Can Aurora Cannabis challenge Canopy Growth Corp. for King of the Weed Stocks?

For more than a year now, Canopy Growth Corp (TSX:WEED) has owned the podium in the lead up to recreational marijuana legalization in Canada.

But as companies continue to jockey for position, a number of challengers have emerged, none more worthy than Aurora Cannabis (TSX:ACB), which could be on track to knock Canopy out of top spot.

Canada’s pot stocks have been on quite a ride over the past half year, posting huge gains in December and early January, only to lose much of that ground by late January and February. The sector has calmed considerably since, with catalysts lately coming in the form of news about dual listings, both realized and upcoming, on Canadian and American exchanges.

Cronos Group (TSX:NVM, NASDAQ:CRON) was the first in that capacity, listing on the NASDAQ on February 27 and seeing its share price rise 37 per cent in the wake of the news, while for Canopy and Aurora, their eventual US listings are now being talked up as a matter of when, not if. CEOs Terry Booth of Aurora and Bruce Linton of Canopy have both recently gone on record saying that trading on either the NYSE or NASDAQ is just around the corner.

But while Cronos posts a relatively hefty market capitalization at, currently, $1.68 billion, the Toronto-based company still has a long way to go to catch up with market leaders Aurora ($5.48 billion market cap) and Canopy ($6.15 billion cap).And interestingly, that cap spread between Aurora and Canopy has tightened over time, even as they continue to distance themselves from the other pot co’s in terms of market cap.

Will Aurora ever catch up?

We can compare public interest in the two companies over time with Google Trends, which frames the issue in terms of search volumes for “Canopy growth” versus “Aurora Cannabis.” By that measure, interest peaked for both companies in early January, with Canopy maintaining a healthy advantage ever since, typically garnering three times the public interest as Aurora. Notably, the spread hasn’t changed much over the past 90 days, suggesting that even as Aurora’s market cap pulls closer to Canopy’s, the latter has still been better at grabbing the public eye.

Things could change, though, when the rec cannabis market revs up for real and companies have to start producing all that weed they’ve been talking about.

As it stands, Canopy has a huge amount of land set aside for growing pot, with facilities lined up in all ten provinces. In February, the company obtained a cultivation license for the first of two planned “mega-scale” facilities in BC, each of which covers over a million square feet, and with those additions, Canopy now says it’s on track to have a whopping 5.6 million sq. ft of available domestic growing space.

Large numbers, to be sure, but how much weed will Canopy actually be producing when the rec market opens? Those estimates, while still very big compared with most of its peers, are a little less mighty: Canopy says it’ll be ready with 90,000 kg of cannabis by the end of 2018, and its plans are to double that amount by sometime in 2019.

So, how does Aurora compare? In terms of planned square footage, ACB is more modest, currently operating a 55,000 sq. ft facility in Mountain View County, Alberta, along with a 40,000 sq. ft. facility in Pointe-Claire, Quebec. Its flagship facility is the still-in-construction Aurora Sky in Edmonton which will house 800,000 sq. ft. of cultivation. Finally, we can add the 100,000 sq. ft. run by Saskatoon’s CanniMed, which Aurora acquired in February.

Again, though, the projections for actual product are the issue, and on that front, Aurora could be bigger than Canopy, as it says it’ll have 130,000 kg of marijuana ready by the end of 2018. Again, we’re still talking projections here, but that’s potentially 30 per cent larger than Canopy’s domestic production.

Lastly, we can look at revenue estimates for the two companies, and there, the edge seems to go to Canopy, but only slightly. In 2018, Aurora’s projected revenue is said to be around $70 million while Canopy’s is in the $75-80 million range. The toplines for 2019 are just as tight, with Aurora coming in around $350 million and Canopy a touch larger in the $375 million range.

These numbers will change, of course, but the similarities in projected revenue show that it’s still anyone’s guess whether Canopy or Aurora will be cannabis king in a year from now.