Kotek alleges abuse of power by top OLCC management

By GARY A. WARNER and DICK HUGHES
Oregon Capital Bureau

Gov. Tina Kotek is seeking the ouster and investigation of top leaders of the Oregon Liquor and Cannabis Commission due to what she says in letter to commissioners is a pattern of abuse of power for personal gain. 

OLCC is the regulatory agency for sale of alcohol and marijuana. It recorded $839 million in liquor sales from its 284 state-licensed stores, which have a near-monopoly on the sale of distilled spirits in Oregon. Agency revenues returned to the state, counties and cities were $316 million last year.

Kotek last week demanded the resignation of OLCC Director Steven Marks, who had held the position since 2013. He was previously the chief of staff of Gov. John Kitzhaber.

Oregon Capital Bureau columnist Dick Hughes had requested a copy of Marks’ resignation letter from Kotek’s office. Kotek communications director Elisabeth Shepard confirmed Wednesday that Marks has resigned. However, Marks letter of resignation was sent to the Oregon Liquor Control Commission, which has direct authority over the agency and its management.

Shepard responded Wednesday by sending a copy of Kotek’s letter to the OLCC commissioners. OLCC did not issue any response. The commission is scheduled to meet on Feb. 15.

“After requesting the head of the Oregon Liquor and Cannabis Commission’s (OLCC) resignation, my administration became aware that leaders within this agency, including the director himself, abused their position for personal gain per their own admission in an internal investigation,” Kotek wrote to the commissioners. “This behavior is wholly unacceptable. I will not tolerate wrongful violations of our government ethics laws.”

Kotek called on commissioners to remove unspecified other managers and leaders from their positions who “have taken advantage of their access and authority to benefit themselves.”

Kotek is in Washington, D.C. for the National Governors Conference and had no further comment Wednesday.

In her letter, Kotek also said she was referring the matter to Attorney General Ellen Rosenblum.

“I have asked the Attorney General to conduct an independent civil investigation to look into the extent of any wrongdoing and recommend stronger protocols for ensuring ethics laws are followed by OLCC,” Kotek wrote.

Kotek, who succeeded Kate Brown as governor on Feb. 9, said her office would seek changes in OLCC policies. 

After the Oregon Capital Bureau reported the Kotek letter, The Oregonian newspaper posted an investigation alleging Marks and other top OLCC managers would order expensive bottles of liquor be set aside for their personal use.

Willamette Week first reported Kotek’s demand that Marks resign.

The Oregonian reported there was a longstanding practice within the agency of reserving bottles of the popular bourbon, Pappy Van Winkle, for multiple employees, including the recently ousted executive director, Steve Marks, and his second-in-command, Will Higlin.

Four other managers were named in the investigation as having requested bottles be set aside for them: Bill Schuette, the budget manager; Chris Mayton, the director of the distilled spirits program; Boba Subasic, the chief information officer; and Kai Nakashima, director of the office of information services. All were reprimanded, but have retained their jobs. The Oregonian said all declined further comment on Kotek’s letter.

A state report disclosed by The Oregonian showed that Marks asked for 23-year-old Pappy Van Winkle bourbon be set aside for him. Pappy Van Winkle is aged bourbon whiskey from a Kentucky distiller that dates back to 1935. It’s distilled and bottled by the Sazerac Company at its Buffalo Trace Distillery in Frankfort, Kentucky.

“The oldest and most sought after vintage of the Pappy Van Winkle lineup, Pappy Van Winkle 23 year old, is the whiskey that all others are measured against. The bourbon boasts huge notes of dry, tannic oak, worn leather, and dark cocoa,” says a description from The Rare Whiskey Shop, an online specialty shop. 

A December 2022 lottery had just five bottles of the bourbon available in Oregon – drawing 20,748 entrants. Winners had a 1-in-4,500 chance to buy the bourbon, which sold in state liquor stores for just under $330.

The Rare Whiskey Shop sells a bottle of the same bourbon for $5,599.99.

Kotek said she would work to reform OLCC policies in the future. 

“My office will work in coordination with the Department of Administrative Services to establish stronger processes and systems around investigations into possible violations when involving agency leadership,” the governor wrote.

Kotek ended the letter by saying the alleged problems at the top of OLCC shouldn’t reflect on all agency workers.

“This investigation should not undermine the great work that the staff of OLCC performs every day,” Kotek wrote. “Despite the disappointing actions of a few, the vast majority of public servants within OLCC serve Oregonians with integrity and dedication.”

Gary A. Warner is a politics reporter for EO Media Group, a partner in the Oregon Capital Bureau.

Dick Hughes, the longest-tenured journalist covering Oregon state government, is a columnist for Oregon Capital Bureau.