Scorched Earth

A bright pink building four hours south of Portland hints at La Mota’s tactics.

BY SOPHIE PEEL speel@wweek.com

Last month, Oregonians learned the names of Aaron Mitchell and Rosa Cazares, the co-founders of the cannabis dispensary chain La Mota. The couple gained statewide prominence after WW broke the news that Oregon Secretary of State Shemia Fagan was moonlighting as a consultant for their chain and gave Cazares a chance to edit the scope of a state audit of the Oregon Liquor and Cannabis Commission.

Last week, Oregonians watched in shock as Fagan, a rising star in the Democratic Party, resigned over her work for Cazares and Mitchell. On May 8, Fagan left office.

But Mitchell and Cazares were already known in North Bend. The tiny Oregon Coast town has its own La Mota tale to tell.

It’s far less scandalous, but it’s also much stranger: It involves bright pink paint, a proposed sex shop, and a mayor named Jessica. Those close to the matter say the paint job seemed like retribution against a government official who got in their way.

The actions of La Mota’s owners in North Bend, a town of 10,000 whose proudest triumph is an Olympic-sized indoor swimming pool, is indicative of the aggressive tactics the chain honed over the years—a model that helped it grow into the second-largest dispensary chain in Oregon, but also earned it dozens of lawsuits and, ultimately, repudiation from the very industry it dominated.

This week, following Fagan’s resignation, Democrats who had taken campaign contributions from La Mota hurried to donate them to charity—and to pledge new scrutiny of the cannabis industry. The OLCC, which did little to restrict La Mota’s growth even after WW revealed $7 million in tax liens against companies controlled by Mitchell and Cazares, now says it is considering how to tighten its rules.

“Businesses licensed by the state should be in compliance on their taxes,” wrote agency spokesman Mark Pettinger last week. “OLCC and the Oregon Department of Revenue are discussing ways to address this.”

In fact, the state’s leading weed industry guild is asking lawmakers to restrict any expansion by companies that owe tax debts. “The owners of La Mota have funded and accomplished their expansion by remaining in significant arrears with the Oregon Department of Revenue and IRS,” the Cannabis Industry Alliance of Oregon wrote in a letter last week to legislators, “by refusing to pay vendors for products sold in their stores, and by taking advantage of the OLCC’s unmetered issuance of licenses.” if we change any rule at this point,” said City Councilor Pat Goll at an April 26, 2022, meeting. Mayor Jessica Engelke agreed: “We have the code that we adopted.” The council upheld staff’s recommendation.

The sudden eagerness of the weed industry to be regulated may have something to do with the legal battles La Mota is currently waging.

That must have stung. After all, Engelke had received emails from—and the city manager had met with—Cazares. (Cazares wrote in an email that “Val” had shared the mayor’s contact information with her. Engelke tells WW that former Oregon labor commissioner and now U.S. Congresswoman Val Hoyle [D-Ore.] called her earlier that day and asked if she could give the mayor’s contact information to Cazares.)

“ We would like to see an exception to this rule made for our building,” Cazares wrote in one email. “We know how important it is to cities like North Bend to support minority and independently owned businesses working to bring jobs and revenue to the city.”

Then, on June 21, the city received a curious business application from Cazares: for a sex shop called “Jessica’s Adult Entertainment.”

Just days before, the building at 1625 Sherman Ave. had been painted bubble-gum pink.

“This store will be for patrons 21 years and older,” Cazares wrote on the application. The business activity listed included “adult entertainment/gift novelty/retail store.”

City staff tells WW the move was clearly a middle finger to Engelke. “It’s horrible,” says a manager of a smoke shop across the street from the pink building. “When you’re driving along 101, and the sun hits it, I still have customers complain about the glare sometimes.” (The city also received a complaint about the building’s color from the insurance business across the street.)

In June, Cazares and Mitchell appealed the city’s decision to deny their application to open a weed shop to the Oregon Land Use Board of Appeals. In September, the board dismissed the appeal.

Cazares and Mitchell never did open the sex shop. But the pink building remains, as does the sour taste left in the city’s mouth. North Bend city staff say it cost $22,000 in legal fees to fight the LUBA appeal. La Mota did not respond to a request for comment.

Billin, either said those records didn’t exist or that they should be privileged. Then, in Billin’s latest filing before withdrawing from the case in April, the attorney said his hard drive with much of his work product in the case had crashed. The case is set for trial in July. What does La Mota say? In filings, the defendants argue they don’t owe the consulting company as much as the complaint alleges. A recent filing obtained by WW shows a new lawyer has signed on to represent the defendants temporarily, likely in order to allow the couple time to find a lawyer for trial. The defendants still have not provided all requested discovery materials.

The Former Budtender

What’s the allegation? Lacy Williams, a former employee of a La Mota dispensary in Lebanon, alleges in a June 2022 filing that a La Mota company fired her in 2021 after she reported she was being sexually harassed by the store manager. (That man, Jeremy Rowan, is now serving time in jail for rape, luring of a minor, and sex abuse.)

Why it matters, if true: It would mean the chain failed to protect an employee from a sexual predator. At least 20 former La Mota employees have filed complaints with the Oregon Bureau of Labor & Industries, alleging unpaid wages, retaliation and failure to protect employees. (The current and past labor commissioners, Christina Stephenson and Val Hoyle, accepted campaign contributions from Cazares and Mitchell but have since given the money back or donated it to charity.)

What happens now? In recent months, Williams’ attorney alleged the defendants engaged in “intentional obstruction” and “spoliation” of evidence requested by the plaintiff. He’s since filed a motion to compel production of discovery requested last year.

What does La Mota say? The defendants deny the underlying allegations and say 503 Staffing LLC, a company controlled by the couple, fired Williams because she made “false statements regarding her failure to show up to work.”

Among the 30 lawsuits the chain has faced, six are from farms and other vendors that allege Mitchell and Cazares stiffed them.

And then there’s what happened in North Bend.

As he had done dozens of times before, Aaron Mitchell in March 2021 bought a building.

He and Cazares took their standard approach to expansion: give the neglected building a facelift, get the necessary permits from local government, obtain a license from the state agency that regulates cannabis, and open a dispensary.

This time, the building the couple bought, at 1625 Sherman Ave., had formerly been a tree-trimming business in North Bend. On one side of the building was the town’s oldest diner, Mom’s Kitchen, slinging bacon and hashbrowns; across the street was the town’s insurance agency.

But in March 2022, city staff recommended denying La Mota a dispensary permit based on new city code that two dispensaries could not operate within 1,000 feet of one another. An existing dispensary stood 951 feet away—49 feet too close. The chain appealed the decision to the North Bend City Council.

“I think we’re opening a bucket of worms

It’s just one of several legal battles the couple has waged as they sought the ear of top state officials. Here’s the status of three others, and why they matter.

The Tax Company

What’s the allegation? Cazares hired The Michael L. Larson Company in 2021 to complete its taxes. The company alleges in court filings that La Mota’s financial paperwork was “in shambles” and alleges Mitchell and Cazares stiffed the consulting firm of $154,000 in billings.

Why it matters, if true: It offers a glimpse into how the couple’s matrix of companies handle money. Cazares and Mitchell control more than 70 separate LLCs, business records show, making the tax work complicated and confusing. The lawsuit claims many of the couple’s companies had “missing or incorrect” financial records. “Defendants had engaged in a number of questionable business practices,” it adds.

What happens now? The Larson Company’s attorney, Bear Wilner-Nugent, has repeatedly made discovery requests since June 2022. He’s asked for the couple’s credit card and bank records, car ownership records and property ownership records, as well as tax returns from prior years. But La Mota’s former attorney, Rich

The Landlords

What’s the allegation? Eric and Alia Breon, owners of a Northwest Hills mansion where the Mitchell and Cazares hosted champagne fundraisers for Fagan and Gov. Tina Kotek, allege the couple failed to pay eight months’ rent and severely damaged the home. The Breons allege that “cats urinated and defecated” throughout the home. They’re demanding $417,000.

Why it matters, if true: It would mean the couple, who flaunted wealth—hosting a blacktie gala for Kotek last fall and driving Mercedes Benzes and Maseratis—failed to meet a financial obligation central to their political giving. What happens now? The case remains ongoing.

What does La Mota say? The couple stated in court filings that they withheld the $20,000 monthly rent because the homeowners refused to fix a major water leak. They filed a counterclaim and are requesting that the Breons pay them $660,000. The couple alleges they both suffer at least one of the following symptoms due to water intrusion: “upper respiratory distress, skin irritation, edema, cellulitis, fatigue, memory loss, chronic cold/flu-like symptoms, body aches and pains, numbness and tingling in extremities, headaches, nose and throat irritation, and sleep disturbance.”