Interviews

Russ Schamun, CEO Of Liberty Distribution, Talks Cannabis Accessories

Liberty Distribution is a rapidly growing accessories distributor out of Huntington Beach California

Liberty Distribution is a rapidly growing accessories distributor out of Huntington Beach California that focuses on customized, well built, quality hardware with manufacturer direct pricing for their customers. We sat down with their CEO Russ Schamun to talk about the overall vape market and what retailers and manufacturers should look for when starting out in accessories for the first time.

 

Marijuana Retail Report – Can you tell our readers a little bit about Liberty Distribution and kind of how you got started in the cannabis space.

Russ Schamun – I’ve worked in logistics for 40 years as a President, CEO, and various other executive positions before I finally decided to retire in 2017. At that time, my son had been in the industry and came to me asking for business advice. I ended up meeting with my son and the other founder to go through some things which turned into “hey we need someone like you to do all the back office stuff and really set this thing up”. So to be honest, I just kinda fell into it and have enjoyed it immensely since.

It’s nice to get back into a startup company and help make some of those crucial decisions up the start to help really ensure the company’s longevity. As you know, most startups fail within 2 years and we were profitable from our first quarter which is outstanding. By using any mistakes learned from my 40 years of experience were applied to this in order to account for any variable. We keep our costs down, manage our money correctly, and plan on growing our customers along with us.

Right now, we’re starting in North America and the US and Canada are our biggest markets, but we’ve been getting inquiries from the UK because of some of the developments with cannabis over there as well as a couple of other countries. We are still working through the banking logistics of it for overseas international distribution, but we really want to focus on being the best in the North American market.

 

Marijuana Retail Report – In your opinion, what is the most exciting part of the North American market?

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Russ Schamun – Really depends on your definition of exciting. California because of the massive size of it is certainly exciting, but also you have the issues of the regulations in California not as finalized as they are in other states. You have a lot of municipalities making the final decisions which hinders the ability to have a cohesive understanding of the overall market here. The majority of our wholesale is done to cannabis extraction labs who process the oil into the pens, and right now only certain municipalities allow for that. I think the state that is most put together right now is probably Colorado, but we are seeing orders from all over the US. Michigan is getting pretty active and we are starting to see orders from Florida, New York, Maine, etc… but to be honest the entire market is exciting in its own way.

 

Marijuana Retail Report – How did you finally decide which part of the industry to get into?

Russ Schamun – Doing the hardware was really a fascinating front. I really enjoyed being in both the cannabis and e-juice industries, but I tended to enjoy the hardware industry more because it actually had less regulations and required less upfront capital to get started. From the get-go I knew it was an incredible business model for what we wanted to do. It allows us to quickly evolve and offer more supplies to the cannabis industry like packaging, bottles, and an assortment variety of other ancillary products that enables us to be a one-stop shop for the industry.

 

Marijuana Retail Report –Do you see the expansion of the vaporizer market as a growing trend?

Russ Schamun – Absolutely. I read a lot of statistics about the legal cannabis industry and this year in the U.S. cannabis is expected to eclipse spirit in terms of revenue. That’s starting to happen everywhere and the vape part of the industry is one of the fastest growing parts of cannabis. Baby boomers, of which i’m one and who are among the biggest spenders and fastest growing consumer base of the industry, really like how discreet how vapes are. The odor from cannabis is something you can’t easily disguise. When you are consuming, everyone knows in the world that you consume, whether it be on your clothes, or on your body. What I like about vaping, is I think it’s better for your lungs than flower, because its been purified through the laboratory process. Retailers tell me that concentrates and vape products can make up to 50% of their retail sales so that is astronomical. As more states legalize it, that number is going to grow. I also firmly believe that the federal government will come around. I still think its years off, but I think it’s going to happen in a way mirroring the original prohibition of alcohol.

 

Marijuana Retail Report – What are some new development trends for the hardware industry?

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Russ Schamun – As you know, CBD is becoming a major component of the industry. So we are seeing people requesting cartridges with smaller holes to accommodate the viscosity of CBD oil versus traditional THC distillate. One of the things I brought to the company, because I think a lot of entrepreneurs got into dealing with manufacturing over in China and really not knowing what they got into, is my background that had me dealing with hundreds of manufacturers there. So when I went into the accessories business I knew what to look for from a quality control and lead time perspective with manufacturers. One of the things what we do, which is different from what I believe is happening with other manufacturers and distributors, is we require our manufacturers to have certification for lead. I believe in the cannabis industry there are a lot of products that have different glues and lead in them that are extremely toxic. We make it a point to give our customers a piece of mind by letting them know we have among the safest products in the industry. I also think the heating elements, having evolved from wick to nickel to now ceramic, keeps evolving to get better and better along with the rest of the hardware to accommodate the thickness of your oil and making sure the end consumer has the best possible smoking experience.

The products that are really becoming popular are disposables. Disposable products for THC oils and CBD only are only going to get a bigger and bigger slice of the growing market share. We have also seen an explosion in productivity for the industry. We are actually repping a line of machines now we call ‘filling and capping’ machines to help facilitate that. Gone are the days of the manual labor process and having your employee’s fill each cart by hand.

 

Marijuana Retail Report – What are some common mistakes you notice with brands?

Russ Schamun – One of the biggest challenges I see in the industry is becoming professional to the level of other industries. We are dealing with a lot of people that have issues with the professionalism that is done with all other business. Its an industry inundated with 20 and 30 year old entrepreneurs and unfortunately, they don’t operate in a traditional business environment manner. And so, what I’ve seen in regards to mistakes is there is a lot of reactionary response versus a proactive measured approach towards work done in the ordering process. Our manufacturing process in China takes anywhere from 2-3 weeks, plus likely another week for customs clearance to get it delivered. No one wants to carry millions of dollars in inventory when you are just starting out because that is a risky way to start a business.

So we would get calls for orders and someone will call and say “Hey I need 20,000 carts” and I say okay and we begin to put together an order and then they would say “tomorrow”. So what we’ve tried to do to solve this is we’ve tried to use part of my logistics background to get involved directly with the manufacturers as well as the buyers to come up with predictable sell cycles, and order cycles. We can then go to them and say hey, we’ve looked at your last three orders, this is the volume you are ordering, and here are the holiday periods you have to be very much aware of in dealing with Chinese manufacturing. In order to make sure you don’t lose your momentum by lacking the available inventory, there needs to be a lot better planning in that area. We understand that if we can help our customers plan their order and usage cycle, we will become a valuable partner in their supply side of their business. There is also a lack of understanding about the toxins involved in lead based products and alloys as well as glue and other things that lesser manufacturers are using.

 

Marijuana Retail Report – What are some questions should customers ask when ordering accessories for the first time?

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Russ Schamun – First they should ask for certifications from their hardware companies to show that they’ve been tested to be lead free. Too many entrepreneurs out there are only worried about the end price versus is this product even safe to use? Then you should go into what do you really need from your hardware. Tank sizes come in mainly 2 sizes, the gram and half gram, but your hole sizes again are extremely important due to the viscosity of the oil, you need bigger holes for thicker fluids. The other issue that you will have is you will have a lot of pull pens out there. Pull pens are the pens that suction on the mouthpiece causes the battery to fire the heating element and those are what we call bottom airflow cartridges and many bottom airflow cartridges leak. We’ve developed with our manufactures some leak proof processes so it isn’t a problem for us, but we know a lot of customers don’t even ask and it’s something you should verify from the beginning rather than have a high complaint rate from your end consumer down the road. Thankfully, we don’t just sell our products. We ask our customers a lot of questions first to help guide them to the right product. It’s our opinion, that if we get the right hardware product that makes the end customer happy with the performance, they will keep coming back. Our retention business is almost at 100% and we are proud of that.

 

Marijuana Retail Report – What’s next for you guys?

Russ Schamun – We have to get a bigger warehouse here in Southern California and are looking at expanding by adding warehouses in Michigan, Florida, Colorado, and other states where we have large scale customers where we have predictability to help cut down on final delivery time and really help them purchase rapidly. We’re also continuing to expand with the products we offer. Our goal is to be a one stop supply shop for all things a company could need and we are well on our way to getting there.

 

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