Better Marijuana Stock: Origin House vs. HEXO

Origin House (NASDAQOTH: ORHOF) and HEXO (NYSEMKT: HEXO) are very different marijuana stocks, but they also have several things in common. Both companies changed their names relatively recently. Both are growing sales rapidly. And both stocks have been big winners over the last 12 months.

But which of these stocks is the better pick now for long-term investors? Here's how Origin House and HEXO stack up against each other.

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The case for Origin House

Origin House was previously named CannaRoyalty, reflecting its primary focus on the cannabis royalty streaming business. But along the way, the company changed its focus. Its name now better represents the company's goal of becoming the leading global house of brands for cannabis products.

Significant progress has been made toward achieving that goal. Origin House now ranks as the top distributor of cannabis products in California. That's a pretty nice achievement, considering that California has the largest legal marijuana market in the world.

But Origin House does more than just distribute cannabis products. The company has several brands of its own. CEO Marc Lustig said in October that Origin House would generate roughly half of its total revenue from in-house brands by early 2019. 

The real argument for buying Origin House stock, though, is its growth prospects. California's legal recreational marijuana market is still in its early stages. As more dispensaries open throughout the state, Origin House's distribution business and its own cannabis brands should enjoy strong growth. 

Origin House is in the process of making an acquisition that will give it a foothold in the Canadian recreational marijuana market as well. The company's pending buyout of leading Canadian vape retailer 180 Smoke should provide Origin House a platform for launching its brands in the fast-growing Canadian market.

And while Origin House doesn't primarily focus on royalty streaming anymore, its previous deals continue to pay off. The company recently converted its royalty interest with AltMed, which markets medical marijuana products in Arizona and Florida, into an equity stake. Origin House also has sold stakes in companies to generate cash to fund its efforts to add more cannabis brands to its lineup.

The case for HEXO

Until around five months ago, HEXO was officially known as The Hydropothecary. This name change came in conjunction with the company's planned launch of recreational marijuana products in Canada. HEXO is a lot catchier -- and certainly easier to say -- than The Hydropothecary.

Why consider buying HEXO stock? First, the company is the undisputed market leader in Quebec's recreational marijuana market. Thanks to a landmark supply agreement with Quebec last year, HEXO claims a 35% market share in the province and is on track to generate sales of around 1 billion Canadian dollars over the next five years. 

In addition, HEXO has supply channels in other Canadian provinces, notably including the largest prize of all: Ontario. The company's strategic investment in cannabis retailer Fire & Flower gives HEXO a solid retail presence throughout much of Canada.

There's another potentially large component of the Canadian recreational marijuana market that has yet to open for business. The country is expected to finalize regulations for cannabis edibles and concentrates later this year. HEXO should be in a good position to compete in this new market thanks to its partnership with Molson Coors Brewing.