Most marijuana stocks took a beating in October. Once-high-flying Tilray (TLRY) plunged more than 30%, although it still claims the highest market cap among its peers. But not every marijuana stock experienced misery last month. Shares of Origin House (ORHOF), formerly known as CannaRoyalty, actually ended October up a little.

Which of these two marijuana stocks is the better pick for long-term investors? Here's how Tilray and Origin House stack up against each other. 

Marijuana buds on top of U.S. cash

Image source: Getty Images.

The case for Tilray

We can pretty much sum up the argument for buying Tilray in two sentences: The global marijuana market will be huge. Tilray will be a major player in this huge market.

There are probably few who would argue that the first statement isn't true. Many might dispute, though, just how big the global marijuana market will be. Tilray CEO Brendan Kennedy has mentioned a $150 billion cannabis market. Anywhere even remotely close to that figure should give Tilray enormous opportunities for growth.

As for the second statement, Tilray already is a major player in the global marijuana market. The company has plenty of growing space and is on track to rank fourth in production capacity by 2020. Tilray is positioned well in Canada's recreational marijuana market.  

More important, though, Tilray has solid operations in international medical marijuana markets. The company exported medical cannabis to Europe before any of its peers. It's the only Canadian marijuana producer approved to supply both cannabis flower and cannabis oils to Germany, the largest marijuana market outside of North America. 

Tilray's Portugal production facility gives it a great springboard for supplying European markets. The company should be able to expand into the United Kingdom now that medical cannabis has been legalized. Tilray is also in a good position to benefit from the growth of medical marijuana markets in Australia and Latin America.

There's also an opportunity for Tilray to partner with a major company outside of the cannabis industry. Actually, Tilray already teamed up with Sandoz Canada, a subsidiary of Novartis, to jointly market medical cannabis products in Canada. So far, Tilray hasn't landed a deal with a big company to target the recreational cannabis market, but it would likely be on the short list for any alcoholic beverage maker or tobacco company seeking a partner. 

The case for Origin House

The investing thesis for Origin House can be made in two sentences also: Canada is big, but California is huge. And Origin House is positioned for success in both markets.

California's marijuana market really is huge. In 2017, marijuana sales in the state were around $3 billion. By 2022, that number should jump to $7.7 billion, according to Arcview Market Research and BDS Analytics. By comparison, Canada's marijuana market in 2022 is likely to reach around $5.4 billion.

Origin House currently ranks as the largest distributor of marijuana in the state of California. The company distributes more than 130 branded cannabis products to 70% of dispensaries in the state. Origin House also markets several of its own brands and plans to add to its product lineup over the next year.

While Origin House appears to be poised to profit as California's marijuana market heats up, it's also hoping to benefit from the growth of Canada's recreational marijuana market. Origin House is acquiring 180 Smoke, Canada's leading vape retailer. 180 Smoke has 26 stores as well as strong online operations.

Beacon Securities, an investment firm based in Canada, thinks that distributors and retailers could be "king makers" of cannabis brands. That assessment has merit, considering that distributors and retailers have the most insight into which products consumers like the most. This could bode well for Origin House's prospects over the next several years.

The investment firm projects that Origin House is on track to generate revenue of around $325 million by 2020. Origin House CEO Marc Lustig expects the company to be profitable in 2019. With the company's market cap currently hovering around $300 million, Origin House stock should have plenty of room for growth.

Better marijuana stock

I think that the arguments for Tilray are correct, but they also leave out two important facts. First, the U.S. remains the largest marijuana market in the world, but Tilray can't establish a significant presence in it yet. Second, it's going to take a long time before the legal global marijuana market grows to the levels that could justify Tilray's current market cap. 

Origin House, on the other hand, looks like a pretty good bargain at its current price. As the California market matures and the company executes on its strategy, Origin House's share price should increase significantly. In my view, Origin House is the hands-down winner over Tilray. 

There are risks for Origin House, though. Marijuana remains illegal at the federal level in the U.S., and it's possible that the California market won't expand as rapidly as expected. However, I don't see those risks as overly troubling at this point. I think Origin House ranks as a top marijuana stock to buy after the big meltdown experienced by most other marijuana stocks.