Fall of a rising star: Oregon Secretary of State Shemia Fagan resigns Tuesday over $10,000 a month cannabis side job

By JULIA SHUMWAY/Oregon Capital Chronicle

SALEM — Secretary of State Shemia Fagan will resign next Monday, a little more than a week after news broke of her moonlighting for a troubled cannabis company that played a key role in an audit conducted by her office.

It’s an abrupt fall from grace for Fagan, next in line for governor and long viewed as a rising star in state Democratic politics. Political watchers have speculated that she would run for governor, Congress or the U.S. Senate in the coming years, and she had already announced plans to seek re-election in 2024.

Fagan submitted her resignation by email to Gov. Tina Kotek at 2:26 p.m. Tuesday, several hours after she told Kotek and announced it publicly, according to documents shared by the Secretary of State’s office.

“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 wrote.

“Protecting our state’s democracy and ensuring faith in our elected leaders – these are the reasons I ran for this office,” she continued. “They are also the reasons I am submitting my resignation now.”

Her decision to moonlight as a consultant for La Mota, a cannabis company whose co-owner donated $45,000 to her campaign, has baffled observers and sparked calls for stronger enforcement of state ethics laws and higher salaries for Oregon elected officials, who are among the lowest-paid in the nation.

Since Willamette Week broke the news of her contract with the company late last week, the Oregon Government Ethics Commission launched an investigation, Fagan’s chief of staff resigned and legislative Republicans and the editorial board of the state’s largest newspaper called on her to step down.

Kotek urged the commission to investigate and asked the Department of Justice to analyze the recent Secretary of State audit of the cannabis industry for any influence Fagan had had on that. It indicated that looser regulation would help the industry.

Kotek said in a statement that she supported Fagan’s decision to resign, though a spokeswoman added Tuesday evening that Kotek didn’t ask Fagan to step down. Kotek spoke with Fagan on Friday to share her concerns and again by phone on Tuesday morning when Fagan shared her decision to resign.

“It is essential that Oregonians have trust in their government,” Kotek said. “I believe this is a first step in restoring that trust.”

At first, Fagan appeared determined to weather the storm. Less than an hour after the initial Willamette Week article was published, she was tweeting praise for students who contributed essays and photographs to the latest edition of the Oregon Blue Book, the state government directory. The next morning, she posted photos of Oregon’s state tree, the Douglas fir, to mark Arbor Day.

Fagan didn’t acknowledge reporters’ questions until Friday night, more than 24 hours after news broke, with a written statement saying that she held herself to the highest ethical standards. She declined to share her contract with Veriede Holding LLC, an affiliate of the La Mota cannabis dispensary chain, until Monday. Fagan received $10,000 per month – nearly two-thirds more than her $77,000 annual state salary – and was eligible for a $30,000 bonus if the company received a marijuana license in a state other than Oregon or New Mexico.

Fagan said Monday that she didn’t receive a bonus, and that she had ended her contract after about two months. She accepted it while the audits division of her office was finishing an investigation of the state commission that governs the cannabis industry, an audit Fagan recused herself from shortly before it was finished.

In a virtual press conference Monday, she apologized for breaking trust with Oregonians and said she couldn’t survive on her $77,000 state salary. Fagan’s chief of staff, Emily McLain, resigned shortly after that press conference, according to an email shared by the office.

McLain, former executive director of Planned Parenthood Advocates of Oregon, has been Fagan’s chief of staff since she took office in 2021. She wrote that she would resign no later than June 30, so she could support employees who report to her through the May election and end of the legislative session in June.

“Because the circumstances are developing rapidly, I reserve the right to resign without further notice at any time,” she wrote.

Rising star?

Fagan, 41, has long been viewed as a rising star in Oregon Democratic politics, with a personal story seemingly tailor-made for a glossy political ad. She was raised by a single father in rural Oregon, visiting her mother as she battled addiction and lived under someone else’s porch during bouts of homelessness. She went to college on an athletic scholarship, earned her law degree and worked as a civil rights attorney while serving in the state Legislature.

She unseated a Democratic state senator in 2018, then won a three-way Democratic primary for secretary of state in 2020. Fagan handily defeated Republican state Sen. Kim Thatcher of Keizer in the 2020 general election, securing her post as Oregon’s chief election officer and the second in line for the governorship.

During her 2020 campaign and in almost every public appearance since, Fagan has described her role as building trust with Oregonians and championing the state’s election system.

“Our mission in the Secretary of State’s office is to build trust, to build trust between the people of Oregon and our state government so that our public services can make a positive impact in people’s everyday lives,” she said as she introduced a May 2022 audit of a mortgage tax break. She began most press conferences and presentations during her nearly two-and-a-half years in office with similar statements.

She has a tattoo of the word “vote” on her right forearm, with the shape of Oregon taking the place of the “o.” A portrait of Fagan, sleeves rolled up and arms crossed to display the tattoo, is in the top left corner of every page on her office’s website.

Chris Koski, a political science professor at Portland’s Reed College, said Fagan’s resignation came as a surprise. Typically, when political scandals break, the people at the center of the scandal offer an alternative narrative.

“Instead, we heard pretty straightforward contrition and then a very rapid resignation,” he said. “It seemed like there might have been building pressure from within the party for her to resign, but there wasn’t an outright call for it.”

Republican legislative leaders called on Fagan to resign last Friday, but she hadn’t faced similar public calls from within her own party. Former Gov. John Kitzhaber, who resigned in 2015 over revelations that he and his fiancée used his political office for personal gain, didn’t do so until after then-House Speaker Kotek and Democratic Senate President Peter Courtney called on him to step down.

On Monday, House Speaker Dan Rayfield of Corvallis, Senate President Rob Wagner of Lake Oswego, House Majority Leader Julie Fahey of Eugene and Senate Majority Leader Kate Lieber of Beaverton, all Democrats, said in a joint statement that Fagan’s decision to resign will allow the state to move on and build trust.

“As elected leaders, we know that our work depends solely on our ability to hold the trust of the people we serve and represent,” they said. “Secretary of State Fagan’s severe lapses of judgment eroded trust with the people of Oregon, including legislators who depend on the work of the Audits Division for vital information on public policy.”

Senate Republican Leader Tim Knopp, R-Bend, praised Willamette Week reporters Sophie Peel and Nigel Jaquiss for uncovering Fagan’s “web of ethical violations.” House Republican Leader Vikki Breese-Iverson said Kotek should carefully vet potential appointees.

“Today’s resignation of Secretary Fagan reflects the level of corruption occurring in state government,” she said.  “Since the beginning of the year, I have said we need a transparent process. The level of abuse Secretary Fagan flaunted from her official position is just another example of the extreme measures of one-party rule in Oregon,” Breese-Iverson said.

Koski, the political science professor, said Fagan’s decision to resign could help if she chooses to run again for political office. It’s hard to imagine her running successfully any time soon, he said, but there are no closed doors in politics.

“It could very well be that if another opportunity came in front of her, she would be able to point to this and say ‘Listen, there was an event, I made a mistake, I resigned, I did the right thing.’ It’s a good political narrative,” he said. “I’m guessing in the coming weeks, Fagan’s side will have a more complex narrative with regard to what she thinks has happened here, how she justifies her decision-making. All of that happening after she has resigned is actually in her favor if she ever wanted to go on and become another elected official again.”

‘Bad for governance’

The La Mota contracting gig isn’t the first time Fagan found herself mired in controversy. In early 2022, Fagan blocked New York Times columnist Nick Kristof from running for governor and disqualified ballot measures that would have capped campaign contributions. The Oregon Supreme Court eventually upheld both decisions, though former secretaries of state said they would have allowed Kristof and the campaign finance reform measures to appear on ballots.

At the time, Kristof decried Fagan’s decision as an act of self-protection by a “failing political establishment.” Jason Kafoury, a Portland attorney who cofounded Honest Elections Oregon, accused Fagan of undermining campaign finance reform because she was beholden to labor unions. Fagan accused both men of engaging in misinformation and contributing to a hostile environment for election workers.

Kafoury told the Capital Chronicle that the circumstances leading to Fagan’s resignation proved the need for the kind of campaign finance reform she blocked last year.

“It’s a sad situation that in Oregon politics, we establish such low compensation for elected officials and yet allow unlimited political donations and big money lobbyist influence,” Kafoury said. “This combination is exactly why we need contribution limits in Oregon. If La Mota owners were limited to $1,000 or $2,000 contributions, I don’t think they would have nearly as much influence with Oregon politics.”

Kristof said in an email that he hoped the next secretary of state displays “impeccable ethical judgment” and focuses on addressing the state’s challenges.

“No gloating here,” he wrote. “Any time there’s an influence peddling scandal and a loss of trust in officials, that’s bad for governance and for the state.”

Fagan also has come under criticism for her office’s slow handling of election complaints. She asked legislators for nearly $2 million over the next two years to hire more staff to handle complaints and address election security, after spending $370,000 last year producing ’70s-style animated public service announcements about how voting in Oregon “feels good.”

In the meantime, many election complaints linger for months or years. Fagan’s elections director, Deborah Scroggin, resigned late at Fagan’s request after clashing with her boss over handling election complaints, Willamette Week reported. Among their disagreements: Scroggin didn’t want to make an exception for a candidate who submitted information late for the state-issued Voter Pamphlet, Scroggin wanted a public database of campaign finance violations and Scroggin disagreed with spending money on the animated videos instead of on more election complaint investigators.

Earlier this year, Fagan’s office declined to investigate a residency complaint against a Democratic state representative. The Republican political operative who filed the complaint didn’t get a response until after the representative was in office, well past the 40-day window to challenge election results.

And an April email from the director of the office’s Corporation Division, supported by Fagan, asking customers to advocate for the agency’s budget raised concerns from some legislators and email recipients.

Deputy takes over

Deputy Secretary Cheryl Myers will lead the agency until Kotek appoints a new secretary to serve through the 2024 election. The Secretary of State’s Office is in the midst of overseeing the May 16 special districts election, with ballots already in voters’ hands.

“This is a resilient agency, with strong division leadership and internal systems that can withstand change,” Myers said in a statement. “We are ready to continue the important work of the Secretary of State’s office during this transition.”

The office oversees elections and audits of state agencies and administers public records, including running the state archives and maintaining records of business licenses.

Fagan’s replacement must be a registered Democrat. The appointed secretary won’t be next in line for governor – that distinction will fall to state Treasurer Tobias Read, the next highest-ranking elected official.

Oregon has had two appointed secretaries of state in the past decade. Democrat Jeanne Atkins served from 2015 to 2017, replacing Kate Brown when she replaced Gov. John Kitzhaber when he resigned. Republican Bev Clarno served from 2019 to 2021, following Dennis Richardson’s death from cancer.

Atkins, who had been a division director in the state Department of Human Services for years and worked for Sen. Jeff Merkley, D-Ore. during his time in the Legislature and in the U.S. Senate, said her experience in state agencies was an advantage when she served as secretary of state.

“It would have been very hard for me to walk in with only experience I’ve had outside of state government, especially given the time crunch that will happen here,” Atkins said. “Obviously somebody who knows this agency might be a good pick.”

Atkins didn’t run for a full term, though that wasn’t a condition of her appointment. She hadn’t been elected before and didn’t have the time to set up a campaign while running the office. Someone who has run for office before might be able to do both, she said, adding that it’s important for the secretary of state to stay focused on running the 2024 election.

Clarno said the appointed secretary of state must have impeccable integrity and be satisfied with the office’s current salary. She advocated while in office for making the office nonpartisan, and she said Kotek should appoint someone without partisan ties.

“You’re overseeing elections of Democrats and Republicans, and it should be a non-partisan position,” she said. “So if I was Tina Kotek, I would appoint Betsy Johnson as the interim to replace the current secretary. I think she has integrity plus would be a good replacement for the current secretary.”

Kotek could look at the two Democrats who ran against Fagan in 2020: former state Sen. Mark Hass from Beaverton and Jamie McLeod-Skinner, an emergency manager and former congressional candidate from Terrebonne recently considered to lead the Oregon Department of Environmental Quality.

Hass didn’t immediately return a phone call Tuesday afternoon. McLeod-Skinner told the Capital Chronicle she would be honored to serve the state if asked.

“This is obviously the governor’s call, and I’m sure she’s going to consider the needs of the state and make a good decision,” McLeod-Skinner said.