A new year is around the corner for the cannabis industry, and that can mean a new start for two troubled stocks: Tilray (TLRY) and Cronos Group (CRON 1.26%). Like much of the industry, both have struggled this past year and both are now at lower valuations. And with the launch of the "Cannabis 2.0" market in Canada sure to give both companies a boost in 2020, it's a good time for investors to take a close look at these two stocks to see which is the better buy going forward.

Does having a big partner give Cronos a big advantage?

Having tobacco giant Altria (MO 1.38%) in Cronos' back pocket ensures that running short on cash and resources shouldn't be an issue for the pot stock. Altria made a large $1.8 billion investment into Cronos a year ago, which gives it lots of incentive to ensure things go well for the cannabis producer.  Rising net losses and a lack of cash flow have been problems in the cannabis industry this year, and that's why the partnership with Altria gives the company an immediate advantage.

With 1.5 billion Canadian dollars in cash on its books as of September 30, Cronos isn't in any imminent danger of that being a problem just yet. Cronos' cash burn over the past nine months has totaled CA$102 million, but it's been the company's investing activities of more than CA$906 million that have been draining the well. Having access to cash can allow Cronos to take advantage of acquisitions or growth opportunities as they come up. 

Yet the cannabis company may need to find something to invest in or acquire to inject a lot more growth into its sales. Over the past three quarters, Cronos has generated net revenue of just CA$29 million, and it's going to be difficult to convince investors that Cronos is a formidable cannabis stock to invest in if those numbers don't get a lot higher.  The company is lagging key rivals very badly. In just their most recent quarters alone, Aurora Cannabis and Canopy Growth have reported net revenue of CA$75 million and CA$77 million , respectively. Vaping was one area where Cronos was expecting to see a lot of growth, but given the rising health concerns tied to vape products this year, there are questions about how strong sales will be in Canada in light of those issues.

Cannabis leaf on top of a map of Canada.

Image Source: Getty Images.

Diversification could make Tilray a safer stock heading into 2020

Tilray did not impress investors with its most recent quarter with its loss in Q3 of $36 million, which was nearly double last year's loss.  However, investors shouldn't lose hope on the stock just yet. One reason that the stock could be a great buy: its diversification. Vaping-related health risks underscore the danger of a stock having too much exposure to just one segment of the market.

In Tilray's case, the company has many different segments of its business that it can rely on for growth. Of the $120 million in revenue that the company has generated during the first three quarters of 2019, just under one-third of that (32%) came from the adult-use market, with sales in that segment totaling $39 million. Tilray's hemp sales of $41 million have made up more of its total revenue, and medical pot sales in both domestic and international markets have combined for $40 million as well. 

Tilray's sales numbers could get a lot stronger next year. Back in February, the company announced it was acquiring Manitoba Harvest, which owns the Hemp Hearts brand, for CA$419 million. The acquisition gives Tilray a terrific opportunity to accelerate its expansion into the hemp-based cannabidiol (CBD) market in the U.S. Meanwhile, its research partnership with Anheuser-Busch InBev will help drive opportunities in the cannabis-infused beverages market in Canada, which is now open for business. With so many ways to grow, Tilray could be due for a big year in 2020.

Why Tilray is the better buy today

Cronos having a big partner to lean on is advantageous, but it's not enough to make up for the challenges the company is facing today. Not only is the vaping market a big question mark for the company, but its sales are just not strong enough. Currently, Cronos trades at around 90 times its sales. In contrast, Tilray trades at much more modest 13 times sales. And with more diversification and some attractive growth opportunities ahead of it, Tilray is the better marijuana stock to invest in today.