vendor story

CUSTOMPACKCO avoids packaging pitfalls and helps brands scale

How CUSTOMPACKCO’s innovative approach to packaging and partnership with Order.co propels cannabis brands forward.

 

*CUSTOMPACKCO is now AE Global Midwest. You can read the press release here.

In this conversation, Nathan Russell, CEO and Co-Founder of CUSTOMPACKCO, discusses his experience creating bespoke packaging, insight into the craft, and partnership success with Order.co.


Topics in this story:

About CUSTOMPACKCO

Avoiding packaging pitfalls

Starting CUSTOMPACKCO during Covid

The Order.co parternship

Improving cash flow with Order.co

What's next for CUSTOMPACKCO


Tell me about CUSTOMPACKCO, your mission, and the range of products that you offer.

We're a custom packaging company, you can probably judge from the name. We focus on some specific areas in packaging, like high-end, high complexity designs. We do a lot of custom molds, we design and engineer custom products for our clients, and we have a fair amount of proprietary packaging that we've designed, too. We're really focused on building custom things for people that are defensible — that's a big part of our ethos. 

Secondarily, we also own a processing facility, a co-packing facility, so a lot of our packaging is built on being efficient because we have gone through all those trials and tribulations that a lot of operators have and we know their challenges. 

In general, we're working on building good catalogs of products for our clients versus just selling them a bag or a box. We try to provide value beyond the products we sell — bringing our industry knowledge into those products to make them better.

“We're really focused on building custom things for people that are defensible — that's a big part of our ethos.”

On your website, you write, “Our team has already seen or made every possible packaging mistake so yours doesn't have to.” What are those common mistakes and how do you ensure that the products you create are ultimately flawless?

A really simple ones is — there are certain types of labels that sit really nice on something flat, but because of the rigidity, when you put them on tubes, two days later they're all going to peel off. Same with Mylar bags — we had a really large order for a client. We made them and design them and they're really pretty. But, they were designed like nice little circles, custom cut. But that made the whole at the top and the zipper really small so it couldn't feed from our automated feeder. We didn't know that until they were on site. So now, any customer who wants to make a cool little bag, we ask them about the size of your feeder head. We know to ask those questions.

On a grander scale, we help advise customers on what should be printed on their packaging. Including your Instagram handle, ways to contact you, staying compliant — we catch a lot of those mistakes for our clients too. 

There's a wide, wide range of mistakes, but for a lot of them, I don't know how we would have learned it without actually paying that really expensive price. Like, filling 100,000 bags by hand. One of the benefits you get from working with us is that you'll avoid one of those problems. 

What led you to the cannabis space in the first place and how did you decide to start CUSTOMPACKCO?

I guess my parents are kind of hippies, you know? My mom is a criminal defense attorney. She was a member of NORML, so cannabis was in my life growing up. I didn't really smoke like a ton in high school, but when I did, I really liked it. I went to school for engineering in Milwaukee, and I was playing basketball. I was there for a year and I realized — this is all wrong, this isn't for me.

The next year I moved to Humboldt State and got my Botany and English degrees. But I was fully immersed in cannabis. I did my senior thesis on cannabis. 

I already had grown a bit back in Michigan — like in a closet. I was super into the counterculture scene, the psychedelic scene, all those things led me out to Humboldt in 2008. I was out there for 7 or 8 years, and after school I ran commercial groves, commercial extraction facilities - back when you could grow as much as you want, and it could be sold in dispensaries.

But there were people robbing you — and that's actually the second part of your question. 

There was a point where we got robbed for 100 pounds at gunpoint. I actually wasn't there for that piece of it, but we lost a lot of money. We had spent years living in the mountains — there were mountain lions, bears, crazy mobs  — and I was super tired of it.

“We had spent years living in the mountains — there were mountain lions, bears, crazy mobs — and I was super tired of it. ”

We were really into music festivals, so we started selling official merch at music festivals. We had licensing deals to carry Woodstock, Pink Floyd, Electric Forest, EDC — we did all the majors.

That kind of led me to spend a lot of time in China, developing consumer packaged goods. Eventually we built that into a custom business where we did merch for Kim Kardashian, the NFL, Disney, Marvel. We really developed those chops of design, sourcing, packaging, sampling, etc. 

We were selling collectibles — you buy one and you never throw it away. Going through all the motions of design and sourcing, but doing relatively low quantities. We had a light bulb moment: let’s sell disposable things. I was like, we need to start cannabis packaging. I have all the people, I'm in China all the time,

Luckily we started that business, and then Covid hit which killed the whole other music festival business. Ben, my partner, is an incredible salesperson. He had lined up some really good clients for us in that interim. With cannabis now, instead of dealing with bears and mountain lions, we need to deal with our crazy village manager and weird regulations. 

But, at this point I've grown thousands of pounds, rolled millions of pre-rolls, packed millions of pounds of grams of concentrate. It’s been a weird, long path, but I feel like a master of my craft now because of the story we've been through.

How did you get the business off the ground during peak Covid, when all of your production was coming from China?

We were making most things from the music festival business in China and Covid hit China first, so we got a heads up that it was going to be bad. 

We shut down our office, ended our lease. I paid all of our staff six months of paychecks, and was like, I'm moving to my farm. We're going super lean, but we're not quitting. I built a PPE website because I had PPE hooks in China. 

Our music festival business went from like 3 or 4 million in custom goods to $60,000 the next year. Litterally 99% gone. But, that same year we did about 3 or 4 million in PPE and custom packaging. 

We're like a bunch of hustlers. We had a lack of access, we couldn't get to China anymore so we needed to develop relationships in Vietnam and domestically. We needed to build a better system and level of trust with the people in China so that we can continue our operations without physically being there.

How did you first hear about Order.co and how did that partnership develop? 

One of our biggest clients was already partnered with Order.co, so it was pretty seamless for us. They wanted us to use it. There's benefits for our client — they received a small discount for everything they order through through Order.co. They get net 90 terms and we can get paid up front. Depending on how early we get paid, we give up a percent or two to Order.co. Then that savings gets passed on, so it's a win win all around. 

For a startup that's like 100% bootstrapped, not having net 90 terms with your biggest client who does massive orders that are Ship C, is a huge win for us. A couple percent for three months of cash flow is a pretty small ask.

“They get net 90 terms and we can get paid up front...it's a win win all around.”

How does that payment arrangement, where your clients get net terms and you get paid upfront, impact your business?

We're a pretty lean company. As we build out in-house labeling, stocking, shipping more things ourselves — we have latent overhead that has a long cycle time. Not having cash tied up in our client orders is pretty big for us. We get the same benefits that anyone does out of like shortening that cycle.

Another really nice benefit is that the workload on our sales staff and our admin staff is a lot lower. One of the biggest challenges of our business is the account management, the hand-holding through all of that custom work. So, Order.co makes it easy for people to reorder or place like orders with a few decorative changes, and at least get the financial piece really streamlined. It takes a little bit of that that hand-holding work away, which any piece makes our sales staff happy.

What is it like to receive POs and payments from Order.co?

A client sends a PO through Order.co, we and the client approved that PO, Order.co confirms it, and we are paid within 3 to 5 days — and the client has terms on that. So it's pretty seamless, generally easier than working with a client directly to get paid. It's been pretty nice for us.

What's next for CUSTOMPACKCO and for you? What are some of these bigger goals and aspirations that you have in the coming years?

One big thing for CUSTOMPACKCO — we're building out a more user-friendly e-commerce checkout system for custom labeled goods. Think of it like Vistaprint — you say what item you want, you upload your artwork, you can see it on the jar or tube.

The real pain point that we're trying to focus on is that in most states, in Michigan, there are two levels of tracking — source-level tracking, which is the cannabis coming in, and package-level tracking, which is when you break that cannabis down into cases that go to store. Each of those cases has its own tracking tag, and that tracking tag matches the units inside. 

So, if you had a batch of 10,000 pre-rolls, you have 100 different tags and every 100 pre-rolls has a different number on it. So, you can't just order 10,000 labels because every 100 is different. Generally what people do is that they order a decorative label with some warnings, and when it gets to their spot, they put a second label that has that compliance data on it, but that's a 30 cent cost to them and really slows down the process.

Basically what we can do is — you upload all your data and place your order. Then, we send you an overnight label, you send us your metric tags, and we actually print those labels all perfectly ready for you with the compliance data. It will show up in a case, so you just have to open it, fill, cap, and ship to your clients. It's removing millions and millions of dollars from labeling work in the industry. 

Personally, I want to spend more time building catalogs for people. So much of our thesis is that cannabis is going to be like convenience stores. There's really no difference. It's a consumer packaged good, no different than potato chips or soda. 

If you look at those two specifically, soda all comes in the same type of bottle, chips all come in the same bags. The difference is that there’s a brand behind it and the flavor. 

Because we do packaging and branding, I want to continue the quest of serving cultivators and brands to help them achieve that next level cohesive brand across all their products. And, bringing genetics into the branding as well to differentiate themselves.

Give your customers better terms, but get paid net 1

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