Canopy Growth (NYSE:CGC) and Aurora Cannabis (NYSE:ACB) are among the biggest names in the cannabis industry. The two Canadian pot producers are rivals, their share prices are down more 50% in the past year, and they're both navigating through some challenging times in the industry amid the COVID-19 pandemic.

But one area where the two companies deviate is when it comes to strategy -- specifically, whether to focus on beverages. It's an important decision and one that may determine which stock does better not just this year, but over the long term.

Canopy Growth is bullish on beverages

It shouldn't be all that surprising to investors that Canopy Growth sees beverages as a key part of its strategy, given that beer maker Constellation Brands (NYSE:STZ) owns a 39% stake in the company.

Cannabis beverage.

Image source: Getty Images.

On the fourth-quarter earnings call May 30, Canopy Growth confirmed that it's already launched three beverages; four more are on the way sometime over the next three quarters. The company's already shipped more than 500,000 drinks in what's still a fairly new segment of the market. It was only in December 2019 that edible products, including beverages, started hitting store shelves in Canada. 

Some industry insiders believe cannabis beverages could account for as much as 30% of pot sales in Canada. In the U.S. market, consulting company Zenith Global estimates that sales will hit $1.4 billion by 2023 -- which is up from approximately $227 million in 2019.

Canopy Growth is among those that are bullish on beverages, which is why in October 2019 the cannabis producer announced it was acquiring a 72% stake in sports nutrition company Biosteel, which makes sports beverages.

With Biosteel and Constellation Brands, Canopy Growth's armed itself with some significant resources to help tap into the beverage market.

Aurora Cannabis isn't convinced

At Aurora, though, beverages aren't a key part of the strategy today. On the company's third-quarter earnings call back in May, interim CEO Michael Singer pointed out that Aurora "launched across a broad series of categories in December, kind of first out of the gate, and we had most of the major categories with the exception of beverage in December." That was the only reference to beverages or drinks on the entire call, and it shouldn't come as a surprise to investors.

A year ago, Cam Battley, who was the company's chief corporate officer at the time, stated that "we've made a rational decision to focus priorities in areas that we know have strong demand based on a model we've seen in legal U.S. states." Indeed, with less than 1% of pot sales coming from beverages in the U.S. markets, the category may not appear so appealing.

Aurora hasn't ruled out beverages entirely, but it's clear that they aren't a priority for the company at this time. Even with a change in executives -- Battley would leave his position with Aurora in December -- the company remains focused on other areas of its business.

Which company is right?

Whether you believe Aurora is right or Canopy Growth is right will largely depend on how big you think the market will end up being for cannabis beverages, and that can be difficult to estimate.

However, I do see one problem with Aurora's approach: A key part of its analysis a year ago involved looking at the U.S. markets. Established beverage companies aren't going to be jumping into an industry that's still illegal at the federal level; that means they can't transfer products along state lines, which could potentially jeopardize their banking relationships.

That leaves the U.S. cannabis market dependent on cannabis producers that may not be familiar with making beverages. And that's why the relatively small market share that cannabis beverages make up in the U.S. deserves an asterisk.

In Canada, where pot is legal and beverage companies don't face the same obstacles, there will be more opportunities for growth in the segment. Being a first-mover could give Canopy Growth an advantage and help it dominate the market, at least in its early stages. And any way that the cannabis producer can differentiate its sales mix and strengthen its top line could be a big bonus for investors.

Canopy Growth's fourth-quarter results in May showed that net sales were up 15% year over year. Aurora also reported its most recent quarterly results in May, and it saw similar growth numbers, with net revenue up by 16%.

Both companies could benefit from another source of revenue growth, especially with COVID-19 weighing down both Canadian and U.S. economies. And right now, Canopy Growth is in an excellent position to cash in on a potentially lucrative beverage opportunity, making its stock the better buy today.

Over the past 12 months, shares of Aurora Cannabis are down 86% while Canopy Growth's stock fallen by a more modest 58% -- which is better than the 63% decline in the Horizons Marijuana Life Sciences ETF (OTC:HMLS.F) during the same period. The delta between the two cannabis stocks could get wider as the year progresses, especially if beverages inject some added sales growth into Canopy Growth's top line.