Aurora Cannabis (NASDAQ:ACB) has been no stranger to problems lately: Its shares have plunged more than 40% in just the last three months. Aurora missed expectations with its fiscal 2019 Q4 results. Analysts have piled on with negative views, with Stifel Nicolaus downgrading the stock to a sell and cutting its one-year price target by more than 30%.

The Canadian cannabis producer sorely needs some good news to renew investors' confidence. Unfortunately, the latest news for Aurora is again bad. What is this development, and just how bad is it?

Shadow of a dollar sign on a pile of cannabis leaves

Image source: Getty Images.

The Italian job

Aurora announced in July that Italy had selected it as the sole supplier of medical cannabis to the country. Five companies competed for the two-year contract. However, all the other companies fell by the wayside because they couldn't meet the stringent requirements of the Italian government.

It now appears that Aurora can't consistently meet those demands, either. The Italian minister of health recently stated that one of the three lots awarded to Aurora Cannabis was canceled because the lot didn't fully comply with the European Union's Good Manufacturing Practice (GMP) standards, according to a report by Marijuana Business Daily.

The lot in question contained cannabis with high levels of cannabidiol (CBD). Aurora was originally awarded three lots. The other two lots, one with high-THC cannabis and the other with similar levels of THC and CBD, weren't impacted by Italy's cancellation of the high-CBD lot.

How big of a problem?

At least at first glance, the cancellation of one of three lots for the Italian medical cannabis market seems problematic for Aurora. The company has a two-year contract, and messed up within two months of the contract going into effect.

It also could be relatively serious, since the underlying cause of the lot cancellation was that Aurora didn't comply with the EU's GMP standards. Other key European markets, notably including Germany, also require medical cannabis to meet EU GMP standards.

So does Aurora potentially have a big problem on its hands? I don't think so.

For one thing, Italy imposes some of the tightest restrictions on medical cannabis in the world. Just because Aurora didn't meet Italy's requirements doesn't mean that it will have issues anywhere else.

More importantly, Marijuana Business Daily said that the Italian government canceled the high-CBD medical cannabis lot because "stability studies to define the shelf life of the products were not carried out." That seems to be an oversight that Aurora could address in the future without too much trouble.

Also keep in mind that we're talking about one 40-kilogram lot, out of three lots. Aurora's first lot is for 320 kilograms with the second lot for 40 kilograms.

More serious challenges ahead

My view is that the Italian setback for Aurora isn't anything to be concerned about. However, the company faces some more serious challenges in the near future.

One of these challenges is Aurora's big bet on vapes in the Canadian cannabis-derivatives market. Cases of health problems related to vaping have occurred in both the U.S. and in Canada. It's too soon to know how all of this will play out, but there's a real possibility that Aurora won't be as successful as it hoped in launching vape products.

But the most concerning issue for Aurora is what I've described in the past as the company's ticking time bomb. Aurora will almost certainly have to pay off 230 million Canadian dollars of convertible debentures that come due in March 2020. The only way that it won't have to pay this amount is if its stock skyrockets by around 175% in the next few months. That could happen, but the odds are definitely slim.

Assuming Aurora does have to pay off this debt, the company will have to raise more cash to do so. And that means that more dilution for an already heavily diluted stock is probably on the way.

Aurora's latest problem amounts to only a molehill, in my opinion. But like quite a few marijuana stocks, the company could have some mountain-sized problems in its future.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.