Cannabis investors have grown accustomed to splashy, exciting announcements by companies in the sector. But sometimes, a well written press release makes much more of the announcement than what it really is. You can't blame a company for trying to help generate some bullishness around its stock, but the savviest investors can read between the lines.

Recently, Canopy Growth (CGC 1.73%) made the announcement that it was entering the cannabidiol (CBD) beverage category in the U.S. with the launch of a new product. However, before you rush to buy the pot stock on this news, there are some important things to consider.

Marijuana leaf floating in a beverage.

Image source: Getty Images.

This is still the hemp business

Canopy Growth didn't enter the federally illegal marijuana market. The company's new Quatreau drink technically does contain CBD, but this is different from non-hemp products which contain higher levels of tetrahydrocannabinol (THC), which gives users a high. CBD is often associated with the plant's health benefits. Currently, hemp is legal in the U.S. after the federal government passed the Farm Bill in 2018.

If you don't know the difference between hemp and pot, that's okay. Even law enforcement has struggled with the difference in the past, arresting many people they mistakenly thought were transporting marijuana rather than hemp. The one way to tell the difference is by the THC content. If the substance contains more than 0.3% THC, it can be classified as marijuana and is federally prohibited.

For consumers, this is an important distinction. At 0.3% THC, there isn't going to be much of a buzz from drinking a hemp-based beverage. Yet, some low-THC products have found massive success. According to data from Headset, the top-selling beverage in California (the top market in not just the U.S., but in the world) is Hi-Fi Hops Hoppy Reverb Sparkling Water, which contains 0mg of CBD and 10mg of THC (per 12 fluid ounces).

The market still isn't that big -- yet

Canopy Growth is banking on what it calls a "proven strategy" in the Canadian market, where it claims it is "the market share leader in CBD-infused ready-to-drink beverages." That is a very specific claim, but it's also important to note that the cannabis 2.0 market in Canada (which includes beverages) only became legal in December 2019 -- with a limited selection of products.

Rival Aurora Cannabis didn't even think the segment was worth getting into, instead deciding to focus on other areas. While Canopy Growth has partnered with beer maker Constellation Brands and a few other companies have been following suit in partnering with the beverage industry, that segment of the market still isn't a large one right now. According to Fortune Business Insights, the global cannabis beverage market was worth just $367.4 million in 2019 (California's entire pot market was worth around $3 billion that year), but it could be worth more than $8.5 billion by 2027.

Green Thumb may be the better option for you

If you want to take advantage of the potential in the cannabis beverage market, you may be better off investing in a company that is based in the U.S. with a better path to success in that segment. Last week, on March 3, Green Thumb Industries (GTBIF -4.76%) announced that it was partnering with Cann, a company that sells CBD-infused sparkling water. Green Thumb will help launch the products in Illinois as early as this spring. New Jersey, which recently legalized marijuana for recreational use, is also on the radar of the two new partners. Headset's data shows that Cann's Social Tonic products account for three of the top 10 selling CBD beverage products in California.

As more markets open up, Green Thumb and Cann have the potential to dominate the cannabis beverage segment. Meanwhile, Canopy Growth will be restricted to hemp products until federal legalization of marijuana occurs -- which could be years away. Multistate operators like Green Thumb will be able to build their brands during that time and could put themselves well ahead of the Canadian cannabis producer by the time it can fully penetrate the market. 

Over the past three quarters, Green Thumb has generated $379.3 million in sales -- more than double the $140.6 million it reported in the same period a year ago. By tapping into new markets and opportunities, the stock could continue to become a hot buy. In the past 12 months, its shares are up an incredible 355% while Canopy Growth's stock is up 102%. But both investments are doing better than the Horizons Marijuana Life Sciences ETF, which has climbed 74% during that time frame.

Should you buy shares of Canopy Growth or Green Thumb?

Canopy Growth is an expensive pot stock to buy right now, especially when comparing it to Green Thumb on a price-to-sales (P/S) basis, which is a useful multiple for evaluating companies in an industry in which net losses are still the norm.

GTBIF PS Ratio Chart

GTBIF PS Ratio data by YCharts

If you want to bet on the fast-growing beverage segment, then Green Thumb is the stock to go with today. Even with its astronomical gains over the past year, it looks like a bargain compared to the overpriced Canopy Growth.