Marijuana stocks aren't all alike. Take OrganiGram Holdings (OGI -2.07%) and Green Thumb Industries (GTBIF -2.63%). OrganiGram's share price is down more than 50% year to date with continued uncertainty for its business. Green Thumb's stock has more than doubled so far in 2020 with seemingly bright prospects ahead.
Is going with Green Thumb over OrganiGram a slam dunk? Not necessarily. Here's how the two pot stocks compare.
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The case for OrganiGram
My Motley Fool colleague Sean Williams thinks that OrganiGram ranks as the Canadian pot stock that's best positioned for long-term success. There are several reasons why Sean might be right.
OrganiGram is one of only a handful of cannabis producers that markets to all 10 Canadian provinces. The company launched its first value brand in the summer, giving it room to run in one of the country's fastest-growing cannabis markets.
Speaking of fast-growing cannabis markets, OrganiGram appears to be in great shape in Canada's "Rec 2.0" cannabis derivatives market. Its product lineup includes cannabis-infused chocolates and powdered beverage mixes.
In addition, the company has a promising international opportunity with its multiyear deal to supply dried cannabis flower to Canndoc, one of the top medical cannabis producers in Israel. OrganiGram will supply up to 6,000 kilograms of dried flower to Canndoc, with a purchase of 3,000 kilograms guaranteed by Dec. 31, 2021.
OrganiGram claims at least a couple of advantages over its larger Canadian rivals. Unlike those bigger companies, OrganiGram has generated positive operating cash flow. Its valuation is also much more attractive, with OrganiGram's market cap below $250 million.
The case for Green Thumb Industries
Green Thumb Industries stands as one of the largest multistate cannabis operators in the U.S. It owns and runs two retail cannabis chains, Rise and Essence, with 48 stores in 10 states.
The company's business is soaring. Green Thumb reported revenue in the third quarter of 2020 totaling $157.1 million, a 131% year-over-year jump and a 31% quarter-over-quarter increase. It reached profitability for the first time in Q3 and generated positive operating cash flow for its third consecutive quarter.
Much of Green Thumb's growth stems from its home state of Illinois, which launched its recreational marijuana market this year. New Jersey, Ohio, and Pennsylvania are other key growth markets for the company.
Green Thumb should have a clear path to future growth as the cannabis markets expand in the states where it already operates. The company owns 48 additional licenses for retail cannabis locations, which would enable it to double its store count.
Even better, the U.S. elections earlier this month brought great news for the cannabis industry. Five states voted to legalize marijuana, with four legalizing recreational pot. New Jersey especially presents a tremendous opportunity for Green Thumb; it could be a multibillion-dollar market, like Illinois.
Better marijuana stock?
It's possible that the future for OrganiGram could be brighter than its recent past. However, the company still faces intense competition in the Canadian market.
My view is that the choice between these two marijuana stocks is an easy one. Green Thumb has too much momentum and too many growth opportunities to ignore. With new recreational marijuana markets in Arizona and New Jersey on the way, I'll look for Green Thumb to keep up its winning ways.
