In case you haven't noticed, marijuana stocks are growing like a weed. A majority of those with a market cap of at least $200 million have had their share price double or triple over the trailing year as optimism surrounding legal weed grows.

Rapidly rising sales figures have certainly played a role in boosting investor confidence in pot stocks. Marijuana Business Daily's newest report, "Marijuana Business Factbook 2017," calls for 45% legal cannabis sales growth in the U.S. in 2018 and a quadrupling in total U.S. sales between 2016 and 2021 to approximately $17 billion. Consistent annual growth in the 25% to 35% range is certainly something worth paying attention to.

A hemp plant in an outdoor grow farm with the sun in the background.

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But underlying this growth is the real catalyst: consumers' opinion of marijuana. In 1995, the year before California became the first state to legalize medicinal cannabis for compassionate use, only a quarter of the public wanted to see marijuana legalized nationally. By October 2017, according to Gallup's latest poll, 64% of Americans now want to see pot legalized. That's a major swing over just 22 years, and there appears to be enough support that lawmakers on Capitol Hill could feel pressure from their constituents to reschedule marijuana at the federal level.

Three reasons this pot stock has gained more than $1 billion in market value over the past month

Yet, even these figures pale in comparison to what Aurora Cannabis (NYSE:ACB) has done for its shareholders over the trailing month (Oct. 25, 2017, through Nov. 25, 2017). Whereas some of the top-performing marijuana stocks are up 20% to 40% over the trailing month, Canadian-based Aurora Cannabis has seen its shares climb by 150%. In fact, they're up by 195% since the year began and 1,069% over the trailing two-year period.

What's behind the sudden surge that's catapulted Aurora to the third-largest publicly listed pot stock with a market cap in excess of $2.1 billion? It appears to boil down to three key events.

A cannabis joint in front of a red maple leaf.

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1. A push to legalize in Canada

First, on a broader scale, Aurora has benefited from a surge in Canadian medical cannabis patient enrollment (and use), as well as the expectation that Canada could become the first developed country in the world, and second overall behind Uruguay, to legalize recreational weed by next summer.

According to Health Canada in May, medical patient enrollment was growing at about 10% a month, leading most Canadian cannabis producers (albeit not Aurora Cannabis at the time) to nominal quarterly profits. As the number of eligible medical patients grows, sales and margins are expected to expand for these pot producers.

But the real crown jewel would be legalizing recreational weed by July 1, 2018. Prime Minister Justin Trudeau introduced legislation in April that would do just that, and along with reasonably low proposed tax rates that would be lower on weed than alcohol in Canada, it looks to have a real shot at becoming law. Recreational marijuana in Canada could add billions in revenue annually and put some serious profits in the pockets of growers like Aurora Cannabis.

A cannabis bud lying atop a messy pile of hundred dollar bills.

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2. A surprise first-quarter profit, and Aurora Sky remaining on track

More recently, the company's share price has benefited following a surprise first-quarter profit of $2.8 million. That may not sound like much for a company valued at $2.1 billion, but Aurora has struggled to deliver profits like its peers, so this was viewed as a positive step forward.

Specifically, we saw sales improve by 169% from the prior-year period. Dried cannabis sales grew 69%, and newly introduced cannabis oil sales and exports to Germany really boosted year-over-year sales. Meanwhile, the average selling price per gram jumped 30% from the prior-year period and growing costs dropped, helping margins.

All the while, Aurora announced that its 800,000-square-foot Aurora Sky project, which is expected to be the most highly automated grow facility in the world when completed in mid-2018, remains on track and on budget. This facility should be capable of perhaps more than 100,000 kilograms of dried cannabis production each year, which is perfect given rising medical cannabis demand in Canada and overseas, as well as the potential for domestic recreational legalization. 

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3. The biggest proposed marijuana merger on record

The most recent catalyst of all was the company's unsolicited bid to acquire CanniMed Therapeutics (NASDAQOTH:CMMDF) in an all-share deal for a maximum of $425 million, or approximately $18.75 a share (24 Canadian dollars). If the deal were to go through today, we'd be talking about nearly $2.6 billion in combined market value.

Why make a play for CanniMed? Truth be told, a few larger players have really emerged on the medical side of the equation, and mid-level players like CanniMed run the risk of getting left behind if they don't expand quickly enough. Gobbling up CanniMed would, with Aurora Sky, boost the combined growing capacity of the companies to 130,000 kilograms of dried cannabis a year. It would also give the duo about 40,000 actively enrolled medical patients, which should be more than enough to keep the company cash flow positive.

Aurora Cannabis also feels compelled to try to keep pace with Canopy Growth Corp. (NYSE:CGC), which has 2.4 million square feet of growing capacity currently in development or under construction. Canopy Growth has the most recognized cannabis brands in Canada, and it's primarily grown by acquisition. If there's any means to keep Canopy from securing even more market share, it's through mergers and acquisitions. 

A risk dial turned to its maximum setting.

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Aurora Cannabis is no sure thing

However, shareholders should keep in mind that Aurora may not be able to hold these impressive gains after being seemingly priced for perfection. For instance, any wrinkles in Canada's plans to legalize recreational marijuana could wreak havoc this stock and its peers.

There's also a pretty large asterisk that should be next to the company's enormous cash pile. Yes, Aurora Cannabis is well-funded, but that's only because it continues to engage in bought-deal offerings and debt conversions into common stock. In other words, the company is diluting investors into oblivion, despite strong recent stock gains. With little in the way of positive cash flow, bought-deal offerings and debt conversions are likely to remain its primary source of funding in the intermediate term. 

Given the potential for triple-digit sales and profit growth, this company deserves to be on your watchlist. But following a 150% romp higher over the trailing month, I'm not so certain it should be in your portfolio at this point.

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.