Shemia Fagan, Oregon’s secretary of state, just revealed to WW that in February, she signed a consulting relationship with a La Mota cannabis store subsidiary. The owners of La Mota are under investigation by the Oregon Department of Revenue and the Oregon Liquor and Cannabis Commission, as previously reported by WW.
The owners reportedly contributed heavily to Fagan’s election campaign. It seems like money is tight for La Mota right now. More than $7 million in tax liens have been issued against La Mota owners Rosa Cazares and Aaron Mitchell and the corporations they manage in recent years by the Department of Revenue and the federal Internal Revenue Service.
Over the last several years, Cazares, Mitchell, and their businesses have been sued 30 times in Oregon circuit court. A common claim in the papers is unpaid debt. WW’s March 29 cover story and following articles in-depth reported these facts, as did the magazine.
WW discovered on Thursday(April 27) that Democrat Fagan, an employment lawyer before winning the secretary of state’s election in 2020, has taken on one of La Mota’s affiliates as a client despite the company’s difficulties. In response to WW’s inquiries Thursday afternoon, Fagan’s office verified that arrangement.
An audit of the OLCC’s oversight of the cannabis sector will be made public on April 28 by the Audits Division, which answers Fagan. Some businesses have taken exception to the agency’s rules. The Fagan administration claims that Fagan disqualified herself from participating in the audit.
“Secretary Fagan recused herself from the OLCC audit on Feb. 15 because she was planning to begin a limited consulting contract with Veriede Holding LLC (an affiliate of La Mota),” spokesman Ben Morris said. “The contract with [Veriede] began on Feb. 20, 2023, and is for projects outside of Oregon.”
Morris did not provide details about the contract or the salary she receives. Fagan does not seem to have any consulting businesses listed in the Corporation Division of her government office. Fagan’s silence on contract-related emails was perplexing.
As secretary of state, Fagan receives a yearly salary of $77,000. Officials in the state of Oregon are allowed to have other jobs outside of government. Oregon ethics laws allow public officials to take outside employment so long as they don’t use their public position, public resources, or insider knowledge obtained from their position to aid their outside work.
Morris says Fagan spoke with the Oregon Government Ethics Commission three times about her proposed consulting work and added that the commission “did not advise Secretary Fagan of an actual or potential conflict.”
It is as long as they do not benefit from their official capacity, public resources, or insider information gained via their position. Morris claims Fagan discussed her prospective consulting employment with the Oregon Government Ethics agency on three separate occasions, adding that the agency “did not advise Secretary Fagan of an actual or potential conflict.”
It is normal practice for public officials to get a formal legal interpretation from the commission on questions of ethics. According to the head of the agency, Ron Bersin, such was not the situation here.
According to what I’ve been told, she really called the agency and talked to an agent. These were phone calls, and although we do not keep track of every call we get, we do keep track of the overall volume, Bersin stated in an email. The worker thinks this happened a few months ago, but she can’t recall how often she spoke with SOS Fagan.
If you believe Morris, “the Secretary’s contract states that both the consultant and the company will “at all times abide by guidelines for public officials.” The Secretary will cancel the contract immediately if these restrictions aren’t followed.
A representative from the Oregon State Bar told me that Fagan is not an active member of the bar, and so cannot practice law in that state. Morris claims that although Fagan “is still in the process of being restored to the Oregon State Bar…She submitted a new application [in February] and is now completing the steps to be readmitted.
Even yet, it is quite unusual for a statewide elected person to have a second job. Former Governor John Kitzhaber asked the Oregon Government Ethics Commission for permission to deliver paid talks during his time off in 2012. Before his resignation in February 2015, Kitzhaber, a nationally known specialist on health care policy, delivered just one such address.
Fagan’s responsibilities as secretary of state include monitoring elections, companies, and audits. Oregonians must believe that she is serving the public interest, not private special interests, in each of these capacities.
Mitchell and Cazares have over 50 licenses via the OLCC, while Fagan claims her consulting work will be done outside of Oregon. As La Mota expands into other areas, Fagan’s fame might improve the company’s bottom line. Fagan’s choice to look for employment elsewhere is uncommon in two other ways.
The fact that the proprietors of the corporation she’s committed to working for were key supporters of her 2020 campaign is the first and most obvious reason for suspicion. The Oregon Secretary of State’s office has Veriede Holding LLC listed as an official business.
According to its registration documents, Cazares serves as manager and Mitchell as a member. “Retail” is mentioned as the company’s line of operation. They gave a lot of money to prominent Democrats as their legal and financial problems mounted, including Fagan, Governor Tina Kotek, and Congresswoman Val Hoyle (who had previously served as commissioner of the Bureau of Labor & Industries).
Since 2019, the Cazares couple, La Mota, and a Cazares-controlled PAC have given more than $200,000 to Democratic candidates and committees. Since 2020, Mitchell has given Fagan a total of $45,000. La Mota’s business with at least two governmental agencies further affects Fagan’s contract.
The Oregon Liquor and Cannabis Commission is responsible for vetting license applications, punishing licensees for misbehavior, and cracking down on bad actors in the cannabis industry. Cazares and Mitchell’s companies have obtained several licenses from the government, including those to operate as cultivators, wholesalers, and retailers.
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Income taxes in Oregon are collected by the Oregon Department of Revenue, which has filed liens totaling over $1.5 million against Cazares, Mitchell, and the businesses they own for unpaid taxes, including over $592,000 in marijuana sales taxes, in recent years.
Fagan also manages the state’s Audits Division, which will publish an audit of the OLCC and its cannabis license and compliance operations on April 28. The significance of today’s news is that the politician in charge of the auditing agency has worked for La Mota’s owners all along.
On February 15th, Fagan emailed her coworkers earlier this month to let them know that she would “soon be consulting for a company involved in the cannabis industry in multiple states.” She said, “I do not believe a real conflict exists because the Legislature or OLCC would take any action required, and any benefit could flow to all cannabis companies in Oregon, not just this specific company.”