The marijuana industry is on fire, and it's not hard to understand why. According to a handful of Wall Street investment banks, the legal weed industry is on track for as much as $50 billion to $75 billion in global annual sales by the end of the next decade. That'd place the cannabis industry more or less on par with the global soda industry, and it would mean a lot of dollars flowing into the eventual winners in the pot space.

The big question is, which marijuana stocks to buy?

Two rows of cannabis buds lying atop neatly arranged hundred dollar bills.

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The market's most popular pot stock

Arguably no company has been more popular with investors -- especially millennial investors -- than Aurora Cannabis (ACB -7.79%). Aurora's acquisition-heavy strategy has pushed it to the top of the pack in terms of forecasted peak production. While its management team is calling for more than 500,000 kilos in peak annual yield, I believe this to be a highly conservative estimate. Rather, production is liable to come in closer to 700,000 kilos a year when operating at full capacity. Such immense annual output should translate into the signing of lucrative long-term deals and the formation of partnerships.

Aurora is also primarily focusing on the medical marijuana community, which is in stark contrast to most growers that are laser-focused on the larger recreational marijuana market. Though medical cannabis does focus on a smaller consumer pool, these are folks who tend to use pot more often, open their wallets more frequently than recreational marijuana users, and will usually account for most alternative cannabis purchases such as oils and sprays. Alternative weed products sport much higher margins than traditional dried flower.

But Aurora Cannabis -- or should I say, its long-term shareholders -- has paid a steep price for this rise to the top. Namely, in order to fund organic build-outs, joint venture greenhouse retrofits, and its numerous acquisitions, Aurora has issued more than 1 billion shares of common stock since June 30, 2014. The issuance of this stock has weighed on its share price and may make it very difficult for the company to generate a meaningful per-share profit.

Rather than becoming enamored with Aurora Cannabis, here are three better options to consider for your portfolio in the marijuana space.

An up-close view of flowering cannabis plants growing in a warehouse.

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OrganiGram Holdings

Instead of focusing on the industry's largest growers, which in many cases already have large premiums built into their share price, you'll find much better value with small-cap pot stocks. In particular, no grower looks to be more attractive than OrganiGram Holdings (OGI -0.97%).

OrganiGram offers a number of competitive advantages. For starters, we have the company's location in New Brunswick. OrganiGram is the only major grower (i.e., a grower expected to produce at least 100,000 kilos a year at its peak) located in the Atlantic region of Canada, meaning it has a very good shot to lock up market share in New Brunswick, Nova Scotia, Newfoundland and Labrador, and Prince Edward Island. Even though these are less-populated provinces and territories compared to, say, Quebec or British Columbia, early data shows that residents in these Atlantic-based provinces are more likely to consume cannabis than in any other provinces in Canada.

This is a company that's also utilizing a three-tiered growing system at its Moncton, New Brunswick, campus. By using growing tiers at its lone campus, OrganiGram has maximized its cultivation space, which totals 490,000 square feet. With management calling for 113,000 kilos at full production, this means OrganiGram is yielding a little over 230 grams per square foot, or more than double the industry average. Couple this superior yield with reasonably low supply chain costs from having a single grow campus, and it's easy to see why OrganiGram is consistently considered a value relative to its peers.

Check out the latest earnings call transcripts for the companies we cover.

An assortment of legal Canadian cannabis products on a counter.

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KushCo Holdings

In the ancillary niche, KushCo Holdings (KSHB) looks to be a much smarter and cheaper way to play the cannabis space than Aurora.

KushCo is best known for providing packaging and branding solutions to more than 5,000 growers worldwide. Every legal country, state, or locale can have different packaging and labeling requirements that growers need to adhere to, which is where KushCo comes in. It provides the tamper- and child-resistant packaging, ensures that this packaging is compliant with local laws, and aids in package differentiation and labeling to improve consumer engagement with brands.

KushCo's acquisition of Summit Innovations in 2018 also moved the company firmly into the hydrocarbon gases and solvents arena. The former is necessary for the production of high-margin cannabis oils, while the latter is required for cannabis concentrate production. Since alternative products are going to be the key to juicier margins, KushCo finds itself as a necessary middleman in a number of ancillary niches.

The icing on the cake here is that KushCo is trading at just 2.5 times Wall Street's consensus 2020 sales forecast, which is really inexpensive for such a fast-growing industry.

Four vials of cannabidiol oil lined up on a counter.

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Charlotte's Web Holdings

A third pot stock to consider buying instead of Aurora Cannabis is Charlotte's Web Holdings (CWBHF 4.60%).

Charlotte's Web is a manufacturer and distributor of hemp-based cannabidiol (CBD) products. CBD is the nonpsychoactive cannabinoid best known for its perceived medical benefits. Heading into the end of 2018, Charlotte's Web was retailing its leading hemp-derived CBD products in nearly 3,700 stores.

Then, in December, Charlotte's Web received some big news: President Trump signed the Farm Bill into law. In doing so, hemp production, and hemp-derived CBD, became legal in all 50 states. Although adding CBD of any form, including hemp-based CBD, to food and beverages is still a no-no per the U.S. Food and Drug Administration, the Farm Bill's passage opens the door for Charlotte's Web to get its products into new retail doors with ease.

Also, what investors might be overlooking is that Charlotte's Web has been profitable on an operating basis for a while. In 2017, and through the first nine months of 2018, Charlotte's Web has generated an operating profit by focusing on high-margin oils that are popular with medical cannabis patients and folks who simply believe that CBD oils offer medical benefits for their ailments. Few marijuana stocks can offer early-stage profit growth like Charlotte's Web.