Anyone who looks into investing in marijuana stocks will no doubt quickly learn about Aurora Cannabis (ACB -4.85%). It has the second-largest market cap among Canadian cannabis producers and is followed heavily in the media and by investors. Namaste Technologies (NXTTF -3.70%) (N), on the other hand, is a small provider of an online e-commerce platform for the cannabis industry and receives relatively little attention.

The decision between investing in either of these stocks, though, shouldn't hinge on size and popularity. Instead, it's smarter to compare Aurora and Namaste on their long-term prospects. Here's how these two very different cannabis companies stack up against each other.

Cannabis leaves, green arrow pointing up, and a stock chart in the background

Image source: Getty Images.

The case for Aurora Cannabis

Aurora Cannabis' multiyear string of acquisitions has put the company on track to boast the largest production capacity in the entire cannabis industry. More than any of its rivals, Aurora has bet on a major expansion in the global cannabis market.

A key part of Aurora's strategy has been to become a top player in the Canadian adult-use recreational market. The company has definitely done just that, racking up recreational cannabis sales of nearly 45 million Canadian dollars in its last quarter.

The Canadian recreational market should be about to expand significantly with the launch of the cannabis derivatives market. Aurora plans to roll out a line of edibles and vaping products before the end of this year, which could fuel solid revenue growth in 2020.

It would be a mistake to focus solely, or even primarily, on the Canadian opportunity for Aurora Cannabis. The company's future hinges on success in global medical cannabis markets. And Aurora's greatest strength is arguably its position in international markets

Aurora is the leading medical cannabis supplier in Germany, the biggest medical cannabis market outside of North America. The company also operates in 25 countries throughout the world, more than any of its rivals. 

You might look at Aurora's market cap of around $3.5 billion compared to its historical revenue and think the stock is drastically overpriced. But if the global medical cannabis market grows anywhere close to what Aurora expects, the stock's current price could look like a bargain in retrospect a few years from now.

The case for Namaste Technologies

Some have called Namaste "the Amazon of cannabis." That's a stretch, but there are some similarities. Both companies provide e-commerce platforms that enable merchants to sell products and allow customers to conveniently purchase products online. But while Amazon is a giant that sells nearly everything, Namaste is tiny and focuses exclusively on cannabis-related products.

With Namaste based in Toronto, the Canadian market is obviously the biggest immediate opportunity for the company. Namaste has signed up multiple Canadian licensed producers offering their products on its CannMart e-commerce platform. The company's website enables Canadians to connect with their healthcare providers to receive and renew medical cannabis prescriptions online.

The "Cannabis 2.0" market for cannabis derivatives products could boost Namaste's fortunes. These products could help expand the cannabis market to a broader population, many of whom could prefer to shop online rather than going to a brick-and-mortar cannabis retail store.

While Namaste's primary focus is on its e-commerce platforms, it has made other strategic investments that could pay off nicely. Namaste acquired a 49% stake in Choklat, a Canadian premium chocolate maker that plans to roll out cannabis-infused edibles. It also owns a 49% interest in Pineapple Express, a home delivery company that serves multiple industries in Canada including the cannabis industry. 

In addition, the hemp-derived products market presents another growth opportunity for Namaste. The company recently signed a deal with Cultivated Beauty to market hemp skin-care products on CannMart.

Better marijuana stock

My view is that Namaste has an intriguing business model that could be a huge winner over the long run. The downside, though, is that the company is essentially creating a new market on the fly. That means there's a huge amount of risk.

Aurora has a more straightforward task: Sell cannabis products in any mode available to as many markets as it can. The company's biggest problem is that it isn't profitable yet, but Aurora is at least appears to be on track to deliver positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the not-too-distant future.

I think that Aurora gets the nod over Namaste for now. But while I think Aurora could have solid long-term growth prospects as the global cannabis market expands, I don't recommend buying the stock right now. Aurora has a ticking time bomb of sorts with a bunch of convertible debentures maturing in March 2020. Although I don't believe in trying to time the market, it's probably a good idea to hold off on buying Aurora with this dark cloud hanging over its head.