Not every marijuana stock claims a market cap of billions of dollars while making less money than your nearest grocery store. And not every marijuana company focuses primarily on growing cannabis, either.

Auxly Cannabis (CBWTF -5.98%) and Origin House (ORHOF) are two cases in point. Origin House has been a big winner so far in 2018, while Auxly's share price has plunged. Which of these two marijuana stocks is the better choice for investors now?

Marijuana leaf on top of $100 bills.

Image source: Getty Images.

The case for Auxly Cannabis

Auxly's CEO, Chuck Rifici, co-founded another player in the cannabis industry you might have heard of -- Canopy Growth. Rifici didn't start Auxly, though. Auxly, named Cannabis Wheaton until earlier this year, was already the world's first marijuana royalty streaming company before Rifici came on board in 2017.

If you like sampling a little bit of everything, Auxly Cannabis might be just up your alley. The company operates in nearly every aspect of the cannabis supply chain. Probably the strongest argument for buying Auxly is the diversification that its breadth of operations across the supply chain offers.

Auxly's upstream cannabis production operations include streaming deals with 16 partners, most of which do business in Canada. The company estimates that its funded capacity resulting from these relationships ranks it fourth among marijuana producers. Deals announced in Q3, including an investment in Delta 9 Cannabis, bolstered Auxly's capacity.

The company has also jumped into midstream operations such as extraction, processing, manufacturing, and research and development. Auxly's April 2018 acquisition of DoseCann was an important move into the midstream part of the cannabis industry. The company also bought KGK Science, a leading contract research organization, in August.

Auxly either owns or has strategic partnerships with several businesses in the downstream sales and distribution part of the industry as well. The company's Kolab Project subsidiary is licensed to operate a retail cannabis store in Saskatchewan. Partnerships with Inner Spirit, Delta 9 Cannabis, and Atlantic Cultivation further Auxly's retail presence.

While most of Auxly's operations focus on the Canadian market, the company's acquisition of Uruguay-based Inverell opened the door to a more significant international opportunity. Inverell is a large outdoor grower of hemp that's used for extraction of cannabidiol (CBD).

The case for Origin House

Another company that has its roots in cannabis royalty streaming and has changed its name recently is Origin House. While Origin House still dabbles in its original business, the company now focuses primarily on building what it calls the "preeminent global house of cannabis brands."

A key step on the path to achieving its goal was to become a major distributor in the largest legal marijuana market in the world -- California. Origin House has definitely checked that box. The company is now the biggest distributor of cannabis products in California, reaching more than 70% of the state's dispensaries with more than 50 brands.

There's a great side benefit of being California's largest distributor of cannabis products. It gives Origin House an inside look at which brands are performing the best. This insight has allowed the company to buy some of those brands for itself. Origin House plans to continue adding to its portfolio of differentiated brands.

An example of this strategy was on display with Origin House's announcement on Dec. 4, 2018, that it is acquiring Cub City, a producer of ultra-premium cannabis flower. Origin House's brand partners have expressed their desire for bespoke exotic cannabis cultivation. The Cub City deal gives the company the production capacity and expertise to deliver for its partners.

But Origin House isn't limiting itself to California. The company announced in September that it was acquiring 180 Smoke, Canada's leading vape retailer. This deal positions Origin House to establish a retail presence to serve Canada's growing recreational marijuana market.

In addition, Origin House hopes to take its model that has worked well in California into other states. CEO Marc Lustig has mentioned neighboring Nevada as a top opportunity for future expansion.

Better marijuana stock

Both Auxly Cannabis and Origin House have market caps of less than $350 million. I think that both companies could experience significant growth over the next few years. But if I could only pick one, it would be Origin House.

Auxly's business model requires that it continue to raise cash to use in providing up-front capital for new streaming partners or in making strategic acquisitions. However, one of the top ways of raising this cash is through issuing new shares. And that means the value of existing shares is diluted. Most of Auxly's share price decline in 2018 stemmed from the company diluting its stock through public offerings.

Origin House has taken a more measured and deliberate approach to expansion. And it has in large part used money generated from selling assets from previous investments to fund its acquisitions.

I think that Origin House's focus on the U.S. market -- while not ignoring the Canadian market -- is smart. The stock is likely to be volatile like most other marijuana stocks, but my prediction is that Origin House will be a big winner over the long run.