It's one of the biggest Canadian marijuana producers. It snagged a major deal with a big company outside the cannabis industry. And its name starts with a "C." Which company is it?

If you've been keeping up with the cannabis industry news, you know that there are two correct answers to that question. Both Canopy Growth (NYSE:CGC) and Cronos Group (NASDAQ:CRON) meet all the criteria.

Canopy Growth claims the biggest market cap of any marijuana producer. Cronos Group is the best-performing marijuana stock of all time. But which of these stocks is the better pick for investors now?

Shadow of a dollar sign on top of a pile of marijuana leaves

Image source: Getty Images.

The case for Canopy Growth

Canopy Growth has a lot going for it. That's probably why big alcoholic beverage maker Constellation Brands (NYSE:STZ) agreed in August to up its stake in Canopy to 38% for $4 billion

It's easy for investors to focus on Canopy's home market of Canada to the exclusion of other markets. Canada certainly presents a significant opportunity for Canopy Growth. The company is also well positioned in its home country, with the most impressive slate of recreational marijuana supply agreements with Canadian provinces and territories in the cannabis industry.

Canopy Growth's bigger opportunity, though, lies outside Canada. The company has already aggressively moved into international markets, notably Germany, Australia, and Latin America. It continues to use the cash from its Constellation deal to fund more international acquisitions, most recently buying German vaporizer manufacturer Storz & Bickel. 

There are two markets that Canopy can't jump into yet but eagerly awaits the chance to do so. Canada's legalization of recreational marijuana in 2018 didn't include cannabis edibles and concentrates. Canopy and Constellation have big plans to launch a variety of cannabis-infused beverages in Canada next year, assuming the country finalizes all regulations.

But the biggest prize of all is the U.S. Canopy Growth can't establish operations in the U.S. and retain its stock listing on the major stock exchanges as long as marijuana remains illegal at the federal level. But the passage of the 2018 Farm Bill should open the door for Canopy to enter the potentially huge U.S. hemp market. And the prospects of relaxation of federal marijuana laws in the U.S. appear to be better than ever after the November 2018 elections.

In a nutshell, the case for Canopy Growth is that global marijuana (and hemp) markets will grow dramatically for a long time to come. With the company's alliance with Constellation, its projected annual production capacity of more than 500,000 kilograms, and strong international operations, Canopy Growth should be a leader in these expanding markets.

The case for Cronos Group

Cronos Group beat out other contenders to snag a big partnership with Altria (NYSE:MO). The giant tobacco company paid around $1.8 billion to acquire 45% of Cronos, with an option to gain a majority interest.

Although Cronos Group hasn't secure as many supply agreements with Canadian provinces as Canopy Growth has, it has agreements with four key provinces. More important, Cronos lays claim to a giant supply deal with Cura Select Canada. Cura signed a five-year agreement to buy at least 20,000 kilograms annually from Cronos Group's Cronos GrowCo joint venture.

Speaking of joint ventures, Cronos Group teamed up with the biggest cannabis retailer in the U.S., MedMen, to target the recreational market in Canada. The two companies plan to open upscale cannabis retail stores throughout Canada in provinces that allow private retail.

Cronos Group has also been busy on the international front. It has secured key distribution agreements in Germany and Poland, and joint ventures in Australia and Israel.

The partnership with Altria should open even more international opportunities for Cronos. Altria has a lot of experience in successfully navigating highly regulated markets across the world. 

One intriguing opportunity for Cronos stems from its partnership with Ginkgo Bioworks. Ginkgo is a small company, but one that has gained a reputation as an exciting pioneer of genetically engineering bacteria for industrial applications. Cronos is working with Ginkgo to develop high-quality cannabinoids from genetically engineered yeast strains. This could be huge for both companies because of the opportunity to dramatically reduce costs associated with current cannabinoid extraction methods.

Better buy

Bigger isn't always better. But in this case, I think the advantage goes to the bigger company.

Canopy Growth's cash stockpile gives it a leg up over all of its rivals in the industry, including Cronos Group. The company's production capacity also is a significant plus in its favor.

In my view, Cronos Group is poised to be a solid winner over the long run -- and now more than ever with its Altria relationship. However, I suspect that Canopy Growth will be an even bigger winner.