Everybody loves Aurora Cannabis (ACB 2.48%). At least, it seems that's the case.

Aurora is the most widely held stock among investors trading on free app Robinhood, which is especially popular with millennials. In March, Cowen analyst Vivien Azer picked Aurora as her top marijuana stock, pushing Canopy Growth (CGC 1.73%) from the No. 1 spot in her ranking. Other analysts have also been high on Aurora lately, including Bank of America's Christopher Carey.

But despite the love that investors and analysts are giving to Aurora these days, Canopy Growth remains by far the biggest marijuana stock in terms of market cap. And Canopy is beating Aurora in performance, too. Canopy's share price has soared more than 82% so far in 2019, a little higher than Aurora's 79% year-to-date gain. Here's why Canopy Growth is still the one to beat even with Aurora's recent rise.

Two green marijuana leaves.

Image source: Getty Images.

Aurora ascending

Let's first put things in perspective. Aurora Cannabis outperformed Canopy Growth in stock gains in 2016 and 2017 -- by a lot. It was only in 2018 that Aurora badly trailed Canopy, plunging 35% while Canopy rose nearly 14%.

This year has seen Aurora return to ascendance. Throughout much of 2019, Aurora outgained Canopy Growth. It certainly helped that analysts began to see Aurora as a great stock to buy. More important, however, are the reasons why analysts now like Aurora.

One major attraction is Aurora's production capacity. The company has been on an acquisitions tear, gobbling up smaller marijuana producers left and right. As a result, Aurora is now on track to have an annualized production capacity of more than 625,000 kilograms -- the highest level in the entire cannabis industry.

At the same time, Aurora has built up an impressive international presence. The company operates in 24 countries. It's a leader in the important German medical cannabis market. Aurora recently became one of three companies to be awarded a license to grow medical cannabis in Germany, a nice feather in its cap.

But Canopy Growth is still king

But while Aurora has rocked so far this year, Canopy Growth still reigns as the king of the cannabis industry. The company's market cap of $16.8 billion is much greater than Aurora's market cap of $9 billion. Canopy continues to outperform Aurora in large part because of two interrelated factors.

The first factor is Constellation Brands' big investment in Canopy Growth. Constellation first bought a 9.9% stake in Canopy in 2017. Last year, the big alcoholic beverage maker followed up with a $4 billion investment to up its ownership interest to around 38%.

Canopy's relationship with Constellation puts Canopy in its own league in the minds of many investors. While a few of its peers also have deals with big partners that operate outside of the cannabis industry, none of those partners have ponied up the amount of cash that Constellation has.

And that cash has been instrumental in the second factor that has helped Canopy Growth outperform Aurora so far this year: Canopy's U.S. efforts to enter the huge U.S. market. Neither Aurora nor Canopy can expand into the U.S. marijuana market and retain their stock listings on the Canadian Stock Exchange (TSX) and New York Stock Exchange (NYSE) as long as marijuana remains illegal at the federal level. But Canopy Growth has made a couple of moves that have left Aurora in the dust.

In January, Canopy announced that it had secured a license to produce hemp in New York state. The company is spending up to $150 million to develop a large-scale hemp production facility in the state and recently announced that it had secured a 308,000-square-foot facility in Kirkwood, New York.

Last month, Canopy Growth followed up with an announcement that it planned to buy the rights to acquire U.S.-based cannabis operator Acreage Holdings. The deal can't be finalized until the situation changes in a way that allows Canopy to conduct business in the U.S. marijuana market and keep its listings on the TSX and NYSE. However, should federal marijuana laws change in the U.S. -- something that's looking more likely than ever -- Canopy will be ready to hit the ground running.

Closing the gap?

Aurora hasn't been completely asleep at the wheel with regards to the big U.S. opportunity. The company spun off Australis Capital as a separate entity last year. Australis is primarily focused on investing in U.S. cannabis businesses. Aurora holds a couple of warrants to buy back a 40% stake in Australis if the door to entering the U.S. marijuana market opens.

Also, Aurora isn't sitting idly by, hoping that a major partner will come knocking. The company brought billionaire investor Nelson Peltz on board in March to help facilitate deals with partners in industries that could be disrupted by cannabis.

It's possible that some news on the dealmaking front could light a fire beneath Aurora stock that blazes so bright that the company significantly closes the market share gap between it and Canopy Growth. Even if that gap isn't fully closed, Aurora could still leap ahead of Canopy in terms of stock performance. Canopy Growth might still be the king of cannabis, but Aurora hopes to be able to win over the long run in the marijuana version of Game of Thrones.