Many investors hoping to make money on marijuana stocks have looked north to Canada to do so. Several Canadian marijuana growers are publicly traded, and have seen their market caps soar into the billions of dollars. Others have also seen tremendous stock appreciation but with lower market caps

Emerald Health Therapeutics (EMHT.F) and Organigram Holdings (OGI 0.99%) are two that belong to the latter group. Emerald Health's market cap has skyrocketed around 650% over the last 12 months to well above $500 million. Organigram's market cap more than doubled during the same period to greater than $400 million. But which of these two Canadian marijuana stocks is the better pick for investors now? 

Marijuana buds on top of small Canadian flags

Image source: Getty Images.

The case for Emerald Health Therapeutics

Without question, the top reason for buying Emerald Health Therapeutics stock is the planned legalization of recreational marijuana in Canada later this year. Although the schedule slipped a bit, Canadians should be able to purchase recreational marijuana legally by September. 

Like others in the industry, Emerald Health has been busy expanding its capacity to meet anticipated high demand. The company is building a 500,000-square-foot facility. Emerald Health formed a joint venture with Village Farms, a large grower of greenhouse tomatoes, bell peppers, and cucumbers, last year. Emerald Health's 50% stake in this joint venture will brings its total annual production capacity up to around 71,000 kilograms by 2020.

Emerald Health isn't just looking to the recreational marijuana market for growth opportunities, though. The company is studying nonpsychotropic cannabinoid THCA in animals in cooperation with the University of British Columbia. THCA has shown potential in treating neurodegenerative and neuroinflammatory diseases, as well as metabolic and other diseases. The first clinical study in humans is planned for later this year. 

The company also is dipping its toes in the water with blockchain technology. Earlier this year, Emerald Health formed a joint venture with  DMG Blockchain Solutions to "develop a blockchain-based supply chain management system and e-commerce marketplace for the legal cannabis industry."    

The case for Organigram Holdings

Organigram has its eyes set on the looming recreational marijuana market in Canada as well. In the meantime, the company's medical marijuana business is expanding nicely. From January 2017 to January 2018, Organigram's total number of monthly active patients soared 495%. 

Currently, Organigram has annual production capacity of 22,000 kilograms. However, the company has construction underway that will expand its capacity to 36,000 kilograms per year by May 2018. Organigram also has future expansions planned that would increase its annual production capacity to 113,000 kilograms by April 2020.

Canada probably won't be the only target market for this increased capacity. Organigram recently launched a new international division and hired a president for the division with significant experience in the international cannabis market.

The company's location in New Brunswick also gives it some advantages. Lower corporate tax rates, utility costs, and wages mean that Organigram claims operating costs below some of its peers. 

And speaking of cost advantages, Organigram just might be the only "marijuana value stock." My colleague Sean Williams did some number crunching earlier this month and found that Organigram's price-to-earnings-to-growth (PEG) ratio is a really low 0.52. 

Better buy

Both Emerald Health and Organigram should benefit from growth in the medical and recreational marijuana markets in Canada. In my view, though, the decision between the two stocks comes down to the best bang for the buck.

I think that Organigram has the advantage. Emerald Health has a higher market cap than Organigram, but it has a lower projected capacity by 2020. Organigram's plans to expand internationally also make sense, in my opinion.

Keep in mind that both stocks have considerable risk, though. Emerald Health and Organigram are competing against larger players with more cash to fund retail operations. If the market for recreational marijuana in Canada isn't as big as predicted, both of these stocks will suffer. There's also the possibility that the scramble among marijuana growers to expand capacity could result in a supply glut down the road, which could cause marijuana growers' stock to plunge. 

Even though I think Organigram has an edge over Emerald Health, the bottom line is that success isn't guaranteed. In my opinion, there are other stocks with better risk-reward propositions.