Oregon Secretary of State Shemia Fagan is in hot water, with Republican lawmakers calling for her resignation and the Democratic governor seeking investigations because Fagan took a consulting job with a marijuana.
Fagan released a statement Friday saying he accepted the governor’s inquiry.
“I am pleased that the Governor has asked the DOJ and the Government Ethics Commission to engage in fact-finding because the facts will restore confidence in our audit division and in me as your Secretary of State,” Fagan said.
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The matter came to a head Friday after Fagan’s office released an audit of the state’s marijuana regulator, the Oregon Liquor and Cannabis Commission. The audit called for the OLCC to “reform” some rules for marijuana businesses, saying they are “burdens” when combined with federal restrictions on interstate commerce, banking and taxation.
Fagan, a Democrat, avoided the audit because he was a paid consultant to an affiliate of the marijuana retail chain La Mota, Fagan’s spokesman Ben Morris said in a virtual news conference about the audit’s release.
La Mota’s co-owner hosts fundraisers for top Democratic Oregon politicians, including Fagan, while the co-owner, his partner and their business allegedly owe $1.7 million in unpaid bills and more in state and federal taxes, according to Willamette Week, a Portland newspaper.
Fagan did not appear at the news conference, which included his spokesman, deputy and audit director. News of the consultancy was first reported Thursday by Willamette Week.
Fagan did not disclose how much the consultancy paid.
Morris denied that Fagan’s outside work represented a conflict of interest and said Oregon Government Ethics Commission guidelines specifically allow public officials to retain private employment.
But hours after the audit press conference, Republican legislative leaders, who are in the minority in the Legislature, called on Fagan to resign from the consulting job.
“This appears to be an ethics violation and otherwise, Oregon’s ethics laws are broken,” Senate Republican leader Tim Knopp and House Republican leader Vikki Breese-Iverson said in a joint that statement.
Gov said Tina Kotek, a Democrat, said she had concerns Friday.
“It is extremely important that Oregonians trust their government,” Kotek said in an emailed statement.
Kotek said he is urging the Oregon Government Ethics Commission “to immediately investigate this situation” and has asked the Oregon Department of Justice to review the audit.
The audit questioned the OLCC’s requirement that marijuana businesses keep their stash behind steel doors and have a 24-hour video surveillance system. The OLCC should make marijuana regulations more similar to those governing distilled spirits, which the agency also regulates, auditors said.
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The audit also said Oregon should prepare for the US government to legalize marijuana and position the state, with its large stockpiles of the drug, as a national leader in the industry.
Oregon, long known for its potent marijuana, would compete with other pot-producing states — particularly California, which also has a massive oversupply — for the export market if marijuana becomes legal nationwide.
“Now is the time for Oregon to prepare its system for a future when cannabis is legal nationwide,” Oregon Deputy Secretary of State Cheryl Myers said at the news conference.
Oregon Audits Director Kip Memmott noted with some envy that Canada legalized marijuana and was “more proactive in looking at the financial benefits.”
Oregon could lead the US in how pot is regulated, while also offering high-end strains of marijuana, Memmott said.
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“We have kind of a signature commodity, with … our timber and all the other great things that Oregon does here. And there’s a real opportunity,” Memmott said.
Oregon auditors reminded the OLCC to follow its own strategic plan to position the state as a national leader by increasing the number of speaking engagements at national conferences, holding more statewide meetings and championing a nationwide framework for cannabis regulation.
OLCC Executive Director Craig Prins wrote in response that his agency is committed to moving quickly if, and when, interstate marijuana commerce is permitted.
Prins said he expects “only the highest quality products from well-regulated systems, with recognized testing, packaging, labeling, and traceability standards, will be allowed to be sold in other states.”
Oregon has been prioritizing these standards for years, aimed at protecting consumers, Prins said.
A total of 21 states and Washington, DC, have legalized the recreational use of marijuana, but activists see little chance of the current Congress moving toward national legalization. However, there is hope that the Biden administration will allow pot commerce in states that have legalized it.