Within the U.S., few if any industries are growing at a faster and more consistent pace than marijuana -- and investors are taking notice.

According to Marijuana Business Daily's most recent report, "Marijuana Business Factbook 2017," the legal U.S. weed market is expected to grow by 45% in 2018, and quadruple between 2016 and 2021 to about $17 billion. Assuming some of this growth trickles down to publicly traded companies, it should bode well for investors.

A cannabis joint lying atop a cannabis leaf on a table.

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Fueling this growth has been a major shift in the way Americans view pot. What was once a taboo topic and a drug that three-quarters (or more) of people wanted to see remain illegal is now a substance that almost two-thirds of the public believes should be legal for recreational use, according to Gallup. A separate survey from the independent Quinnipiac University in April 2017 found that an overwhelming 94% of respondents want medical cannabis to be legalized. 

But herein lies the issue: Marijuana is still a Schedule I substance federally, and that doesn't look to change anytime soon in the U.S. As a Schedule I substance, it's entirely illegal and has no recognized medical benefits. This bifurcation between the federal government and U.S. states creates a lot of volatility among marijuana stocks.

This marijuana stock tacked on nearly a half-billion dollars in market cap last week

Last week, however, that volatility worked in favor of Aurora Cannabis' (NASDAQOTH:ACBFF) shareholders. Aurora Cannabis blasted higher by 49%, tacking on nearly $500 million in market cap, after the company released its first-quarter operating results. As you can probably surmise from the magnitude of the move, the company's earnings results contained a number of positives. 

A cannabis bud lying atop a doctor's prescription pad.

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For the quarter, Aurora Cannabis reported $6.5 million in sales, which was a 169% improvement from what it reported in the year-ago quarter. The company delivered a 69% year-over-year increase in dried Canadian cannabis sales, saw a tripling in service revenue, and added $1.1 million in cannabis oil sales and $1 million in dried cannabis exports to Germany, where medical weed is now legal. The latter two revenue channels, cannabis oils and exports, weren't generating any revenue last year.

What really caught the attention of Wall Street, though, was the company's generating first-quarter net income of $2.8 million. While that doesn't sound like much for a company valued at nearly $1.5 billion, Aurora had lagged its Canadian peers in the profit department, so this quarter was a major step forward. During the quarter, Aurora nearly tripled its year-over-year grams produced, while lowering costs and boosting its average selling price per gram by 30%.

It's the future that's really exciting

The real excitement, of course, is with regard to its domestic Canadian market. In recent years, existing growers have enjoyed consistent growth in the number of registered medical patients. Aurora recently announced that it crossed 20,000 active registered patients subsequent to the end of its fiscal first quarter, up from 8,200 active patients a year ago. But the real allure is what might happen if a bill introduced by Prime Minister Justin Trudeau in April, which would legalize recreational marijuana, becomes law. Were this to occur, Aurora Cannabis is expected to see a major uptick in demand, and possibly garner a notable chunk of dried cannabis market share.

An indoor commercial cannabis grow farm.

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The future for the company lies with the Aurora Sky project, which is an 800,000-square-foot, highly automated facility that should be fully complete by mid-2018. The project, which remains on budget and on schedule, could begin planting later this year. Once complete, Aurora Sky could yield in excess of 100,000 kilograms of dried cannabis annually, and it should surely help lower the company's production costs on a per-gram basis.

In addition, the company's acquisition of Pedanios in Germany, a pharmaceutical distribution company, is beginning to pay dividends. Germany recently legalized medical cannabis, but with little in the way of domestic production, Pedanios has the potential to play a key role in servicing what should be a rapidly growing medical-weed industry in the country.

One major worry investors should have with Aurora

In nearly every respect, this was a great quarter for Aurora Cannabis. But there remains one pretty major blemish. Despite ending the quarter with a healthy $159.8 million in cash and cash equivalents, which doesn't include the $75 million it raised subsequent to the end of the quarter, the company continues to dilute existing shareholders with regularity.

A frustrated man holding his hands up and reading something on his laptop.

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The crux for Aurora Cannabis is that it needs to expand. However, that expansion is only possible with healthy amounts of working capital, which at the moment can only be raised through bought-deal and/or common stock offerings. Though the company has had no issues whatsoever finding buyers of its common stock, it's been subtly destroying shareholder value in the process. Aurora ended its quarter with more than 375 million shares outstanding, compared to just 16.1 million outstanding shares as of mid-2014! That's more than a 2,200% increase in just over three years, and there's little signs of this pattern slowing.

To a lesser extent, investors have to be wondering if Canada will really be ready to enforce recreational weed by next summer. Though conservatives are in the minority in parliament, there have been valid concerns raised about adolescent access with the home-grow option, and regulating drivers who use marijuana. Provincial mayors have also expressed worries about a lack of tax revenue from the sale of legal pot, as well as in preparing their local law enforcement for a possible legalization just eight months from now.

In many ways, Aurora Cannabis has taken major steps forward. Yet the company still has a lot to prove to shareholders after finally turning a quarterly profit. For the time being, the sideline remains the safest place for your money.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.