Last year wasn't very good for Organigram Holdings (NASDAQ:OGI), with the Canadian cannabis producer's shares sinking 31%. But 2019 proved to be an absolute disaster for CannTrust Holdings (NYSE:CTST). A scandal related to growing cannabis in unlicensed grow rooms led CannTrust to lose over 80% of its market cap.

So far this year, though, both Organigram and CannTrust have delivered solid gains. Which of these marijuana stocks is the better pick for long-term investors now? 

Shopping cart containing a large cannabis leaf

Image source: Getty Images.

The case for Organigram

If you're looking for good reasons to buy Organigram, examine the company's latest quarterly update. Organigram hit a home run with its fiscal 2020 first-quarter results. It delivered 55% quarter-over-quarter sales growth. It returned to achieving positive earnings before interest, taxes, depreciation, and amortization (EBITDA) after failing to do so in the previous quarter. And Organigram continues to enjoy a strong cash position.

More important, though, are the factors behind Organigram's strong Q1 performance. The company has ample production capacity. Its products are popular with consumers. Organigram is also a go-to source for other cannabis companies to buy high-quality cannabis on the wholesale market.

Organigram's production costs are also low, in large part because of the company's industry-leading crop yield. The company's management team, led by CEO Greg Engel, exercises significantly more financial discipline than many of Organigram's peers.

The picture could look even better for Organigram in 2020. One issue that many major cannabis producers faced last year was the lack of an adequate retail infrastructure in Canada. But with Ontario, the country's most heavily populated province, issuing more retail licenses this year, the situation should improve markedly.

In addition to having more retail stores in place, Organigram should also benefit as the Cannabis 2.0 cannabis derivative products market ramps up in Canada. The company is already selling vape products and plans to soon introduce its cannabis-infused chocolates and powdered products that allow consumers to add CBD or THC to beverages.

The case for CannTrust

To be sure, the situation for CannTrust isn't nearly as rosy as that for Organigram. We definitely should address the elephant in the room for the beleaguered marijuana grower -- and the hippopotamus in the room, too.

First and foremost, CannTrust still can't legally produce or sell cannabis in Canada after having its license suspended. The company is working hard to take all the steps needed to regain its license. In October, CannTrust said that it expects to complete all of the activities in the remediation plan established by Health Canada by the end of the first quarter of 2020. It confirmed that timeline again in December.

That's the elephant. Now for the hippo. CannTrust's shares are in danger of being delisted on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). The problem with CannTrust's position on the NYSE is that its average share price must be at least $1 over a consecutive 30-day trading period. CannTrust's issue with the TSX is that hasn't met all of the exchange's disclosure requirements.

There is some good news, though. CannTrust fully expects to file all of the necessary paperwork in time to avoid having its shares delisted from the TSX. And its stock has been above $1 per share for most of January. A few more weeks at current levels or higher would enable CannTrust to meet the NYSE listing requirements.

Why even think about buying CannTrust with all of the uncertainty? The stock is dirt cheap, especially considering the company's sizable production capacity. If CannTrust gets its license back from Health Canada and avoids having its shares delisted from the NYSE and the TSX, its stock could move much higher. There's also the possibility that another company could decide to buy CannTrust at an attractive price just to get the additional capacity.

Better buy

I wouldn't be surprised if CannTrust's shares bounce back significantly in 2020. However, I think that Organigram is the better pick for one simple reason: It's the better-managed company.

Organigram has a clearer path to profitability than most of its peers. The company has avoided many of the potholes (no pun intended) that other major Canadian cannabis producers have fallen into. Greg Engel and his team appear to be competent and to have a clear vision for what it's going to take to succeed in the cannabis industry over the long run. That's enough to make Organigram an easy pick over CannTrust.