Oregon Secretary of State Shemia Fagan apologized Monday for taking a job as a consultant for a marijuana company — part of an industry that her office just audited — that paid far more than her state salary.
After previously refusing to disclose the terms of her contract, Fagan had her office email reporters a copy on Monday. It showed the consultancy paid $10,000 per month, with bonuses three times that amount if she helped the company get licensed in other states.
Fagan, a Democrat who is the state’s second-highest ranking official, indicated she aims to hold onto her elected position despite Republican calls for her to resign. Gov. Tina Kotek, a Democrat, requested investigations by the Oregon Government Ethics Commission and the Oregon Department of Justice into the matter Friday.
“I am sorry for harming the trust that I and so many others have worked so hard to build with you over the last few years,” Fagan said during a Zoom conference she held Monday. “I will begin working to build that trust back today.”
The matter came to a head after Fagan’s office released an audit Friday that called for the Oregon Liquor and Cannabis Commission to “reform” some rules for marijuana businesses, saying they are “burdens” when combined with federal restrictions on interstate commerce, banking and taxation.
Fagan recused herself from the audit of Oregon’s marijuana regulatory agency because she is a paid consultant of an affiliate of marijuana retail chain La Mota, her spokesperson, Ben Morris, said at a virtual news conference timed with the audit’s release.
Fagan noted Monday that ethics guidelines allow outside employment. She said the consultancy didn’t represent a conflict of interest because any action taken as a result of the audit would be by the governor, Legislature or cannabis commission; and because a wide range of businesses would be affected by any regulation changes, not just her client.
La Mota’s co-owner has hosted fundraisers for top Democratic Oregon politicians, including Fagan, while the co-owner, her partner and their business allegedly owed $1.7 million in unpaid bills and more in state and federal taxes, according to Willamette Week, a Portland newspaper.
Fagan told reporters Monday she contacted Connecticut Lt. Gov. Susan Bysiewicz as part of her consulting gig, “just to ask who would be somebody for a cannabis company to talk to if they wanted to get the lay of the land.”
Bysiewicz spokesperson Samantha Taylor said in a statement that Fagan called about three weeks ago, asking about “Connecticut’s cannabis license process for a client Fagan had as part of her consulting business.”
After learning of Fagan’s outside work, minority Republicans in the Legislature called for her 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 Friday.
The governor underscored her own concerns as she called for the probes, saying: “It’s critical that Oregonians trust their government.”
Fagan announced Monday she was terminating her contract with Veriede Holdings, the La Mota affiliate. She also provided a copy of the contract, signed Feb. 24, which paid $10,000 per month plus a bonus of $30,000 if she helped the company acquire marijuana licenses in any state other than Oregon or New Mexico. A total of 21 states and Washington, D.C., have legalized recreational use of marijuana.
Fagan’s annual salary as secretary of state, a job that is responsible for running elections in Oregon and overseeing state audits, is $77,000. Fagan told reporters she is divorced with two young children and has student loans and other bills that she says her secretary of state’s salary is not enough to cover.
She said her consultant job had nothing to do with her elected position. Reporters, though, were skeptical. They asked why she would be hired as a pot consultant unless La Mota wanted her to leverage her position to expand their business in other states, especially when there are numerous bona fide marijuana business experts in Oregon.
Fagan responded that she has experience advising and representing, as a lawyer, Oregon businesses and contended that her work for La Mota didn’t require her to be a marijuana expert.
At Monday’s news conference, Fagan fought back tears as she said she is “deeply honored to serve as Oregon Secretary of state, regardless of the compensation.”
“I owe the people of Oregon an apology,” Fagan said. “I exercised poor judgment by contracting with a company that is owned by my significant political donors and is regulated by an agency that was under audit by my audits division.”
Fagan said she was donating all money in her political action committee to the Oregon Humane Society.
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Associated Press reporter Susan Haigh in Hartford, Connecticut, contributed to this report.
