Go big or go small. Those are two different strategies for investing in marijuana stocks.

You won't find a bigger marijuana stock than Canopy Growth (CGC -1.36%). Its market cap of close to $15 billion surpasses all others by a wide margin. You also probably won't find many smaller marijuana stocks that are more attractive than Organigram Holdings (OGI -0.49%)

But which of these two stocks is the better pick for investors? Here's how Organigram and Canopy Growth compare.

Marijuana leaf on top of $100 bills

Image source: Getty Images.

The case for Organigram

Probably the strongest argument for buying Organigram is the bang for the buck it offers. The bang I'm referring to is the company's production capacity.

Organigram currently can grow around 36,000 kilograms of cannabis on an annualized basis. But by the fall of this year, the company should increase its annual production capacity to 113,000 kilograms. That should be enough to rank Organigram in the top seven among Canadian marijuana producers based on capacity. However, Organigram's market cap of around $950 million is only a fraction of several of its larger rivals. 

Despite being a smaller player, Organigram's position in the Canadian adult-use recreational marijuana market looks pretty good. The company now has distribution agreements in place with all 10 Canadian provinces. Even some of its bigger peers can't make that claim.

Organigram expects to compete well in the cannabis edibles market that's expected to open later this year. The company is working with Colorado-based The Green Solution to develop cannabis-infused beverages, edibles, and vaporizable products. It's partnering with Canada's Smartest Kitchen to develop premium cannabis chocolate products. And Organigram teamed up with Valens GroWorks to extract cannabis concentrates for oils and other derivative products.

In addition to Organigram's efforts at home in Canada, the company is also active internationally. Organigram forged a partnership with Alpha-cannabis to distribute medical cannabis products in Germany. It also has a supply agreement with Serbia-based Eviana for hemp cannabidiol (CBD). 

On top of all this, Organigram invested in Hyasynth, a Montreal-based biotech that's working to produce cannabinoids using engineered yeast strains. This method holds the potential to significantly lower the costs of producing high-quality cannabinoids.

The case for Canopy Growth

Why consider buying shares of Canopy Growth? Think big -- as in big production capacity, big market share, big international presence, big partner, and a big cash stockpile.

Canopy Growth doesn't typically refer to its production capacity in terms of kilograms produced per year. But the company isn't bashful about pointing to its 4.3 million square feet of licensed growing space with another 1.3 million square feet on the way. 

After the first quarter of sales in the Canadian adult-use recreational market, Canopy Growth was the hands-down winner. The company grabbed a market share of around 30%, well above any other cannabis producer. It has supply agreements with all of the Canadian provinces, with a minimum total commitment of 70,000 kilograms annually. And that figure doesn't include the biggest province of all, Ontario.

Canopy is a very close No. 2 right now in international sales behind Aurora Cannabis. But it could easily take the top spot in the near future. Canopy is in the process of building a large-scale hemp CBD facility in New York. The company expects to begin selling hemp CBD products in the U.S. by late 2019 and could develop additional facilities in other states.

Probably the biggest competitive advantage for Canopy Growth is its partnership with Constellation Brands, along with the cash the deal with the alcoholic beverage maker brought. Constellation initially bought a 9.9% stake in Canopy in 2017. But last year, the big company upped its stake by investing another $4 billion

As a result of this deal, Canopy now has a partner at its side with considerable success in establishing consumer brands. It also has a cash stockpile of nearly $3.7 billion (as of Dec. 31, 2018) to use in funding global expansions to stay ahead of competitors. 

Better buy

I like both of these Canadian marijuana stocks. It wouldn't surprise me if Organigram outperforms Canopy Growth over the short term (as it has done so far in 2019). Over the long run, though, I think that Canopy is in a better position for success.

The global cannabis market is going to grow significantly. The biggest winners are likely to be companies that can effectively transition from commodity growers to builders of diversified consumer brands. My view is that Canopy's connection with Constellation Brands gives it a significant edge in making this transition. Organigram is a good pick, but I think that Canopy Growth is an even better one.