Thomas Jefferson University’s big gamble on cannabis may be beginning to pay off despite a recent series of setbacks that have included the departure of a key executive, the implosion of a venture to create the world’s largest medical marijuana patient database, and a stalled academic research program.
First, the good news. The Philadelphia health system is using an entrepreneurial model that includes direct investments in cannabis companies.
Last week, one of its collaborations generated a small, but impressive, windfall. The university saw its $2.1 million stake in Ecofibre, an obscure Australian hemp company, swell to $3.2 million after the company (ASX: EOF) went public on the Australian Stock Exchange.
Ecofibre grows thousands of acres of the plant in Kentucky. It produces a line of CBD nutraceuticals under the Ananda brand, and is seeking to become one of the first producers of high-performance hemp-based textiles under its Hemp Black subsidiary.
The gain of $1.1 million may be the first cannabis investment to generate a substantial return for a major U.S. academic research institution.
Ecofibre’s primary owner and chairman is billionaire Barry Lambert, who, with his wife, Joy,donated $3 million three years ago to Jefferson.
The Lamberts’ unrestricted gift helped to create what came to be known as the Lambert Center for the Study of Medicinal Cannabis and Hemp. Jefferson has touted the center as the nation’s first clearinghouse for academic research on the plant and its products. The center’s steering committee boasts many of the nation’s preeminent cannabis researchers.
After funding the Lambert Center, Ecofibre and Barry Lambert also entered into a separate arrangement to partner with a program at Jefferson’s East Falls campus. The campus was formerly known as the Philadelphia College of Textile and Sciences.
A division of the East Falls campus now serves as the research and development arm of Ecofibre’s Hemp Black subsidiary. Hemp Black is developing textiles, hemp-based materials, and wearable fabrics that could monitor the heart rates and other vital signs of patients. About 15 Jefferson students participate in the Hemp Black project.
In return for the sweat equity produced by the students and faculty members, Ecofibre granted Jefferson an initial $2.1 million stake. Jefferson has the option to purchase additional shares, said spokesman John Brand. Last week’s IPO was focused on Hemp Black, CEO Eric Wang said. “Although we have a very strong CBD operation, we’re accelerating the commercialization of our high performance textiles,” Wang said. “That will be the biggest business for Ecofibre.”
Two of Ecofibre’s senior officers are affiliated with Jefferson. The company’s chief science officer, Alex Capano, is a faculty member at the Lambert Center and a senior fellow at Jefferson’s Institute of Emerging Health Professions, according to the company’s IPO prospectus. Brand said Capano is not a Jefferson employee. Chief innovation officer Mark Sunderland is a professor at Jefferson, where he leads research into hemp textiles.
Now the bad news: This week, the Lambert Center was hit by the abrupt resignation of its director, Charles Pollack, a professor of emergency medicine at the university. In an email, Stephen Klasko asked the steering committee to suggest new candidates to lead the center.
As the Lambert Center struggles to chart a new direction, Jefferson also is juggling other cannabis-related stumbles.
The Lambert Center’s partnership to create mmj.org, a national database of 100,000 medical marijuana patients with a Boston company called ioVita, was canceled with no public explanation and Jefferson lost its $150,000 investment in the venture, according to sources with knowledge of the failed deal.
In addition, the health system’s plan to partner with a marijuana company to conduct lucrative medical research has been on hold for more than a year due to a state health department decision.
Jefferson’s former chairman of the board, William Landman, is widely credited with creating an unprecedented provision of the Pennsylvania law that allows eight state health systems to enter into exclusive agreements with marijuana growers.
For the health systems, the arrangements are designed to generate millions of dollars worth of intellectual property and patents.
Before the state reviewed applications, Landman’s company, Mainline Investment Partners, trumpeted that it would be Jefferson’s collaborator in the research venture. Other marijuana companies filed lawsuits in Commonwealth Court alleging unfair competition. Eventually, the state rejected the applications of all eight marijuana companies, forcing each to reapply by April 11.