You might be ready to abandon hope for Aurora Cannabis (NYSE:ACB). That's understandable after the company's ugly fiscal 2020 first-quarter results.

The Canadian cannabis producer's revenue is falling. Its bottom line is deteriorating. Don't let seemingly positive net income resulting from accounting for derivative liabilities fool you on that front. Aurora continues to burn through its cash.

Aurora's path to success might seem next to impossible, but it's way too soon to give up on the company. Here are 10 reasons why. 

A series of wood blocks spells out the word impossible. A man turns over the M block to make the blocks spell the words it's possible.

Image source: Getty Images.

1. Retail headwinds are only temporary

Aurora Cannabis Chief Corporate Officer Cam Battley readily acknowledged in the company's Q1 conference call that there have been some big challenges stemming from the lack of retail cannabis stores in Canadian provinces. He admitted that "these issues will take a little time to resolve," But taking a little time to resolve is a different animal altogether than not being able to resolve the issues. The reality is that these retail headwinds are only temporary. As more stores open, particularly in Ontario, Aurora's sales will soar. 

2. Aurora's brands enjoy strong popularity

It's important to understand just how popular Aurora's recreational cannabis brands are. The three top-selling dried cannabis flower products in Ontario's online retail store all belonged to Aurora. Battley said Aurora's brands "remain either No. 1 or No. 2 in all the major markets across the country." 

3. Medical cannabis sales momentum should pick up

One positive for Aurora in the first quarter was that its medical cannabis sales in Canada increased 3% quarter over quarter. The company's number of active medical cannabis patients in the country jumped 8% from the prior quarter. Aurora is actively trying to take medical patients away from other licensed producers with some temporary pricing incentives. It seems quite likely that the company's medical cannabis sales momentum will pick up. 

4. Rumors of a supply glut are greatly exaggerated

You've no doubt heard some saying that a supply glut is already beginning to show up in the Canadian market. But Aurora's average net selling price per gram in the adult-use recreational market rose 7% quarter over quarter in Q1. Aurora CFO Glen Ibbott stated that this increase shows "that demand for high-quality recreational cannabis is strong." He's right. There could be oversupply scenarios for certain types of cannabis products, but the rumors of an overall supply glut are greatly exaggerated. Aurora's higher average selling prices prove it.

5. Aurora's gross margin remains the best in the industry

Aurora reported a gross margin in the first quarter of 58%, the best in the Canadian cannabis industry. The company is able to deliver such an impressive gross margin because of its low production costs. Because of its strong gross margin, Ibbott stated, "Aurora can compete strongly in any market situation and would still deliver healthy returns at pricing that would not be sustainable for others." That isn't just spin. If a supply glut does come, Aurora would be in a better position to weather the storm than most of its peers. And if demand continues to grow faster than supply, Aurora will be able to make more money than most of its peers.

6. The Cannabis 2.0 market has yet to fully blossom

Although the Cannabis 2.0 cannabis derivatives market technically opened on Oct. 17, sales won't begin until mid-December because of the 60-day notification period required by Health Canada for new products. This market won't really begin to take off until well into next year. Larger companies such as Aurora should be able to benefit more from the coming growth in the Cannabis 2.0 market than smaller cannabis producers.

Shadow of a dollar sign on top of a pile of cannabis leaves

Image source: Getty Images.

7. International markets are ripe for growth

Aurora's international medical cannabis sales jumped 11% quarter-over-quarter in Q1 and now generate 7% of the company's total net revenue. The company expects even higher growth rates in international markets in the future.

8. The company is cutting its capital expenditures

Although Aurora took a step in the wrong direction in Q1 toward achieving profitability, the company's management appears to be serious about its commitment to become profitable. Aurora decided to halt efforts to complete construction at its Aurora Nordic 2 and Aurora Sun facilities. These moves will cut the company's capital expenditures by around $190 million in Canadian and will improve its bottom line.

9. Aurora is largely defusing its "ticking time bomb"

I warned a few months ago about Aurora's "ticking time bomb" -- CA$230 million in convertible debentures that mature in March 2020. The company appears to be largely defusing this time bomb, though, with a plan to allow investors to convert their debentures to Aurora stock earlier than the maturity date at a 6% discount to a five-day volume-weighted average trading price. Aurora has already lined up support for the plan from investors owning around CA$155 million of the debentures. This move helps Aurora in that the company won't have to scramble to raise a ton of cash to pay off debenture holders in 2020.

10. A U.S. CBD partnership shouldn't be too far off

Aurora still hasn't announced a major partnership deal with a U.S. company like some of its peers have. However, Executive Chairman Michael Singer said in the Q1 call that Aurora is "actively involved in negotiating a long-term relationship" with multiple consumer packaged goods companies. He added that Aurora isn't just looking at entering the U.S. CBD market but is also hoping that its partnership(s) will be "a springboard" for international expansion. 

Hold on to those towels

Am I saying that Aurora Cannabis is a great stock to buy right now? No. There will almost certainly be a tremendous level of volatility for marijuana stocks, in general, that will affect Aurora as well.

However, I do think that it's way too soon to predict a doom-and-gloom scenario for the company despite its admittedly disappointing Q1 performance. Hold on to those towels instead of throwing them in the ring: Aurora isn't done yet.