When it comes to the (small) world of Canadian cannabis companies that love to dabble in a few different lines of business and in a few different geographies, Tilray Brands (TLRY -5.29%) and SNDL (SNDL -2.84%) are obvious competitors, but few would say they are equal today, as Tilray is much larger.

Still, Tilray's persistent unprofitability and declining revenue over the last 12 months make it difficult to have confidence in its position in the long term, and SNDL's momentum in its home market is starting to give exactly the opposite impression.

Is an ascendant SNDL on track in the near future to steal Tilray's crown and become a leading purveyor of regulated goods like cannabis and alcohol? It's a lot more likely than it seems, and here's why. 

Tilray's time in limbo is likely to pay off for SNDL (eventually)

SNDL has an opportunity to catch up to Tilray and perhaps even surpass it in size, though there's reason to believe that such a situation would be temporary. Like Tilray, SNDL grows cannabis and sells it in Canada, though it also distributes liquor and makes investments in U.S. marijuana businesses.

Its trailing-12-month (TTM) revenue is $383.4 million in comparison to Tilray's $613.5 million, though its sales growth over the last three years is a whopping 700.2%, which puts Tilray's growth of merely 57.4% to shame. On their face, these figures indicate that SNDL has a good chance of becoming the next Tilray, but there's more to the story. 

TLRY Revenue (TTM) Chart

TLRY Revenue (TTM) data by YCharts

Tilray is currently blocked from realizing its ambitions to be the biggest cannabis company serving North America and the E.U. for one simple reason: Legalization of adult-use marijuana in those jurisdictions hasn't fully happened yet.

The U.S. is still a fragmented market with a smattering of adult-use states, many of which have differing regulations -- and Tilray doesn't have any cannabis operations in the country anyway, at least not yet. It has a strategic deal with MedMen, a U.S.-based marijuana player, that enables it to acquire a stake in the company upon federal legalization or de-scheduling of pot, but not before. 

Likewise, Tilray is competing in a number of medicinal markets within the E.U., but the juicer fruit of legal recreational sales will remain beyond reach until there is some clarity in the bloc's parliamentary body. Until then, it'll be piecemeal progress, likely starting with Germany's ongoing legalization attempts, which could succeed as soon as 2023 or as late as 2025 depending on how long it takes regulators to agree. And that means the business won't be able to make full use of its positioning built from serving the demand for medicinal marijuana. 

SNDL's goals are narrower and closer to being within reach

In contrast to Tilray, SNDL isn't waiting on legalization to occur anywhere to unlock its strategic growth plan. Plus, its objective appears to be profitably competing within the cannabis and liquor markets in Canada to generate excess capital to return to shareholders in the medium term rather than aiming for a global scale and returning capital much further down the line.

That means SNDL probably won't be able to grow to become as large as Tilray might be in the aftermath of legalization in major markets, but also that it won't need to build out multinational operations. 

The most likely outcome is that SNDL will become profitable long before Tilray. But its total addressable market will probably be significantly smaller, making it less likely to eclipse Tilray's size in the long term. So, while SNDL could easily become a larger company with enough free cash flow to make owning its stock more lucrative than owning Tilray's, it won't be following in Tilray's footsteps to become the global cannabis market leader anytime soon, because that isn't its goal.