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Which Cannabis Stock Makes the Better Buy: Aurora Cannabis (TSX:ACB) or Canopy Growth (TSX:WEED)?

Canada’s two largest (and most popular) cannabis stocks thus far have been Canopy Growth (TSX:WEED)(NYSE:CGC) and Aurora Cannabis (TSX:ACB)(NYSE:ACB).

But among the two, which one is the better buy? Let’s take a closer look and try to figure this out.

Size advantage

On the surface, you would think that Canopy Growth would get the nod here, but it’s actually not quite that simple.

Canopy has a market capitalization just shy of $18 billion, which is far larger than Aurora’s market cap of a little less than $10 billion, but if we look at the potential capacity of their available production facilities, the picture begins to get a little fuzzier.

Aurora claims in its latest reporting that it has up to 625,000 kg of annual production that’s already been funded.

Canopy, meanwhile, claims that it has over five million square feet of available production space.

When you look at the numbers closer, there’s not a whole lot to differentiate the two in terms of how much they should be able to produce at full capacity.

Whether the two companies will be able to secure distribution for all that product is a different story entirely, but for now, I’m calling this one a draw.

The international opportunity

One thing continues to become clear about cannabis markets, and that is, rather than being strictly a Canadian or “domestic” play, the cannabis industry continues to appear more and more as though it will inevitably become “global” in nature.

In this respect, I’m going to go ahead and give Canopy the edge.

Not only has it already managed to partner with a mega-player in $35 billion market cap alcohol and spirits distributor Constellation Brands, but it’s also already got operations in 15 different countries, including what it hopes will be a first-mover advantage in the potentially massive U.S. market.

Aurora too, is already active internationally, including operations in more than 24 countries, but it’s also made significant investments in positioning itself as a vertically integrated domestic supplier, including most notably its investment in Alcanna last year.

With the potential size of the global market for cannabis products estimated at nearly 10 times the size of the Canadian market, I have to wonder if ACB might have already spread itself too thin to be able to appropriately attack any attractive international opportunities should they arise.

A strategic partner

In my own opinion, Canopy’s $4 billion partnership with the aforementioned Constellation Brands could end up making a significant impact on its ability to successfully tap into not only markets outside Canada but into adjacent product categories.

Working alongside a mega-partner like Constellation, Canopy should have the leg up when it comes to a sales team that can help it secure international distribution, technology that can enable it to advance the cultivation and extraction process, and a unique opportunity to partner on exciting new projects like cannabis-infused adult beverages.

Foolish bottom line

I happen to like the outlook for both of these companies, but in terms of the one that’s created the most clear vision of a future that happens to be aligned with my own outlook, I’m going to have to go ahead and give the nod to Canopy here, which is slightly ahead of Aurora Cannabis.

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Fool contributor Jason Phillips has no position in any of the stocks mentioned.

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