You might have heard some compare the "green rush" for marijuana stocks that we've seen over the last couple of years to the dot-com boom of the late 1990s. And most of those comparisons probably highlighted the fact that the dot-com boom ended in a bust for most internet companies.

One flop that I remember was Webvan, an internet grocery retailer that at one point was worth $1.2 billion before collapsing. There were lots of similar dot-com failures. Of course, there were a few success stories, too. The most prominent one is (AMZN -0.29%). Its stock is up more than 2,400% since the peak of the dot-com bubble and a whole lot more than that since its initial public offering.

The three biggest marijuana stocks on the market right now are Aurora Cannabis (ACB -1.80%), Canopy Growth (CGC 0.31%), and Tilray (TLRY). Which of these stocks is most likely to be the Amazon of pot?

Marijuana leaf at the end of a line chart trending upwards

Image source: Getty Images.

The secrets to Amazon's success

Many people have attempted to identify the reasons behind's Amazon's tremendous success. The reality is that there isn't just one secret to success for Amazon; there are quite a few of them.

My colleague Brian Stoffel wrote last year about what he called "20 years of wisdom" from Amazon CEO Jeff Bezos. Brian gathered top quotes from Bezos' letters to shareholders through the years. It's a good read, and I think that it highlighted several driving factors behind Amazon's outstanding performance.

For example, from the very beginning, Bezos stressed that Amazon's focus was on the long term. He wrote in 1997: "Because of our emphasis on the long term, we may make decisions and weigh trade-offs differently than some companies." 

Amazon's success also stemmed from pursuing multiple paths to growth (i.e., optionality). Knowing which paths to pursue and which to pass on was key. Bezos wrote in 2006 about Amazon's criteria in choosing new opportunities.

There were plenty of other things Bezos wrote about that help explain why Amazon succeeded while many other dot-com businesses didn't. The company focused on customers. It learned from its mistakes. Amazon prioritized free cash flow over earnings. But those two key areas of a genuine long-term perspective and pursuit of multiple paths to growth strike me as probably the most important success factors for Amazon that translate really well to the marijuana industry.

Check out the latest earnings call transcripts for Amazon, Canopy Growth, and Tilray.

Long-term perspectives for marijuana

I think the management teams of Aurora Cannabis, Canopy Growth, and Tilray all have long-term perspectives. Their public statements certainly seem to indicate that they do.

Aurora was late to the party in obtaining a license to cultivate medical cannabis in Canada. But the company caught up by making a string of acquisitions. In June 2018, Chief Corporate Officer Cam Battley said in a virtual investor conference that Aurora gobbled up so many businesses so quickly because it was in the middle of a "land grab." He noted that many weren't appreciating the long-term global medical marijuana opportunity.  

Canopy Growth co-CEO Bruce Linton sounds like he has a long-term view. Linton stated in an interview with the Financial Post last year, "You've got to be working for five or six years, and then planning ahead for another four to five, to create the value we're being attributed with today."

Linton thought that many cannabis companies will fail in the next few years because they weren't thinking like businesses. He added, "A company is just a corporation that has a stock you can buy, whereas a business makes decisions looking at the next decade or two." 

Tilray CEO Brendan Kennedy underscored his long-term perspective for the global marijuana industry in a September 2018 interview with CNBC's Jim Cramer. He told Cramer that there will be "multiple hundred-billion-dollar companies" in the cannabis industry in the future. 

Multiple paths to growth

It's hard to differentiate the three top marijuana stocks based on the long-term thinking of their executives. But what about the pursuit of multiple paths to growth?

Aurora Cannabis, Canopy Growth, and Tilray are targeting the same opportunities for the most part. All three are key players on the Canadian recreational marijuana market. All three are going after the global medical marijuana market, especially in Europe and Latin America. However, Aurora might be left behind its two rivals to some extent in one potentially lucrative arena -- the U.S. hemp market.

Canopy Growth is investing between $100 million and $150 million to develop a large-scale hemp production facility in New York state and expects to have hemp-based cannabidiol products on the market by the end of 2019. Tilray acquired Manitoba Harvest, the world's largest hemp food company with its products sold in over 16,000 stores in the U.S. and Canada. So far, though, Aurora hasn't made a big move into the U.S. hemp market.

Canopy's Bruce Linton arguably has the grandest thoughts about pursuing multiple paths to growth. He stated in December that he thinks that his company can disrupt four multibillion-dollar industries: beverages, opioids, sleep-aid drugs, and veterinary products. Canopy Growth is actively developing products targeting all four markets.

The Amazon of pot?

It's not too hard to have a long-term perspective. It's also not difficult to be able to identify multiple paths to growth. The challenge comes in making good long-term decisions and pursuing multiple opportunities when you have limited financial resources. 

I think Canopy Growth is most likely to achieve long-term success in the midst of lots of failed rivals -- like Amazon did -- because it has greater financial resources than its peers. Canopy's $4 billion investment from alcoholic beverage maker Constellation Brands was the biggest cash infusion in the marijuana industry's history. As a result, Canopy can expand in ways that other marijuana growers can only dream about.

While there are some similarities between the dot-com boom and the current marijuana boom, there are some key differences, too. Success in the marijuana industry depends in large part on production capacity, distribution networks, and the capability to build consumer brands.

Canopy Growth's only close competitor on capacity is Aurora. The company has the best distribution network in Canada and arguably the best overall globally. And with Constellation, Canopy has a partner with a proven track record in establishing successful consumer brands. 

I suspect there will likely be plenty of marijuana companies that go the way of Webvan. But I don't think Canopy Growth will be one of them.

Maybe Canopy won't really become the Amazon of pot. The two companies' business models are very different, after all. However, if I had to put money on which marijuana stock is most likely to emulate Amazon, my bet would be on Canopy Growth.