GrowGeneration (GRWG 0.88%) and Trulieve Cannabis (TCNNF -0.71%) rank as two of the hottest stocks in the cannabis industry so far this year. Shares of GrowGeneration have soared 270%, while Trulieve's shares are up close to 60%.

Trulieve is still nearly three times bigger than GrowGeneration. But which of these marijuana stocks is the better pick for long-term investors? Here's how GrowGeneration and Trulieve stack up against each other.

Cannabis plants growing under lights

Image source: Getty Images.

The case for GrowGeneration

GrowGeneration isn't really a pure-play marijuana stock. However, it certainly qualifies as a picks-and-shovels play for the cannabis industry. GrowGeneration operates the largest chain of specialty hydroponic and organic garden centers in the U.S. Many of its customers are cannabis operators. 

Business is booming for the company. GrowGeneration reported all-time high revenue in the second quarter of $43.5 million, up 123% year over year. It's profitable as well, with earnings jumping 142% to nearly $2.6 million.

Can GrowGeneration keep this momentum going? Probably so. Cannabis markets are growing in the 10 states where the specialty retail already operates. These states include California, which ranks as the largest legal cannabis market in the U.S., and Florida, where medical cannabis sales are soaring.

GrowGeneration has ambitious expansion plans as well. It currently operates 28 stores. The company hopes to have 50 stores open in 15 states next year.

Probably the biggest knock against GrowGeneration is its valuation. Shares currently trade at more than 58 times expected earnings. However, that metric should be viewed in the context of GrowGeneration's huge growth prospects.

The case for Trulieve Cannabis

You could probably call Trulieve Cannabis the 800-pound gorilla of Florida's medical cannabis market. The vertically integrated cannabis operator claims roughly half of the market and continues to grow.

Trulieve generated record revenue of $120.8 million in Q2, up 26% quarter over quarter and more than doubling the revenue total in the prior-year period. It recorded earnings of $6.6 million, with adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $60.5 million. 

There's no doubt about Trulieve's ability to continue growing over the near term. The company's Q2 results were based on 50 cannabis stores in operation. Trulieve now has 61 dispensaries. And it's on track to exceed the corporate goal of 68 stores.

While Florida will remain Trulieve's primary market, the company has expanded into other regions. Trulieve recently expanded into its fifth state with two acquisitions in Pennsylvania. It also has relatively small operations in California, Massachusetts, and Connecticut. 

Valuation isn't a major concern for Trulieve: Shares trade at only 16 times trailing-12-month earnings. Perhaps the biggest question for Trulieve is whether or not it will be able to succeed in these new markets, especially as the medical cannabis market in Florida matures. 

Better marijuana stock?

I think that both GrowGeneration and Trulieve will be winners over the long term. If I had to pick only one of these stocks, though, I'd go with GrowGeneration.

The global hydroponics system market is projected to reach close to $16 billion within the next five years. The U.S. market is highly fragmented right now, with around 1,000 retail stores. GrowGeneration should have a clear pathway to growth by working to consolidate this market.