Curaleaf Holdings (OTC:CURLF) and Trulieve Cannabis (OTC:TCNNF) have been taking two very different approaches to expanding their cannabis businesses. Curaleaf's been focusing on expanding rapidly, while Trulieve has chosen a steadier approach. Their share prices are also going in opposite directions of late:

CURLF Chart

CURLF data by YCharts

By comparison, the Horizons Marijuana Life Sciences ETF has fallen 35% over the same period.

Both Curaleaf and Trulieve are among the most successful multistate operators in the country, but knowing which one to invest in today involves a closer look at their strategies. Let's separate these two cannabis stocks and assess which one is the better buy heading into 2020.

Curaleaf's pending acquisitions could propel it atop the industry

Curaleaf has been aggressive when it comes to acquisitions. It's taken a page out of Canopy Growth's book in not shying away from making big moves. In May, Curaleaf announced it was acquiring cannabis oil producer Cura Partners, which owns the popular Select brand, in an all-stock deal worth $948.8 million at the time of the announcement. However, as a result of worsening market conditions in the cannabis industry, the deal has since been adjusted, and it's now worth around $309 million, with the possibility of that rising if certain targets are met.

Two glove-covered hands trimming marijuana plants

Image Source: Getty Images.

The acquisition will give Curaleaf a significant presence on the West Coast; at the time of the announcement, Select's products were sold in more than 900 retailers across the West Coast, including in California. Currently, Curaleaf has operations in 12 states with 50 dispensaries and 14 cultivation sites. 

However, the company didn't stop there. Curaleaf made another big splash in July by announcing it would acquire Grassroots in a cash-and-stock deal worth $875 million. It's a strategic move for Curaleaf as the deal gives it access to new markets including Illinois and Oklahoma. It would give Curaleaf a presence in 19 states across the country. Curaleaf says the deal would make it "the world's largest cannabis company by revenue." 

And that could indeed be true. In November, Curaleaf released its third-quarter 2019 earnings, which identified pro forma revenue totaling $129 million. Pro forma is essentially a what-if scenario, as it includes revenue from closed and pending acquisitions. For comparison's sake, Canopy Growth's sales totaled just $77 million Canadian dollars in its most recent quarter.

Has Trulieve focused too much on Florida?

On Dec. 18, Trulieve opened its 42nd dispensary in Florida as it continues expanding its operations in the state. However, there are more than 30 other states that have legalized medical marijuana; it's hard not to wonder if Trulieve has been too passive in its strategy.

The company did announce multiple acquisitions in the past year to expand into new markets, including Connecticut, California, and Massachusetts. But a presence in just four states still puts Trulieve well behind Curaleaf and other multistate operators in the country.

However, it's hard to argue with good results, which is what Trulieve's produced in recent quarters. In November, the company released its Q3 earnings; Trulieve posted a profit of $60 million. The cannabis producer has recorded a profit in each of its past four quarters. Even the company's operating income is consistently in the black.

And with revenue totaling $209 million over the trailing 12 months, the company has been doing just fine in Florida. With a strong business model that's focused on selling to one of the hottest markets in the country and then slowly expanding outward, an argument could be made that it doesn't need to rapidly expand the way Curaleaf has. Many cannabis companies are bleeding cash and recording mounting losses, and Trulieve is growing at a much more sustainable rate, one that won't incur as many expenses compared to if its expansion were rapid. That's allowed Trulieve to better control its costs, enabling it to record strong margins and profits, which is a rarity in the industry and that's why the stock stands out from its peers.

Why Trulieve is the better stock to buy today

An overly aggressive growth strategy can be a quick way for a company to spread itself thin, accumulate costs, and burn through cash. That's why, for all the potential and market-share opportunities that exist for Curaleaf, there are also some very big risks. It may have operations in more states than Trulieve, but with marijuana still illegal at the federal level, Curaleaf is not able to benefit from synergies across those locations and even transport marijuana products across state lines.

And that's why a rapid growth strategy may not be worth all the expenses and cash burn that will come with it. The simpler the business model, the easier it is to control. Trulieve is profitable, it's growing, and there's nothing wrong with the business to suggest that it needs to expand. Marijuana legalization may not happen in the U.S. for years, and expanding too early may do more harm than good.

There's still plenty of time for Trulieve to expand into more markets. It's a great marijuana stock to buy for both the short and long term.