Other than being marijuana stocks, Aphria (APHA) and KushCo Holdings (KSHB) might not appear to have much in common. The two companies focus on different segments of the cannabis industry supply chain. They focus on different geographical markets. One of these stocks -- KushCo -- has generated a nice gain so far in 2018. Aphria is down significantly year to date.

Both Aphria and KushCo Holdings offer the potential for solid returns over the long run. But which is the better buy right now? 

Marijuana buds spilling out of plastic container onto $10 and $20 bills.

Image source: Getty Images.

The case for Aphria

Aphria has one major thing going for it that KushCo doesn't: As of October, Aphria stock trades on the New York Stock Exchange (NYSE). This makes Aphria more accessible to a larger number of investors. It's not surprising that Aphria's trading volume is roughly four times greater than KushCo's. But trading on the NYSE isn't a reason to buy Aphria stock. There are several really good reasons to do so, though.

You can put Aphria's opportunity in the Canadian recreational marijuana market near the top of the list. By 2022, Canadian recreational marijuana sales are projected to reach $5.5 billion, according to Arcview Market Research and BDS Analytics.

Aphria ranks as the third-largest marijuana producer in terms of production capacity. By early 2019, the company should be able to grow 255,000 kilograms of cannabis per year thanks to a major expansion at its Aphria One facility and the opening of its new Aphria Diamond facility.

Reaching Canadian recreational marijuana customers shouldn't be a problem for Aphria. The company secured supply agreements with all of Canada's provinces plus the Yukon territory. Aphria's partnership with Southern Glazer's, the largest wine and spirits distributor in North America, provides a retail presence across the country.

International markets present even larger opportunities for Aphria. The company's recently announced acquisition of pharmaceutical distributor CC Pharma strengthens its position in Germany, which claims the biggest medical marijuana market outside of North America. Its acquisition of LATAM Holdings boosts Aphria's operations in the fast-growing Latin American and Caribbean marijuana markets. 

The case for KushCo 

Picks and shovels were critical for gold rushes in the past. In the "green rush" of the cannabis industry today, picks and shovels have been replaced by, among other things, packaging products. And KushCo Holdings has emerged as the go-to supplier for the U.S. cannabis industry when it comes to packaging.

The company markets a wide range of packaging solutions designed specifically for cannabis products, including pop-top bottles, vaporizer cartridges, tubes, and other containers. In addition, KushCo sells hydrocarbon gases and solvents used in extracting cannabinoids from marijuana plants to make cannabis oils and other products. 

Business is definitely booming. In September, KushCo announced preliminary fiscal-year 2018 revenue of $51 million, up 171% over the prior year. KushCo CEO Nick Kovacevich said that the company believed "that no U.S.-based public cannabis-related company has ever before generated this level of annual sales revenue."

One huge plus for KushCo is that its success doesn't hinge on a handful of big customers. No single customer generates more than 10% of the company's total sales. 

KushCo also has several opportunities for growth. An obvious one is the expansion of the U.S. marijuana market. As more states legalize either medical or recreational marijuana, KushCo's addressable market increases. The company also has key opportunities in Canada and Europe. And the acquisition of Zack Darling Creative Associates gives KushCo another opportunity to grow by providing branding, marketing, and e-commerce solutions to the cannabis industry.

Better marijuana stock

I think that Aphria is one of the most attractive of the big Canadian marijuana stocks. The company could be a big winner over the long run as international markets open up.

But my view is that KushCo Holdings gets the nod as the better marijuana stock right now. The company is growing by leaps and bounds. While Aphria hopes federal laws change in a way that allows it to gain access to the U.S. market -- the biggest marijuana market in the world -- KushCo is already a major player in the U.S.

It's possible that other big packaging providers could mount a competitive challenge to KushCo in the future. For now, though, the company is the clear leader in its niche market.

KushCo isn't consistently profitable yet, so the company might have to issue more shares down the road to raise cash -- and cause dilution in the value of existing shares. Still, the prospects for KushCo appear to be quite good.