You might be thinking that a beat up pot stock like Aurora Cannabis (Aurora Cannabis Stock Quote, Charts, News, Analysts, Financials TSX:ACB) would be worth a look right now, but portfolio manager Bruce Campbell has some thoughts you might want to consider, starting with the observation that the industry’s growth potential in the United States is looking a lot better. “We think quite highly of the US industry. We think there's a lot of opportunity in the US because of the fact that it still isn't legal in the entire US and you still have multiple states that are bringing it on as a recreational product or as a medical product or both,” said Campbell, president of StoneCastle Investment Management, who spoke on BNN Bloomberg on Wednesday. “In Canada, it's a little bit different circumstances in that what we're seeing is cannabis companies had a really easy time raising money and there was a lot thrown at them,” he said. “They went out and built these massive facilities, and Aurora, unfortunately, is guilty of that.” Edmonton-based Aurora Cannabis announced on Wednesday the closing of a new bought deal financing round for proceeds of US$172.5 million, with management saying the money will go towards general corporate purposes. The financing was underwritten by investment bankers Canaccord Genuity and BMO Capital Markets, a sign, one would like to think, that some institutional money still has faith in the company. But Aurora’s story over the past couple of years hasn’t been pretty, with the period of rapid build-out both across Canada and internationally followed by an almost as swift retraction as the company faced mounting losses by the quarter. Aurora announced last month the closure of its flagship Aurora Sky facility at the Edmonton International Airport in Leduc, Alberta, which had been running recently at just 25 per cent capacity, claiming cost-cutting measures needed to be put in place. “We continue to steer our differentiated global cannabis business towards long term shareholder value creation. This is being accomplished through a sole focus on the most profitable growth opportunities, rationalization of our Canadian cost structure and disciplined use of capital. Our plan is working and we remain firmly on track to achieving a positive Adjusted EBITDA run rate by the first half of fiscal 2023,” said Aurora CEO Miguel Martin in a May 12 press release. Investors have responded accordingly to Aurora’s gloomy news, dropping the stock down by almost 50 per cent over the past month alone. But that’s small potatoes compared to the overall decline in ACB in recent years, where the stock has lost an incredible 98 per cent of its value since this time three years ago. An Aurora share is now worth less than it was even before the cannabis-craze began in earnest in 2017. Campbell says the problem lies in overzealous expectations on the size of the Canadian legal cannabis market and on the penetration Canadian companies thought they would be able to enact in other countries, where so far, Canada’s so-called first mover advantage on the world stage of legal weed hasn’t really panned out. “Aurora built these massive facilities because they thought that the market was going to be huge and they thought they were going to be able to export cannabis in fairly short order,” Campbell said. “They’d supply the Canadian market, they would export globally what’s really happened is there is oversupply in Canada, prices have continued to decline and a lot of these bigger facilities of Aurora’s haven't been able to be very efficient as far as producing cannabis. So, they've had to take big write downs.” Campbell says it isn’t necessarily an end-of-days scenario for Aurora, as its presence in the European market could still bear fruit, if, that is, countries become more open for importation. “We haven't really seen that a lot with the exception of Germany,” he said. “Aurora does sell some into the German market but not a lot. Where the opportunity lies is if you saw multiple jurisdictions in Europe or maybe elsewhere allow for export. Then Aurora could capitalize on that. I don't see that in the imminent future.” “And so unfortunately, I don't think that there's a near term hope for Aurora stock having a big jump, but certainly longer term there is the potential but it's kind of an outside probability,” Campbell said. As for the US market, Campbell says investors will want to own one of the big cannabis players and he singled out Massachusetts-based multi-state operator Curaleaf (Curaleaf Holdings Stock Quote, Charts, News, Analysts, Financials CSE:CURA) as a good option. Campbell said Curaleaf’s revenue and EBITDA growth have been strong and they’ve been acquisitive in the US market, as well. And while the cannabis sector is hurting all over and that includes stocks like Curaleaf (down 57 per cent over the past year), Campbell says the potential for movement on the federal level on cannabis in the US makes a name like Curaleaf very tempting, even if the payoff could still be years away. “From our perspective, we think that there is going to be some type of federal change to the legislation at some point in the future, but it could be two months from now or two years or five years from now. So if you do hold it, you have to be prepared for that,” he said.