Aurora Cannabis' (ACB -7.79%) acquisition strategy is paying off with eye-popping sales growth and envy-inspiring marijuana production capacity. The company just reported fourth-quarter 2018 financials that included a 223% surge in sales from one year ago, but that might be the tip of the proverbial iceberg once recreational sales begin in Canada next month.

Skyrocketing sales growth

Aurora Cannabis and it's Canadian cannabis peers make most their money selling medical marijuana in Canada. Unlike the U.S., Canada's created a highly regulated nationwide marketplace for medical marijuana and that's allowed demand to grow significantly as the medical market has matured.

A marijuana joint being held up in front of Canada's maple leaf.

Image source: Getty Images.

Growth in licensed medical marijuana patients is only one way, however, that Aurora Cannabis' revenue is climbing. It's also increasing because of its acquisition-oriented business strategy. In the past year, it's bought 11 competitors and peers and its active registered patients (i.e., customers) have increased by 164%.

Thanks to organic growth and acquisitions, Aurora Cannabis' sales surged 223% to $19.1 million in its recently reported fiscal fourth quarter and its sales for the full fiscal year jumped 206% to $55.2 million.

Also, if you include a full quarter of sales associated with its recent acquisition of MedReleaf, a major medical marijuana company, then Aurora Cannabis' pro forma revenue last quarter was $33.1 million, giving it an annualized sales run rate of $132 million.

A big opportunity approaches

One reason Aurora Cannabis has been so acquisitive is to lock up marijuana production capacity ahead of the Canadian recreational market opening in October.

The medical marijuana market is attractive, but it's not nearly as enticing as Canada's adult-use recreational market. According to Deloitte, medical marijuana sales in Canada next year should exceed $770 million, but recreational marijuana sales there should eclipse $1.8 billion.

To meet the expected increase in demand from recreational sales, Aurora Cannabis has been boosting internal investments to expand its existing facilities and those efforts -- plus capacity it's acquired in deals -- have it on pace to reach 570,000 kilograms of marijuana production capacity in 2019. For perspective, Canopy Growth -- the second-largest marijuana stock in Canada by revenue -- is on pace for about 500,000 kilograms of production capacity next year, and Tilray is only on pace for production capacity of less than 150,000 kilograms in 2019.

Don't expect profitability anytime soon

Yes, Aurora Cannabis reported $79.3 million in earnings last quarter, but that was only because of an "unrealized non-cash gain on derivatives and marketable securities." Exclude unrealized gains on investments, such as its 17% equity stake in Green Organic Dutchman Holdings, and financing costs, share-based payments, acquisition and project evaluation expenses, and payroll are soaring.

Its employee count has increased to 1,400 from a few hundred one year ago and because it's issued shares to finance acquisitions, its share count has increased to nearly 475 million shares from less than 200 million shares in 2016.

ACBFF Average Diluted Shares Outstanding (Quarterly) Chart

ACBFF Average Diluted Shares Outstanding (Quarterly) data by YCharts.

Overall, its general and administration costs more than doubled to $22.6 million last quarter from $9.8 million in the prior quarter, and its sales and marketing expenses jumped to $14.8 million from $5.9 million in the prior quarter.

Aurora Cannabis' future beyond Canada

Canada's recreational market opening is likely to significantly increase Aurora Cannabis' revenue because it's struck agreements throughout Canada to sell its cannabis products. If Deloitte's forecast is anywhere near close to correct, a major increase in the company's target market in Canada could result in sales surging even higher.

An even bigger opportunity exists outside Canada, though. Although the U.S. market is still off limits because marijuana remains a Schedule I controlled substance federally, Aurora Cannabis is laying the groundwork to participate in other important, emerging markets, including Germany. According to Constellation Brands, a major beer, wine, and spirits company that recently acquired more than one-third of Canopy Growth's equity, the ex-U.S. marijuana market could be worth $120 billion in 15 years. There's no telling how much of that market opportunity Aurora may capture, but landing even a 1% share would still create a company with $1 billion-plus in annual revenue.