Only six marijuana stocks trade on the New York Stock Exchange (NYSE). CannTrust Holdings (CNTTQ) is the newest addition to the NYSE, while Innovative Industrial Properties (IIPR -0.88%) was the first marijuana stock to list on the Big Board in December 2016.

CannTrust has been the bigger winner of the two if you include the period its shares traded on Canadian stock exchanges before listing on the NYSE. However, if we only look at performance on the NYSE, Innovative Industrial Properties (IIP) has delivered a much stronger performance than CannTrust.

But none of that matters in determining which of these two marijuana stocks is the better pick for investors now. What's important are the growth prospects for each company and how well the companies are positioned to capitalize on those opportunities. Here's how CannTrust and Innovative Industrial Properties compare on these key criteria.

Check out the latest earnings call transcripts for Innovative Industrial Properties and other companies we cover.

Marijuana plants growing in a greenhouse

Image source: Getty Images.

The case for CannTrust

CannTrust's primary focus right now is on the Canadian recreational marijuana market. This market could reach close to $5 billion annually by 2022, according to projections from Arcview Market Research and BDS Analytics. 

There's an even greater opportunity, though, in international medical cannabis markets, especially in Europe. Cannabis market research company Brightfield Group thinks that the European medical cannabis and cannabidiol (CBD) markets should approach $10 billion by 2023. 

There are two keys to capturing significant shares in these markets: capacity and distribution channels. CannTrust appears to be in pretty good shape in both areas.

The company's annualized production run rate is around 50,000 kilograms now that the phase 2 expansion of CannTrust's Perpetual Harvest Facility is completed. CannTrust CEO Peter Aceto said in the company's Q4 conference call that its phase 3 facility should boost annual production capacity to 100,000 kilograms by the second half of 2020. 

That could be just the start, though. CannTrust plans to grow cannabis outdoors on around 200 acres of land it has secured. Aceto projected that the company's outdoor expansion could add another 100,000 to 200,000 kilograms of cannabis in 2020.

As for distribution channels, CannTrust has supply agreements for the recreational marijuana markets in nine Canadian provinces. The company partnered with Breakthru Beverage Group, a leading alcoholic beverage distributor in Canada, to distribute its recreational marijuana products. In addition, CannTrust is teaming up with National Access Cannabis, which plans to launch more than 200 retail cannabis stores across Canada.

On the international front, CannTrust formed a joint venture with Stenocare to distribute medical cannabis products in Denmark. The company also is partnering with CannTrek to distribute medical cannabis products in Australia and owns a 19.8% stake in the Australia company. Aceto also said in CannTrust's conference call that the company is working with Canadian generic-drug maker Apotex to develop three products that will be distributed internationally.

The case for Innovative Industrial Properties

Innovative Industrial Properties is a real estate investment trust (REIT) that focuses on developing and leasing medical cannabis properties in the United States. Thirty-three U.S. states have already legalized medical cannabis and more could be on the way.

The U.S. medical cannabis market could top $8 billion by 2024, according to market researcher Global Markets Insight. Arcview Market Research and BDS Analytics project that the total U.S. marijuana market, including both medical and recreational products, will exceed $23 billion by 2022. 

How can Innovative Industrial Properties capitalize on the U.S. opportunity? The company currently owns medical cannabis properties in 13 states. All of the properties are leased to medical cannabis operators. Several of the states in which IIP owns properties have fast-growing cannabis markets, including Illinois, Massachusetts, and New York.

The company's business model is to use the money it makes from leasing its current properties and reinvest into developing additional properties. IIP recently acquired new properties in California and Ohio. The company was able to immediately lease the properties.

IIP continues to post strong revenue and earnings growth. As a REIT, IIP must distribute at least 90% of its taxable income to shareholders as dividends. It recently increased its dividend by 29%, with the yield now just over 2%.

Better marijuana stock

CannTrust and Innovative Industrial Properties have similar market caps. But CannTrust remains unprofitable while IIP has been consistently profitable for quite a while and pays a nice dividend to boot. In my view, Innovative Industrial Properties is the better pick because of its stronger financial position.

I also like IIP's growth prospects with its "rinse-and-repeat" approach. The company should be able to continue to invest in new properties and quickly lease them out. There are risks for IIP, including the fact that marijuana remains illegal at the federal level. However, I think the potential long-term returns for the stock outweigh the risks.