Aurora Cannabis (ACB -1.80%) and KushCo Holdings (KSHB) are two marijuana stocks that are about as different as night and day. Aurora claims a market cap of more than $5.7 billion and produces cannabis for the Canadian recreational and medical marijuana markets and international medical marijuana markets. KushCo's market cap is less than $460 million. The company provides packaging solutions primarily for the U.S. cannabis industry.

The performances of these two marijuana stocks have also been very different so far in 2018. Aurora's share price has plunged, while KushCo stock has generated a big year-to-date gain. But which of these two stocks is the better pick now?

Marijuana leaves with a shadow of a dollar sign.

Image source: Getty Images.

The case for Aurora Cannabis

If you think that the global marijuana market is going to grow tremendously and that the biggest current players in the market are most likely to thrive, Aurora Cannabis is a stock to seriously consider. 

Aurora certainly qualifies as one of the biggest current players in the global marijuana market. The company has the largest production capacity in the industry. By early 2019, Aurora should have an annualized production run rate of more than 150,000 kilograms. That level is expected to increase to over 500,000 kilograms in the future.

In the first few weeks of the launch of the Canadian recreational marijuana market, Aurora especially stood out. Its products generated around 30% of the market supplied through the Ontario Cannabis Store website. Two of Aurora's brands ranked in the top five best-selling oil and capsule products in British Columbia. And the company claimed all four stop spots among dried flower products in British Columbia.

While Aurora Cannabis is excelling at home in Canada, the company is also active internationally. It is acquiring ICC Labs in a deal that will significantly expand its presence in Latin America. Aurora is also a leader in Germany, the most important international marijuana market outside of North America. The company has established operations in several other key international markets as well.

For now, Aurora can't set up shop in the U.S. because it can't do so and maintain its listings on the New York Stock Exchange and the Toronto Stock Exchange. That's because marijuana is illegal at the federal level in the U.S. However, Aurora just might be able to enter one big U.S. market soon.

The 2018 Farm Bill could soon be passed. This bill would legalize hemp in the U.S. Hemp is defined as cannabis containing 0.3% or lower levels of THC, the primary psychoactive ingredient in cannabis. If this legislation becomes law, Aurora could be able to enter the U.S. hemp-based cannabidiol (CBD) market, which Brightfield Group projects will grow to $22 billion by 2022.

The case for KushCo

Why buy KushCo Holdings stock? The company is the top provider of packaging for the cannabis industry. It focuses on the biggest marijuana market in the world: the U.S. And KushCo has lots of growth opportunities.

You might wonder how something as mundane as packaging could be a great market to be in. But KushCo makes specialized products custom-designed for the cannabis industry, including pop-top bottles, vaporizer cartridges, and tubes. The company works closely with its customers to address their specific needs.

KushCo's core business is rapidly growing. A total of 31 states now allow the legal use of medical marijuana. Ten states have legalized recreational marijuana. But the markets in most of these states are still in their early stages. Marijuana Business Daily thinks that the U.S. cannabis market will triple in size from its 2017 level by 2022.

But KushCo isn't just limiting itself to the U.S. nor to the packaging business. The company has its eyes set on international opportunities as well, especially in Canada and in Europe. KushCo also made several acquisitions that put the company in new ancillary markets.

One of those acquisitions was KushCo's purchase of Summit Innovations in May 2018. This business, now named Kush Energy, focuses on supply hydrocarbons and solvents for the extraction process used in producing cannabis edibles, oils, and waxes.

KushCo also now has a marketing business thanks to its acquisition of The Hybrid Creative in July 2018. This business provides branding, marketing, and e-commerce solutions to the cannabis industry.

Better marijuana stock

Both of these stocks should have tremendous growth opportunities. But while Aurora Cannabis has to hope that it can enter the huge U.S. market, KushCo doesn't have to wait at all. 

There's also the matter of valuation. Neither of these stocks is cheap by any stretch of the imagination. However, KushCo's price-to-sales (P/S) ratio of 8.8 looks like a relative bargain compared with Aurora's P/S ratio of 99.9. 

Because of these factors, I think that KushCo gets the nod as the better marijuana stock. KushCo isn't a great pick for more conservative investors because of its volatility and sky-high valuation. However, aggressive investors could find this stock an attractive way to profit from growth in the global marijuana industry.