The cannabis industry has been growing at a rapid clip, and investor enthusiasm has been high. This, in spite of the fact that cannabis companies are largely untested, there remain significant legal thresholds and barriers in the U.S., and the industry itself is changing dramatically. Still, analysts have focused on a small number of companies which seem poised to assert their dominance over the competition. Among these are Canopy Growth Corp. (CGC) and Tilray (TLRY). On the surface, these companies share much in common. Both of them are based in Canada, where recreational marijuana use was legalized in October 2018. Both have also made headlines for their aggressive expansion practices and their ambitious plans going forward. But how exactly do they stack up against one another in a direct comparison?

Market Cap and Share Price

Both Canopy Growth and Tilray have seen big gains to their share prices and total market capitalizations this year. As of March 2, 2021, Canopy had seen its shares climb by close to 25% year-to-date, while its market cap increased by close to 63%. By contrast, Tilray's share price and market cap have both more than doubled year-to-date.

Why the dramatic difference? Simply put, Canopy Growth increased its shares outstanding by just under 68% during 2018, while Tilray bumped its shares outstanding by less than 2%. This helps to explain why Tilray saw its market cap and share gains move almost in lockstep, while Canopy's figures were widely separated from one another.

What the New Shares Mean

Canopy issued a substantial number of new shares over the course of 2018. The reason for this was an effort to raise cash in order to continue to fund expansion efforts. Tilray, by contrast, launched its IPO in July, providing it a large influx of cash with which it could accomplish its own goals.

In both cases, Canopy and Tilray moved to expand aggressively in 2018. Canopy began the year with a CAD$175 million bought-deal financing transaction. Canopy bought up several companies in 2018, including Manitoba-based cannabis company Hiku Brands and Colorado-based research outfit ebbu. Canopy Growth has also rapidly developed its production capacity; as of mid-November, the company boasted 4.3 million square feet of licensed production capacity. Perhaps the best thing for Canopy, though, is the fact that beer giant Constellation Brands (STZ) bought up $4 billion worth of the company, a purchase of more than 104 million shares of common stock. This puts Canopy in an exceptional position in terms of cash to use to finance continued development, research and expansion heading forward.

Tilray Adopts a Different Strategy

While many cannabis companies have gobbled up space to develop cultivation facilities, Tilray's approach has been different. The company has seen its market cap rise dramatically, though it doesn't focus on cultivation to the same degree that many of its competitors do. While this may seem counterintuitive, it could give Tilray an edge over the long term. If marijuana production becomes a low-margin and low-cost business, major producers could find themselves in a race to the bottom in order to survive. Tilray, on the other hand, could position itself to buy, rather than grow, its supply. The company has recently made inroads into the Latin American market through its acquisition of Alef Biotechnology, and it continues to focus its efforts on medical marijuana studies and research.

On the other hand, heading into the end of 2018, Tilray has saw its stock price decline along with negative earnings estimate revisions, per Nasdaq. Whether this is a short-term downside risk or a sign of things to come, though remains to be seen.