Marijuana stocks, in general, have soared in recent days following the news that Constellation Brands invested a whopping $4 billion in Canopy Growth. MedMen Enterprises (NASDAQOTH:MMNFF) and Organigram Holdings (NASDAQOTH:OGRMF) are no exceptions, with both stocks jumping by double-digit percentages.

What might the future hold for MedMen and Organigram? And which marijuana stock is the better choice for investors? Here's what you need to know about these two small cannabis companies.

Legal and marijuana signs with cannabis sign and cloudy sky in background

Image source: Getty Images.

The case for MedMen

MedMen is listed on the Canadian Securities Exchange (CSE). But it's not your typical Canadian marijuana stock. 

First of all, the company is actually based in the U.S. MedMen currently operates retail stores that sell marijuana and related products in three states -- California, Nevada, and New York. It's looking to expand its operations in California, as well as move into Florida, which allows the legal use of medical marijuana, and Massachusetts, where both medical and recreational marijuana use is legal.

California ranks as the biggest cannabis market in the world. Arcview Market Research and BDS Analytics project that total marijuana spending in the state will reach $7.7 billion by 2022. MedMen recently reported that its stores generated around 6% of total retail marijuana and marijuana-related product sales in California during the second quarter, based on tax revenue statistics reported by the state's government.

MedMen opened its first store in Nevada barely over one month ago. Nevada is one of the fastest-growing cannabis markets in the U.S. MedMen's new retail store is located in downtown Las Vegas, which receives around 40 million visitors every year. 

Florida and Massachusetts could be even bigger markets than Nevada, though. Arcview and BDS Analytics see Florida as the No. 3 state in the U.S. in terms of total marijuana spending in 2022, with Massachusetts ranking sixth overall.

But while the U.S. is home for MedMen, the company has more ties to Canada than just a listing on the CSE. In March, MedMen and Cronos Group agreed to form a joint venture, MedMen Canada, to develop cannabis-branded products and launch retail cannabis stores throughout Canada.

The case for Organigram 

MedMen focuses on retail sales of cannabis; Organigram focuses on growing cannabis. Organigram has seen strong growth in its medical marijuana sales in Canada. The company's bigger opportunities, however, lie in the domestic recreational market and in global medical marijuana markets.

Organigram is cranking up its production capacity to supply these markets. The company's current annual production capacity is 36,000 kilograms. By October 2019, though, Organigram expects to be able to produce 113,000 kilograms annually.

The company has inked recreational marijuana supply agreements with five provinces so far. Just a few days ago, Ontario included Organigram among the 26 licensed producers that will supply recreational cannabis to the Ontario Cannabis Store, the only online outlet for recreational cannabis in the province.

Organigram also is looking outside of Canada for opportunities. The company formed a partnership with Alpha-Cannabis Germany, a deal that not only gives Organigram a foothold in the fast-growing German medical marijuana market but also offers a launching pad to export to other European markets. In addition, Organigram is shipping medical cannabis to Australia, thanks to its relationship with its Australian partner CannaTrek Medical.

There are two trends that could give Organigram an edge over many of its rivals. The company has steadily increased its harvest yields, reporting an average of 93 grams harvested per plant in the most recent quarter, up from 71 grams per plant in the previous quarter. Organigram also has dramatically reduced its cultivation costs, with an all-in cost of production of less than one Canadian dollar.

Better marijuana stock

I think that both MedMen and Organigram should see tremendous revenue growth over the next few years. MedMen arguably has greater growth prospects because of its exposure to the larger U.S. market. Does that make it the better marijuana stock? Not necessarily.

The problem is that an enormous amount of growth already is baked into MedMen's share price. The company's market cap of $1.4 billion is way more than Organigram's market cap of around $520 million. But MedMen hasn't made much more revenue over the last 12 months than Organigram has.

It's certainly true that Organigram's stock price also reflects high growth expectations. But Organigram could deliver on those expectations, with the Canadian recreational marijuana market scheduled to open in October and Organigram's potential in Germany and other international markets. 

For now, my view is that Organigram is the better pick over MedMen. However, I'm concerned about how Organigram will fare within a couple of years or so when supply outstrips demand in Canada. I also am afraid that the company could be left behind if it doesn't forge a big partnership like Canopy has with Constellation. But at least for the next year or so, I think Organigram could deliver some solid gains.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.