The marijuana industry had an unforgettable 2018, with the cannabis movement arguably advancing more than in any previous year.

As we ready to open the curtain on 2019, Canada has legalized recreational marijuana, 32 U.S. states have given the green light to medical cannabis (10 of which also allow adult-use pot), the highly restrictive nation of Thailand recently OK'd medical weed, and billions of dollars appear primed to flow into the legal cannabis industry -- not to mention that the percentage of Americans who want to see marijuana legalized nationally hit an all-time high in 2018.

And yet, marijuana stocks went up in smoke this year, with many losing 30% or more of their value.

A person holding cannabis leaves in their cupped hands.

Image source: Getty Images.

Aurora Cannabis: Buy or bye-bye in 2019?

Possibly the most polarizing and widely followed pot stock of them all, Aurora Cannabis (ACB 0.23%), shed more than a third of its value in 2018. The big question is: Does Aurora Cannabis deserve to be in your portfolio in 2019? Let's take a closer look at both sides of the argument.

Why Aurora Cannabis is worth a look

To begin with, it's virtually impossible to find a Canadian pot grower that offers more annual production at peak capacity than Aurora Cannabis. Prior to completing its ICC Labs acquisition, Aurora's management had been calling for roughly 570,000 kilograms of peak annual production. The addition of ICC tacked on 92,000 square feet of operational grow farms, as well as more than 1.1 million square feet of developing greenhouses. Between organic, partnered, and acquired capacity expansion, Aurora has a path to easily hit around 700,000 kilograms in peak annual yield within the next two to three years.

Being the top dog in terms of production is so important because it makes Aurora a logical source for Canadian provinces and foreign markets that are seeking long-term supply deals. It could, potentially, also be a dangling carrot for a brand-name beverage, tobacco, or pharmaceutical company angling for a cannabis partner. And, as the icing on the cake, Aurora's massive scale should allow its per-gram growing costs to drop considerably in the quarters that lie ahead.

Second, don't forget that Aurora Cannabis is more than just a dried cannabis flower producer. Aurora has a number of alternative cannabis products on the docket, including the recent launch of a line of softgel cannabis oil capsules. Although most alternative products, such as vapes, edibles, concentrates, and cannabis-infused beverages, aren't yet legal in Canada, this could change as soon as this coming summer. Aurora has previously expressed interest in developing cannabis-infused beverages and held talks with Coca-Cola in September about a possible partnership or equity investment (which didn't go anywhere).

An indoor commercial cannabis grow facility.

Image source: Getty Images.

To build on this point, Aurora Cannabis also generates revenue from its ownership of Larssen, which it acquired in November 2017. Larssen designs and constructs greenhouses around the world, meaning Aurora can internalize some of its costs when building organically, as well as benefit from helping other growers construct greenhouses.

And third, Aurora Cannabis has been tremendously successful with its equity investments in a handful of other marijuana stocks. Aurora can choose to hang on to these investments and benefit if pot stocks recover in 2019, or it could always liquidate them and generate ample cash for its expansion efforts. As a reminder, Aurora has a presence in nearly two dozen countries -- and this could grow further in 2019.

Why Aurora Cannabis should be avoided

But there are two sides to this coin.

One of the bigger reasons you might want to consider leaving Aurora Cannabis on the sidelines has been the company's inability to generate a recurring operating profit. Sure, it made a 105.5 million Canadian dollar profit in its most recent quarter, but strip out a number of one-time benefits tied to derivatives and the revaluation of an influential investment in The Green Organic Dutchman and you're left with a mammoth CA$111.9 million operating loss in the first quarter of 2019.

Aurora Cannabis is a long ways away from being near the end of its expansion phase. It announced a massive 1.2-million-square-foot construction in Medicine Hat, Alberta, at the end of April (known as Aurora Sun), and has to worry about completing expansion projects at ICC Labs and MedReleaf. In addition, it has to market its brands and expand internationally. These expenses are going to almost ensure that Aurora Cannabis continues to lose money without the assistance of one-time benefits.

A frustrated woman grasping her head with both hands while reading news on her laptop.

Image source: Getty Images.

Aurora Cannabis has also shown little regard for its shareholders with its propensity to balloon the company's outstanding share count. Admittedly, with nondiluting forms of financing still few and far between, bought-deal offerings have been about the only readily available means to raise capital. Nevertheless, Aurora's growth-at-any-cost strategy has seen the company use its stock to acquire entire businesses, or issues shares or convertible notes in order to fund organic projects.

At the end of 2014, long before the cannabis craze really began, Aurora Cannabis had just over 16 million shares of stock outstanding. Following its ICC Labs purchase, it may very well surpass 1 billion shares outstanding. In 2018, shareholders have witnessed the company's market cap rise 56%, yet seen its share price fall 35%. That 91-percentage-point difference is the result of share-based dilution. Aurora has given no indication that it'll stop diluting investors anytime soon.

Lastly, Aurora has yet to land a partner, which is a bit odd. While a brand-name partner could easily be a catalyst for Aurora, its inability to find one thus far suggests that maybe Aurora's asking price is too high (pun fully intended) or that it's not as much of an industry leader as it's being made out to be.

A person holding a puzzle piece with a large question mark drawn on it.

Image source: Getty Images.

What's the verdict?

As recently as mid-October, Aurora Cannabis stood side by side with Tilray as my top marijuana stocks to avoid. Then, Aurora proceeded to lose more than half of its value in 10 weeks. Now, I see it as just modestly to slightly pricey.

While not oblivious to the competitive advantages of being the world's largest publicly traded cannabis producer, Aurora's lack of caring for its shareholders sticks out like a sore thumb. I worry about Aurora's ability to integrate all of its acquisitions efficiently and wonder whether, by the time it is finished diluting investors into smithereens, it'll be able to produce a meaningful per-share profit.

Personally, I don't see the need to jump into Aurora Cannabis here and would suggest patiently waiting for the company's "buy everything" ethos to slow or end completely before considering it for investment.