It's been an up-and-down kind of year so far for Cronos Group (CRON -5.38%). The excitement leading up to the opening of Canada's recreational marijuana market on Oct. 17 has fizzled out. But it's been more of a down-and-down year for Auxly Cannabis Group (CBWTF -0.28%). Auxly's share price has nearly been cut in half in 2018.

The performances of these two marijuana stocks can be misleading, though. Auxly's market cap has increased by more than 50% -- and more than twice as much as Cronos Group's market cap has grown. Both companies have issued new shares this year, with Auxly's activity causing dilution of its stock while its market cap soared.

However, none of this means much when it comes to the future prospects for Cronos Group and Auxly Cannabis Group. Which is the better marijuana stock now? 

Marijuana buds and a bottle of cannabis oil.

Image source: Getty Images.

The case for Cronos Group

Despite the roller-coaster ride experienced so far this year, Cronos Group ranks as the best-performing marijuana stock of all time. It didn't achieve this by sitting still. Cronos established itself in the Canadian medical cannabis market and is ready to compete in new markets as well.

The biggie right now, of course, is the recreational marijuana market in Canada. Cronos is well on its way to being able to produce more than 40,000 kilograms of cannabis per year. The company recently formed a joint venture that should boost its annual production capacity by around 70,000 kilograms.

Cronos already claims significant distribution channels for its recreational cannabis products. The company secured supply agreements with at least four Canadian provinces. It also signed a five-year supply deal with Cura Cannabis Solutions to supply a minimum of 20,000 kilograms annually. In addition, Cronos teamed up with U.S.-based MedMen to launch retail cannabis stores in Canada.

The international medical cannabis market presents an even greater opportunity for Cronos Group. Germany is currently the largest medical cannabis market outside of the U.S. and Canada. Cronos inked an exclusive supply agreement with pharmaceutical distributor Pohl-Boskamp for the German market. The company also has partners in Australia, Latin America, and Poland.

Cronos could be onto something big with its partnership announced in September with Ginkgo Bioworks. The two companies are collaborating to produce cultured high-purity cannabinoids from engineered strains of yeast. Currently, extracting cannabinoids from plants at a significant scale are very costly. Cronos and Ginkgo hope to develop cannabinoids at much lower costs, which could open up a major growth opportunity.

The case for Auxly Cannabis Group

Auxly Cannabis Group isn't your typical marijuana producer. The company, formerly known as Cannabis Wheaton, provides capital to other marijuana growers in exchange for a royalty stream from future production. 

This strategy appears to be working quite well for Auxly. The company is on track to produce 160,000 kilograms per year by 2021 as a result of its multiple streaming deals. This capacity should easily rank Auxly in the top 10 marijuana growers in the world.

But while Auxly has been successful in royalty streaming, that's not all the company does. It has also made equity investments in several businesses and now wholly owns four subsidiaries with a pending 80% controlling stake in another.

These equity deals have given Auxly a solid presence throughout the cannabis industry's supply chain. Auxly's businesses include upstream cannabis cultivation, midstream extraction and processing, and downstream distribution and retail operations. 

Although Auxly has focused much of its efforts at home in Canada, the company hasn't overlooked the significant global marijuana market. Auxly is waiting to finalize its controlling interest in Inverell, a Uruguayan cannabis producer. It also has partnerships with marijuana growers in several countries, including Colombia, Denmark, Lesotho, Slovenia, and South Africa.

Better marijuana stock

My view is that Auxly Cannabis Group gets the nod over Cronos Group for a couple of reasons. For one thing, Auxly's risk level should be lower as a result of its diversification. One or two of the company's partners can fail without causing Auxly to collapse.

The bigger factor influencing my decision, though, is valuation. Auxly's market cap is currently a little over $400 million, while Cronos Group's market cap is around $1.4 billion. I think investors get more bank for their buck with Auxly Cannabis Group.

Both stocks are risky, though, and are only suited for aggressive investors. A supply glut will hit Canada within the next few years. I'm somewhat skeptical that international markets will expand quickly enough to absorb the cannabis industry's excess capacity. If this happens, Auxly Cannabis Group will likely feel the pain.

Although Auxly is the better option over Cronos, in my opinion, I think most investors would be better off looking elsewhere.