Kotek Wants Ethics Probe and DOJ Review of Cannabis Audit in Light of Fagan Consulting Revelations

“It’s critical that Oregonians trust their government.”

Gov. Tina Kotek at a campaign rally. (Blake Benard)

Gov. Tina Kotek tells WW she has requested dual Oregon Government Ethics Commission and Oregon Department of Justice investigations of the circumstances surrounding an audit released today of the Oregon Liquor and Cannabis Commission.

Kotek’s move comes after revelations that Secretary of State Shemia Fagan, who oversees the Audits Division, signed a consulting contract with an affiliate of the embattled La Mota cannabis dispensary chain even as Fagan’s auditors were examining the OLCC’s regulation of the cannabis industry.

Audit work papers show that Fagan encouraged auditors to incorporate the concerns of Rosa Cazares, the CEO of La Mota. Cazares and her partner, Aaron Mitchell, are large Fagan campaign contributors.

“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 said in a statement. “Additionally, I am requesting that the Oregon Department of Justice examine the secretary of state’s recently released audit of the Oregon Liquor and Cannabis Commission and its cannabis program.”

At 7:30 pm Friday, Fagan broke her 24-hour silence on the matter in a statement to WW. She defended the contract work and said she’d broken no ethics laws. She added that she supports the investigations urged by Kotek because “the facts will restore trust in our Audits Division and in me as your secretary of state.” (Fagan’s full statement can be found below.) She still did not, however, provide a copy of the contract itself or disclose what she’s being paid.

Earlier today, WW reported that the Oregon Government Ethics Commission had received at least two ethics complaints about Fagan’s contract with the La Mota company. This afternoon, the executive director of the commission confirmed to WW that it had begun a preliminary review of those complaints.

Records show that Fagan recused herself from the OLCC audit one week after the audit had already been written in its final form.

La Mota’s owners, Aaron Mitchell and Rosa Cazares, gave significant political contributions to both Kotek and Fagan, among other top Democrats. As they did so, they and the companies they control racked up more than $7 million in state and federal tax liens and fought more than two dozen lawsuits filed against them in Oregon circuit courts.

Since March 29, when WW first published its investigation into La Mota, it has asked Kotek if she will return the more than $68,000 in political contributions made to her campaign by Cazares, Mitchell, La Mota and the political action committee Cazares controls. It was not until Friday evening—after Kotek asked for the investigations—that she said she would donate $75,000 to the Oregon Food Bank.

“The contributions from La Mota were made legally during the course of the campaign for governor,” Kotek campaign manager Meghan Cavanaugh said, “but in the interest of transparency and reducing any distraction from the work of the people, the governor is making a contribution in the amount of $75,000 to Oregon Food Bank for food acquisition.”

Below is Fagan’s full statement to WW.

“In my private employment, as a legislator and as Secretary of State, I have held myself to the highest standard and treated the ethics guidelines as a floor, not a ceiling. To that end, I voluntarily shared today that I maintain private employment as an adjunct professor at Willamette University College of Law, and hold limited private contracts with HKM Employment Attorneys and Veriede Holding, LLC. The time needed is minimal and I prioritize my public service.

Today, people had specific questions about the contract I have with Veriede Holding, LLC, a cannabis company and affiliate of La Mota. I immediately shared all the information that relates to my work as a public official, I also understand why I’ve been asked to share more. I’m happy to share that I do non-legal consulting work gathering information and resources on the cannabis industry outside of Oregon. The company contracted with me and others to review the landscape for expanding their operations outside of Oregon. The nature of the contract and the work does not create a conflict of interest under Oregon law or ethics rules. However, as soon as I contemplated the contract and learned that recusal was an option (it is not for legislators), I recused myself from my only work as a public official that touches the cannabis industry, the OLCC audit.

It is fair to ask, why did we audit OLCC to begin with? I have heard concerns about OLCC from numerous cannabis businesses in Oregon since at least 2018 as a candidate for the Oregon Senate and continue to hear them. At the request of numerous industry professionals in Oregon, two years ago I asked the Audits Division to audit the OLCC. Auditors followed their standard practice and periodically updated me about the audit. In all the agency’s audits, auditors speak with dozens of sources, never relying on any one individual source and ultimately they decide the scope of any audit and its findings.

I welcome Governor Kotek’s request to DOJ to review the audit because it will simply highlight the professional work of Oregon’s auditors.

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.”

Willamette Week’s reporting has concrete impacts that change laws, force action from civic leaders, and drive compromised politicians from public office. Support WW's journalism today.