Investors have flooded into marijuana stocks in the hopes of finding huge returns as legalized cannabis spreads across North America. The opening of the Canadian recreational market gave those following the industry hopes to score their most impressive growth opportunity yet, and across the globe, a number of countries are looking at making marijuana more readily available for consumers.

Last week, several key early leaders in the cannabis industry reported their latest financial reports. Much of what Aurora Cannabis (NYSE:ACB), Cronos Group (NASDAQ:CRON), Canopy Growth (NYSE:CGC), and Tilray (NASDAQ:TLRY) had to say reflected common trends across the marijuana space, but other comments were company-specific in nature, and that led to disparate performance among their respective stocks. In particular, while Tilray and Cronos held their own with modest gains for the week, Canopy Growth and Aurora Cannabis suffered double-digit percentage losses for their stock prices that made some investors scratch their heads about their future prospects.

Returns for key cannabis stocks during earnings week

Stock

Return

Aurora Cannabis

(12.2%)

Canopy Growth

(10%)

Cronos Group

0.1%

Tilray

1.4%

Data source: Yahoo! Finance. Return from Nov. 9 to Nov. 16.

How marijuana's big 4 fared

From a fundamental perspective, there were some big disparities between the four most-followed stocks in the cannabis market. One thing that all four of these stocks shared was massive revenue growth. Aurora Cannabis in particular stood out for its 260% top-line growth, as that was enough to send the company ahead of Canopy Growth to claim the title for the most revenue. Cronos also came close to tripling its sales from the year-ago quarter, while Canopy and Tilray had to settle for more modest yet still impressive gains.

In terms of top-line growth, though, the key thing to remember is that for the most part, the quarter's sales didn't include the impact of the legalization of Canadian recreational cannabis, which didn't take effect until mid-October. In particular, Canopy elected not to recognize huge sales of cannabis products during the third quarter in advance of the rollout, unlike some other companies that started making shipments to retail distributors early enough to claim some of the value in their third-quarter reports.

Arched greenhouse with fans, lights, and cannabis plants in rows.

Image source: Getty Images.

Bottom-line performance was all over the map, but that too reflected some of the industry-specific eccentricities that investors have had to get to know over time. For Cronos and Tilray, modest deterioration in the form of losses showed that the companies have invested more heavily in efforts to build up their production and distribution capacity in advance of the Canadian rollout, and that makes sense given the importance of establishing early market share in order to keep from having to play catch-up.

Aurora Cannabis posted a huge profit, but much of those gains came from the investment side of its operations. By contrast, Canopy Growth suffered a huge loss, yet the primary culprit was the company's share-price success, which increased stock compensation costs and led to some fair-value adjustments that hurt the income statement.

The real takeaways from marijuana earnings season

For those who've hoped to score quick stock wins from cannabis companies' quarterly reports, earnings week was a disappointment. Yet for long-term investors still following the space, there were some key lessons learned.

First, the cannabis market has developed to a great enough extent that it's worthwhile to pay attention to fundamental business performance. How these four companies do in Canada's recreational rollout will serve as a case study in how they're likely to approach future legalization opportunities elsewhere, and we saw differences in the way that various players ramped up for mid-October that should show up in fourth-quarter results early next year.

At the same time, though, earnings from marijuana stocks gave many investors their first experience with the quirks of accounting for these companies' operations. Adjustments like biological asset accounting give companies a lot of latitude in determining fair value, and it can also lead to dramatic volatility in results from one quarter to the next. Over time, it'll be possible to separate out legitimately profitable business operations from the pack, but a single earnings report can't tell the whole story.

Finally, supply and demand dynamics have a long way to go before they reach balance. Between the huge ramp-ups in capacity that threaten long-term oversupply and the near-term shortages of cannabis products that plagued Canada's retail rollout, the guidance that companies gave about their immediate future raised as many questions as it answered.

Don't stop watching

There'll be plenty of news items for investors to look at between now and the next earnings releases for these big cannabis companies. But it's important not to lose sight of fundamental business performance. By making sure to hold companies accountable in their financial reports, you'll be in a better position to judge which marijuana stocks are worth holding and which are most likely to go up in smoke.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.