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PORTLAND, Ore. (KOIN) – Oregon Gov. Tina Kotek found out in April that Secretary of State Shemia Fagan had a consulting contract in connection with a cannabis business, according to Kotek’s spokesperson Elisabeth Shepard.
In a statement shared with KOIN 6 News, Shepard said the governor and Fagan had their first official meeting on April 19 to discuss the legislative session and other topics unrelated to cannabis.
At this meeting, Shepard said Fagan briefly mentioned she had recused herself from the audit that was being conducted on the Oregon Liquor and Cannabis Commission to examine how the agency regulates cannabis businesses in the state.
Fagan said her decision to separate herself from the audit was because of a consulting contract and said she had obtained an opinion from the Oregon Government Ethics Commission, Shepard said.
She said Kotek did not know the details of Fagan’s business relationship or contract until the information broke in the press.
“The Governor subsequently expressed her deep disappointment and dismay to Secretary Fagan upon learning those details,” Shepard stated.
The audit of the OLCC was released on April 28, a day after Willamette Week had reported Fagan was working for two people who owned one of the biggest marijuana companies in the state.
On April 29, Kotek called for an investigation into a potential conflict of interest between Fagan’s audit work and her paid consulting contract with Veriede Holding, LLC — an affiliate of the cannabis company La Mota owned by Rosa Cazares and Aaron Mitchell. The Oregon Secretary of State’s Office oversees the audits division.
In a statement to KOIN 6 News, Kotek said, “It’s critical that Oregonians trust their government. That is why I am urging the Oregon Government Ethics Commission to immediately investigate this situation… I let (Fagan) know that I think it’s important to have an expedited review of not only the audit, but any ethics complaints so we can get to the bottom of this. I think Oregonians deserve to know the details.”
On May 1, Fagan announced she was terminating her contract with Cazares and Mitchell. The following day, she issued a press release stating she would resign from her secretary of state position on May 8.
Files from the Oregon Secretary of State’s Office indicate Cazares and Mitchell have more than $5.6 million in tax liens from the IRS and the state of Oregon.
In a press release Tuesday, Kotek announced she is directing the OLCC to make state tax compliance a requirement for the agency to issue or renew cannabis retail licenses. This means applicants for cannabis retail licenses will need to provide the OLCC proof of tax compliance as part of their application process.
According to Kotek’s office, data from the Oregon Department of Revenue shows that cannabis retailers in Oregon have a higher non-compliance rate for paying taxes than other tax programs administered by the agency.
The owners of La Mota made campaign finance donations to both Kotek and Fagan. When Fagan announced she was terminating her contract with Cazares and Mitchell, she said she planned to donate her entire campaign finances to the Oregon Humane Society.
Kotek received $70,865 from Cazares, Mitchell and a political action committee run by Cazares. After the news broke of Fagan’s resignation, the governor made a $75,000 donation to the Oregon Food Bank.