Marijuana investors haven't had much to cheer about this year. Most cannabis equities have fallen on hard times in the back half of 2019 because of a slew of unexpected headwinds, such as the ongoing vaping crisis, a dearth of retail outlets in key Canadian provinces, and the painful realization that America isn't about to legalize cannabis on the federal level anytime soon. 

Are there any pot stocks worth picking up in the wake of this nine-month long downturn? Canada's OrganiGram Holdings (NASDAQ:OGI) and Aphria (NYSE:APHA) are two names that could prove to be tremendous bargains at current levels. Which stock is the better buy right now? Let's dig deeper to find out. 

A flowering cannabis plant growing under direct sunlight.

Image Source: Getty Images.

The case for OrganiGram

Despite a far smaller production footprint compared to industry giants like Aurora CannabisCanopy Growth, and Aphria, OrganiGram has still been able to grab a respectable 10% share of the adult-use recreational market in Canada, according to its own internal estimates. That remarkable achievement speaks volumes about the overall efficiency of the company's unique three-tiered indoor growing facility, as well as management's business acumen.

To build on this early commercial momentum, OrganiGram recently laid out a three-pronged strategy to tackle the initial introduction of Cannabis 2.0 products such as vapes and edibles.  

OrganiGram's first class of Cannabis 2.0 products will consist of the following:

  • A well-rounded and diversified vape pen platform. OrganiGram has partnered with both California-based PAX and Feather Company to develop a top shelf vape pen portfolio. 
  • In collaboration with Canada's Smartest Kitchen, OrganiGram has built a high-efficiency production line for cannabis-infused chocolates. The company expects chocolate sales to get under way in the first quarter of 2020. 
  • A unique line of powdered beverage products. These shelf stable, flavorless nano-emulsion powders will provide customers with a discrete consumption method that can be used in a wide variety of social settings. 

Will OrganiGram's Cannabis 2.0 portfolio grow its market share in 2020? While the answer to this all-important question is a complete unknown right now, this underdog does have a decent shot at outperforming many of its much larger, and demonstrably less efficient, Canadian peers. 

The case for Aphria 

Aphria is Canada's third largest cultivator by production capacity and one of the industry's cheapest names from a price-to-sales ratio perspective. However, the company's real draw for investors lies in its German medical cannabis distribution subsidiary known as CC Pharma, as well as its top-selling dried flower brand Broken Coast that's grown out of Vancouver Island.

Why does Aphria's investing thesis center on CC Pharma and Broken Coast? In the most recent quarter, Aphria generated the highest amount of net revenue within its peer group, thanks in no small part to its thriving medical cannabis distribution business over in Europe. Now, the company does expect CC Pharma's revenue to essentially flat-line for the remainder of the fiscal year, but this unit should at least provide a solid revenue stream to build on from here on out. 

Broken Coast, on the other hand, gives Aphria a bona fide flagship premium dried flower brand. This award-winning product category has literally gotten hundreds of rave reviews on a variety of top cannabis websites by end-users. The same can't exactly be said for the flagship brands of some of Aphria's closest competitors, however.   

Which stock is the better buy? 

All things considered, OrganiGram is probably the better long-term buy and hold. Aphria sports an interesting value proposition with its rapidly expanding international footprint and early brand-building activities. But OrganiGram simply has a more efficient operation at this point in time. Moreover, OrganiGram's business appears to be "right-sized" for the current market conditions. Aphria, by contrast, may have to rethink both the scope and scale of its operations in this challenging environment.