They say that a rising tide lifts all boats. But some boats have a more enjoyable ride.

Widespread interest in the cannabis industry has propelled many Canadian marijuana stocks higher in 2018. Cronos Group (NASDAQ:CRON) ranks as one of those stocks. But a smaller cannabis producer, Supreme Cannabis (NASDAQOTH:SPRWF), is still down year to date despite a nice run over the last couple of months.

Which of these two marijuana stocks is the better pick now? Here's how Cronos Group and Supreme Cannabis stack up against each other.

Marijuana growing in a greenhouse.

Image source: Getty Images.

The case for Cronos Group

The two most critical ingredients to success in the cannabis industry are capacity and distribution channels. Cronos Group scores well in both areas.

Cronos Group's current production capacity stands at roughly 6,650 kilograms. That might not be overly impressive, but the company is cranking up its capacity quickly. A major expansion will soon enable Cronos to grow more than 40,000 kilograms of cannabis per year. And the company's joint venture with greenhouse wizard Bert Mucci plans to construct a new facility with an annual production capacity of 70,000 kilograms.

Capacity is only helpful if there are buyers, though. That's where Cronos Group's distribution channels come into play. The company has supply agreements in place with British Columbia and Ontario, which together make up more than half of Canada's population. Cronos also has deals with two smaller provinces, Nova Scotia and Prince Edward Island. In addition, Cronos will supply at least 20,000 kilograms of cannabis annually to Cura Cannabis Solutions.

Cronos Group partnered with MedMen to launch cannabis retail stores throughout Canada. MedMen is the largest U.S. cannabis retailer, with its California stores, in particular, generating impressive revenue per square foot.

Cronos also appears to be positioned well to compete in international marijuana markets. The company has an exclusive supply deal with Pohl-Boskamp for the German medical cannabis market. It also has a presence in several other international medical marijuana markets, including Australia, Poland, and Latin America.

The company's partnership with Ginkgo Bioworks holds promise for opening up more opportunities in medical marijuana. Ginkgo is developing high-purity cannabinoids from engineered strains of yeast that can be produced at significantly lower costs than current methods of extracting cannabinoids from cannabis plants.

The case for Supreme Cannabis

So how does Supreme Cannabis fare in the two key categories of capacity and distribution channels? Pretty well.

The company's 7ACRES facility can currently grow roughly 13,330 kilograms of cannabis per year. But Supreme Cannabis is well underway with completing the buildout of more flowering rooms. This effort is expected to wrap up by the end of 2018, boosting the company's annual production capacity to 50,000 kilograms.

Supreme Cannabis has been very successful in lining up supply agreements with provinces for the recreational marijuana market. The company has agreements in place with six provinces, including the top prize -- Ontario. Supreme Cannabis also recently entered into supply agreements with Tilray, although the cannabis supplied will be primarily targeted for the Canadian medical marijuana market.

So far, Supreme Cannabis hasn't taken huge steps to enter international marijuana markets. However, the company was the first Canadian licensed producer to move into Lesotho, forming a global distribution partnership with Lesotho-based Medigrow. Supreme Cannabis also bought a 10% stake in Medigrow, which focuses on medical cannabis oils.

There's also one positive about Supreme Cannabis' poor stock performance this year: The stock's valuation isn't as exorbitant as some of its peers. Supreme Cannabis now has a market cap of around $420 million, much less than Cronos Group's market cap of nearly $2 billion. 

Better marijuana stock

Which of these two stocks is better positioned to capitalize on rapidly growing domestic and international cannabis markets? I think the nod goes to Cronos Group.

Granted, Supreme Cannabis claims more supply agreements with Canadian provinces. However, Cronos has deals lined up with the heaviest-populated provinces. And its relationship with MedMen could pay off nicely since MedMen has considerable expertise in targeting a retail cannabis market.

Over the long run, though, international markets will be more important than Canada. That's where Cronos Group could have a clear advantage over Supreme Cannabis, thanks to its foothold in Germany.

But while I think that Cronos is the better pick over Supreme Cannabis, I'm not sold on either of these stocks as great choices to buy right now. In my view, there are even better alternatives for investors seeking to profit from the marijuana boom.

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.