Forget Canada, the U.S. is where the big story is when it comes to cannabis. For one thing, the U.S. cannabis market is much bigger than Canada's. There are also more opportunities for growth, with additional states legalizing cannabis and the prospects for federal regulatory changes that would benefit the cannabis industry.

If you're looking for stocks to buy to capitalize on the U.S. cannabis opportunity, Charlotte's Web Holdings (OTC:CWBHF) and Green Thumb Industries (OTC:GTBIF) should be on your radar screen. But which of these two marijuana stocks is the better pick right now?

Giant cannabis leaf in a shopping cart.

Image source: Getty Images.

The case for Charlotte's Web Holdings

Technically, Charlotte's Web is a hemp stock rather than a marijuana stock. It's a distinction that's worth noting since hemp is legal at the federal level in the U.S. but marijuana isn't. However, Charlotte's Web is categorized as a marijuana stock because hemp is a first cousin to marijuana, with the difference between the two the levels of THC in cannabis plants.

Charlotte's Web single-handedly launched the U.S. hemp CBD market several years ago. It's now the leader in the hemp CBD industry and claims the No. 1 brand in the total hemp CBD market.

The company has delivered strong growth. Its revenue soared 42% year over year in the third quarter. Charlotte's Web has also demonstrated consistent profitability for the most part, although it posted a small loss in Q3 due to higher operating expenses.

More importantly, though, Charlotte's Web's growth could accelerate in the future. The company's products are now on the shelves in over 9,000 retail locations, more than double the number at the beginning of 2019. Hemp was legalized in the U.S. in December 2018, so the hemp CBD market is still only in its early innings.

Perhaps the biggest potential catalyst for Charlotte's Web is the possibility that federal regulations could be changed to allow the use of CBD as a dietary supplement. Although the U.S. Food and Drug Administration (FDA) has taken a hard line against CBD as a dietary supplement, legislation has been introduced in the U.S. House of Representatives to bypass the FDA by revising federal law.

It's too soon to know if this bill will become law, but there are reasons to be cautiously optimistic. It's encouraging that Charlotte's Web is stepping up its game in government relations, recently hiring Kelly Shea for its newly created position of senior vice president of government affairs & corporate communications.

The case for Green Thumb Industries

Green Thumb Industries ranks as one of the largest multistate cannabis operators in the U.S. The company is vertically integrated, operating cultivation and manufacturing facilities, marketing its own cannabis brands through wholesale channels, and running retail cannabis stores.

The growth story for Green Thumb is phenomenal. The company's revenue soared 296% year over year in the third quarter of 2019 and jumped 52% quarter over quarter. Green Thumb also delivered positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

This growth has been driven in large part by Green Thumb's retail expansion. In early 2019, the company operated 14 retail cannabis stores. It recently opened its 41st store. There's plenty of room for Green Thumb to continue growing. The company holds 55 additional licenses to open even more retail cannabis stores.

So far, Green Thumb has operations in 12 states. Those states include California, home to the biggest recreational marijuana market, and Florida, home to the largest medical cannabis market. Green Thumb should also enjoy strong growth in its home state of Illinois, which recently launched its recreational marijuana market.

Remember, too, that Green Thumb has achieved its success while marijuana remains illegal at the federal level in the U.S. Should federal laws change -- or if a presidential executive order is issued that legalizes marijuana across the U.S., as Democratic presidential candidate Bernie Sanders wants to do -- Green Thumb Industries could have even greater growth prospects.

Better marijuana stock

Which of these two is the better marijuana stock? I've been a fan of Charlotte's Web in the past. However, the FDA's stance against allowing CBD as a dietary supplement raised concerns that Charlotte's Web's prospects could be less than I hoped. I think there's a good chance that the U.S. Congress could sidestep the FDA, but it's not a slam dunk.

My view is that Green Thumb has a clearer path to success at this point. Although the company isn't profitable yet, I think that it's on the right track to deliver consistent profits. My opinion could change if hemp CBD is officially approved as a dietary supplement, but in the meantime, I think that Green Thumb Industries is the better pick.