Nearly everything that could go right has done so for Canopy Growth (CGC 0.77%). On the other hand, nearly everything that could go wrong has done so for Aphria (APHA). The stock performances for the two Canadian marijuana producers sort of show it, with Canopy's shares more than doubling over the last 12 months and Aphria's shares sinking nearly 20% during the period.

However, the past, whether good or bad, doesn't necessarily translate to how well a company and its stock will perform in the future. Which of these two marijuana stocks is the better pick for investors now? Here's how Canopy Growth and Aphria stack up against each other.

Marijuana leaf on top of U.S. cash

Image source: Getty Images.

The case for Canopy Growth

Canopy Growth is the biggest marijuana company in terms of market cap. And it's arguably in the best position to be the biggest long-term winner in the global cannabis industry. To achieve success in the cannabis industry, a company must have ample production capacity and a strong presence in key markets. Canopy checks off both boxes.

The company has 10 production facilities in Canada. These facilities include a total of 4.3 million square feet of licensed growing space. Canopy also has expansion efforts under way to add another 1.3 million square feet. That ranks the company No. 2 in production capacity, trailing only Aurora Cannabis (NYSE: ACB).

Canopy clearly has a strong presence in key cannabis markets. The company claimed the highest market share in the industry in the first quarter of adult-use recreational marijuana market sales in Canada. It's also a major player in international medical cannabis markets, with operations in more than a dozen countries.

The company can't enter the U.S. marijuana market while marijuana remains illegal at the federal level. However, Canopy has already leapt into the U.S. hemp market. Thanks to the passage of the 2018 Farm Bill in December, hemp is now legal in the U.S. Canopy moved quickly to secure a hemp production license in New York state and is investing more than $100 million to build a large-scale hemp production facility there.

Perhaps the strongest argument for buying Canopy Growth is its relationship with Constellation Brands. The big alcoholic-beverage maker, best known for its Corona and Modelo premium beers, initially invested in Canopy in 2017, buying a 9.9% stake. In 2018, Constellation invested another $4 billion to up its stake in Canopy to 38%.

There are two huge advantages that the Constellation relationship provides to Canopy Growth. First, Canopy now has a large cash stockpile that it can use to expand without having to raise money through stock offerings or increasing its debt. Second, Constellation's expertise in building successful consumer brands should help Canopy as markets open for cannabis-infused beverages.

The case for Aphria

Aphria has experienced more than its fair share of problems, notably including allegations last year that it drastically overpaid for its acquisition of LATAM Holdings in a deal that lined the pockets of key insiders. But these problems have resulted in Aphria's market cap looking more attractive than many of its peers. And, like Canopy, Aphria deserves high scores in the areas of production capacity and its presence in key markets. 

The company's five production facilities give Aphria more than 2.6 million square feet of growing space. Although all of this space isn't yet licensed and fully operational, Aphria is on track to be able to produce around 255,000 kilograms of cannabis annually, ranking it in third place behind Canopy Growth in total production capacity.

Aphria is also one of the top leaders in the Canadian adult-use recreational market, although supply constraints and distribution challenges have weighed on its sales. However, those issues should only be temporary.

The company is also a significant player in international medical cannabis markets. Aphria claims cultivation licenses in six countries and has distribution operations in four additional countries. Perhaps most impressive, Aphria was one of only three marijuana producers to win approval to grow medical cannabis in Germany. 

Aphria's shareholders turned down an acquisition attempt by U.S. cannabis producer Green Growth Brands. But the company appears to be interested in potential dealmaking. With significant production capacity on the way, solid international operations (especially in Germany), and a relatively low valuation compared to many Canadian marijuana producers, Aphria could be on the short lists of several major companies in industries outside of the cannabis industry. 

Better buy

Although I think Aphria could see better days ahead, Canopy Growth looks like the smarter long-term pick for investors. Canopy's relationship with Constellation Brands and the cash that deal brought puts the company in an enviable position.

Sure, Canopy's market cap of more than $16 billion looks steep based on the company's historical sales. However, the opportunity for cannabis globally is so great that this valuation could look like a bargain several years from now