Lakewood Capital Management, led by Anthony Bozza, revealed short positions in Canopy Growth and Aurora Cannabis, according to the firm’s fourth-quarter investor letter sent Wednesday and obtained by CNBC. The firm has about $5 billion in assets under management.

“It has been hard to come across a retail investor rag or stock blog without hearing about some way to play this theme, and countless web sites are now devoted to investing in this exciting industry,” Bozza wrote. “Despite recent mania around the legalization of recreational pot in California, there is a little problem: none of these companies sell at all into California (or anywhere else in the U.S. for that matter), since that would, of course, be illegal.”

Bozza notes that much of the “appeal” surrounding these stocks recently stems from “regulatory momentum, constant press coverage, growing public acceptance, an absence of large incumbents and an enormous, rapidly expanding market opportunity.” But, he adds, that the barriers to entry for the industry are very low and that the number of licensed producers in Canada is growing rapidly. [Read More @ CNBC]