If you want to invest in cannabis companies that are safe, long-term bets, you might be hard-pressed to find a few standouts. If one thing's for certain, though, it's that investors should at least consider picking stocks that aren't dependent on recreational marijuana, where future growth is still a question mark. Only 11 U.S. states, Canada, and Uruguay permit recreational pot. Thirty-three states currently allow it for medicinal use, but individual states' rules are complicated by the fact that marijuana is still an illegal Schedule 1 drug at the federal level. Note that hemp, a derivative, is federally legal, as it contains no more than 0.3% tetrahydrocannabinol (THC). 

Rather than investing in companies that sell both medical and recreational products, another attractive option is to invest in pure-play medical marijuana or hemp companies with a focus on one type of quasi-legalized cannabis product.  Two companies that fit that criteria are GW Pharmaceuticals (GWPH) and Charlotte's Web (CWBHF 1.81%). Although Charlotte's Web is technically in the hemp market, its focus is still on the medicinal benefits of cannabis and its non-psychoactive substance, cannabidiol (CBD). Both companies' business activities can give you some great exposure to the growing market for medical marijuana. Let's take a look at which is the better investment today.

GW Pharmaceuticals is experiencing significant growth due to Epidiolex

The big moneymaker for GW Pharmaceuticals is its Epidiolex drug. It is the only cannabis-based drug that the U.S. Food and Drug Administration (FDA) has approved for use in the U.S. In 2018, the FDA approved the drug as a treatment for Lennox-Gastaut syndrome and Dravet syndrome, two rare forms of epilepsy. In August, the FDA also approved Epidiolex to treat tuberous sclerosis complex.

Cannabis plant.

Image source: Getty Images.

To say that the drug is critical to the success of GW Pharmaceuticals is an understatement. The U.K. company released its year-end results for 2019 on Feb. 25, and Epidiolex's total sales of $296.4 million made up 95% of its total revenue of $311.3 million. It was the first full year that Epidiolex was on the market, and it generated tremendous growth for GW Pharmaceuticals, which had recorded sales of just $15.4 million in 2018. Profitability, however, remains elusive, as the company has incurred a loss in each of the past four quarters.

In its second-quarter results, released on Aug. 6 for the period ending June 30, GW's sales of $121.3 million were up 68% year-over-year and proved steadfast amid the COVID-19 pandemic.

But what's most exciting is that there's a lot more growth to come. On Sept. 23, 2019, the company announced that the European Commission gave the "OK" for Epidiolex to be used as a treatment in Europe. This approval paves the way for future growth in more countries and suggests that GW Pharmaceuticals could be a hot growth stock.

Does a cheap price make up for Charlotte's Web's growth problems?

Charlotte's Web is at the other end of the spectrum from GW Pharmaceuticals. Its focus is on the CBD hemp market, offering oil, gummies, and topicals, among other products. While this space is safer than recreational pot, which can't legally cross state lines, the sales growth in hemp that Charlotte's Web has hoped for hasn't materialized. In the company's most recent quarterly results, released on May 14 for the period ending March 31, sales of $21.5 million were down 0.9% from the prior-year period. They also declined by 5.7% from the previous quarter.

This drop-off is particularly frustrating given that the Colorado-based company's products are now offered in more locations. As of its first-quarter earnings release, over 11,000 retail locations were selling Charlotte's Web's products. A year ago, that figure was closer to 6,000 locations. On June 11, the company completed its acquisition of hemp company Abacus Health, worth approximately 99 million Canadian dollars. The deal will give Charlotte's Web a presence in more than 21,000 retail locations. But the question of how much sales growth the expansion will actually generate, remains.

Investors are growing frustrated with Charlotte's Web, and shares of the company are down more than 55% this year. That's significantly worse than the Horizons Marijuana Life Sciences ETF (HMLSF 4.79%), which is down just 23%. And it's a far cry from GW Pharmaceutical's 1% decline. But the steep drop in price puts the stock close to its 52-week low of $2.75, which it hit during the March market crash. At a price-to-sales ratio of 3.5, it's less than half the 7.3 times sales that investors are paying for GW's stock right now. The cheaper price does make Charlotte's Web an alluring investment -- one that could easily double in value. 

GW Pharmaceuticals is the better all-around buy today

The big reason to buy GW Pharmaceuticals today is the one significant advantage it has over its peers. The company possesses the only FDA-approved cannabis-based drug on the market, which has seriously driven growth. Charlotte's Web finds itself in the opposite position, where the federal legality of hemp in the U.S. makes competition much fiercer and growth more of a challenge.

Given the growth of Epidiolex and the new opportunities opening up for the drug internationally, the cannabis stock should be doing a lot better than it's done so far in 2020. A lower price just isn't enough of a reason to pick Charlotte's Web over GW. Although it's difficult to say anything for certain about the cannabis market, I believe that GW Pharmaceutical's stock trades at a higher multiple because it's worth its current premium, and that the winner will keep on winning.