Oregon secretary of state resigns after marijuana consulting side hustle scrutiny

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Oregon’s secretary of state submitted her resignation on Tuesday after being scrutinized for working as a consultant for a marijuana company, during the same time her office conducted an audit on the cannabis industry.

Shemia Fagan, a Democrat, announced her resignation on Tuesday, saying it will be effective on May 8.

Oregon Secretary of State Shemia Fagan attends a conference in Baton Rouge, Louisiana, on July 8, 2022. Fagan is under fire as Republican lawmakers call for her resignation over a possible ethics violation.  (AP Photo/Matthew Hinton, File)

Once Fagan steps away, Deputy Secretary Cheryl Myers will take on oversight of the agency until Gov. Tina Kotek appoints a new secretary.

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"Protecting our state’s democracy and ensuring faith in our elected leaders – these are the reasons I ran for this office. They are also the reasons I will be submitting my resignation today," Fagan said. "At this time, I believe it is in the best interest of our state for me to focus on my children, my family, and personal reflection so that the Secretary of State can continue to offer the exemplary customer service Oregonians deserve."

Fagan is Oregon’s second-highest ranking official and is responsible for running Oregon’s elections and overseeing state audits. Her annual state salary is $77,000, which she reportedly said is not enough to cover bills, student loans and raising two young children.

Marijuana plants grow at GB Sciences Louisiana. (AP Photo/Gerald Herbert, File)

On Monday, Fagan had her office email reporters a copy of the terms of her contract as a consultant with an affiliate of marijuana retail chain La Mota, which she previously refused to disclose.

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The terms show she was paid $10,000 per month with bonuses three times that amount if she helped the company get licensed in other states, more than doubling her annual income.

The matter escalated when Fagan’s office released an audit late last week that called for the Oregon Liquor and Cannabis Commission to "reform" some rules for marijuana businesses, claiming they are "burdens" when combined with federal mandates on interstate commerce, banking and taxation.

Fagan recused herself from the audit of the agency because of her role as a paid consultant, though she said the consultancy was not a conflict of interest because action taken because of the audit is on the governor, legislature or cannabis commission.

Fagan also said a wide range of businesses would be affected by any regulation changes and not just her client.

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The co-owner of the company Fagan consulted for has hosted fundraisers for top Democratic Oregon politicians, including her. 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 Portland newspaper Willamette Week.

"While I am confident that the ethics investigation will show that I followed the state’s legal and ethical guidelines in trying to make ends meet for my family, it is clear that my actions have become a distraction from the important and critical work of the Secretary of State’s office," Fagan said.

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A press release from Fagan’s office noted that the Oregon Elections Division and Oregon’s 36 county elections officials are fully prepared to hold a special districts election on May 16, and the elections division will work with counties to complete the normal activities involved with holding local elections.

All secretary of state divisions have reported to Myers for the past two years, so when she temporarily steps into Fagan’s role, she will continue her oversight and collaborate with Kotek’s office to replace Fagan.

"My first priority is to make sure Oregonians receive the customer service they deserve," Myers said. "This agency does such critical work, and it’s our job to put Oregonians first during this transition.

"This is an unfortunate situation, but a change of leadership will allow agency staff to continue their good work with less distraction moving forward," Myers added.

Justin Hwang, the Oregon Republican Party chairman said Fagan's resignation brings a sad ending to a long story of deceit, corruption and overreach.

"I urge the Department of Justice and the member's state ethics to thoroughly and immediately investigate what happened," Hwang said. "This is the culture Salem Democrats have created and the leaders who run our state act. From Kitzhaber's crimes to Kate Brown and Comcast to this it's sad and shameful. It's sad because Oregonians don't trust their government or their leadership.

"Oregon is a mess because of failed Oregon Democrats," he added.

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Hwang promised that in 2024 Oregonians will have a better choice with Republican leaders who will put the state first and work to restore accountability, transparency, and integrity to state government.

The Associated Press contributed to this report.