Fagan said. “It’s something I’m qualified to do as someone who usually represents the business. You know, you don’t have to be an expert in any particular part of it. I frequently reviewed rules and regulations.
Fagan said her contact with La Motta began through her work and social life.
“I met many, many people in the cannabis industry, including the owners of La Mota,” Fagan said. “They became donors to my campaign in 2020. We have children the same age and since we met in 2020 I have seen them socially from time to time.
Co-owner Aaron Mitchell has contributed $45,000 to Fagan, starting with a $10,000 contribution in September 2020, shortly before she was elected secretary of state. Fagan has not received any contributions from LaMotta Cazares himself, and both have given thousands of dollars to other Democratic politicians.
Fagan’s campaign for secretary of state reimbursed her about $20,000 in personal expenses.
Fagan said the reimbursement was for expenses she paid in advance for political events and travel, including airfare, food and lodging. Some of that is out-of-state travel, including to California and Alaska.
Salaries for public service
Fagan’s salary appears to be equivalent to that of other elected agency heads. Treasurer Tobias Reed and Commissioner Christina Stevenson of the Bureau of Labor and Industries also earn $77,000 a year, according to a Department of Administrative Services spokesman. Attorney General Ellen Rosenbloom earns $82,200 a year, and Governor Tina Kotek has an annual salary of $98,600.
They do not have a side job, as do most full-time heads of agencies, according to a survey by “Capital Chronicle” among agencies. Directors of non-sideline agencies include: Oregon Health Authority, Department of Human Services, Business Oregon, Department of Environmental Quality, Department of Employment, Oregon Parks and Recreation, Bureau of Labor and Industries, Department of Consumer and Business Affairs, Department of Revenue, Department of Transportation, Division of Administrative Affairs Services, Department of Forestry, Department of Water Resources, Department of Corrections, Department of Aviation, and the Oregon Lottery.
“It is a great honor to serve as Oregon’s secretary of state, regardless of compensation,” Fagan said.
Asked if she would release her tax returns given questions about her outside work, Fagan said, “It’s not customary for me to release my tax returns.”
“I’m here because I admit a mistake I made,” she said.
Ethics Committee Rules
It is common for public officials to seek written advice from the Oregon Government Ethics Commission as they navigate ethical issues surrounding outside employment – Commission Review public database shows more than 80 requests for advice on conflicts of interest over the past five years, about half of the nearly 170 total requests.
That includes requests from heads of state agencies — James Schroeder, former director of the Oregon Health Authority, asked for assurances that his previous work at various health care organizations and the pension plans he participated in while on the job did not create a conflict of interest. interests.
Lawmakers also sought guidance. Incoming state Rep. Ben Bowman, D-Tigard, co-owns Oregon 360 Media, which publishes podcasts and a weekly newsletter about state politics. He requested and received a letter from the ethics commission in February specifying that he could continue to hold both positions but could not use government funds for his company.
In 2022, Sen. Sarah Gelser Blouin, MD, Corvallis, was advised that she may have to declare a potential conflict of interest on legislation affecting the gambling industry because her father and brother work in the industry and she owns stock in their company . In 2021, the committee advised Sen. Elizabeth Steiner, D-Portland, that it was OK to sublease an office from lobbyists because she was paying more than fair market rate and not trying to get a rent discount because of her position.
And Congressman Greg Smith, R-Heppner, requested and received six letters since 2017 confirming his outside work, including owning an economic development firm that has contracts with Harney County and Umatilla Electric Cooperative. Each time, the director of the commission advised him that holding the position did not constitute a conflict of interest, but he should be aware of potential conflicts that might arise.