Some investments don’t pay off

While many of the tobacco commission’s investments are bearing fruit, two of its more entrepreneurial endeavors have withered on the vine.

The commission loaned $2 million to Tobio LLC in January 2001. Tobio was a consortium of tobacco farmers that invested in CropTech, a company founded in Blacksburg to use the unique genetic properties of tobacco to produce pharmaceuticals. Tobio had a contract to supply tobacco to CropTech, but Tobio’s $6 million stock offering failed.
The commission listed its Tobio loan as a contingency loss in its 2001 annual report, and the money probably is gone for good. Still, Carthan F. Currin III, the commission’s executive director, says there’s a chance that CropTech’s research will someday benefit Virginia’s tobacco farmers.

Currin is not as optimistic about a $100,000 incentive grant that the tobacco commission gave Cerxon Microtechnologies LLC, a manufacturer of electronic components that moved its headquarters from South Carolina to Henry County in 2002. At the time, Cerxon executives promised to invest $6.5 million and employ 250 people, but the company closed its doors in December 2003. “The fact is, some of the companies we provide funds to fail,” says Michael J. Schewel, a member of the tobacco commission and Virginia’s secretary of commerce and trade. “The good news is that most of them succeed, and most of them do better than what we expected.”