Although all eyes have been on tech stocks this year, marijuana remains one of the fastest-growing industries in the world.

Within the U.S., retail cannabis sales are expected to potentially triple between 2019 and 2024 to as much as $37 billion, according to the latest edition of "Marijuana Business Factbook" from Marijuana Business Daily. Meanwhile, BDS Analytics is forecasting over $6 billion in sales for Canada's pot market by 2024. 

But standing head-and-shoulders above all other pot stocks, at least in terms of popularity with investors, is Canadian licensed producer Aurora Cannabis (NYSE:ACB).

An up-close overhead view of a flowering cannabis plant.

Image source: Getty Images.

What you see isn't what you get

Roughly one year ago, Aurora looked as if it had all the tools necessary to be a key cannabis player. Its 15 production facilities were expected to yield well over 600,000 kilos of weed per year, when fully operational. The company also had access to two dozen countries outside of Canada, which made it a logical choice to land supply deals. And it had even lured billionaire activist investor Nelson Peltz to take a role as a strategic advisor. Given Peltz's background with consumer-packaged goods and beverage companies, he was expected to negotiate a possible equity investment or partnership between Aurora and a brand-name food/beverage company.

Unfortunately for shareholders, this vision of Aurora Cannabis from one year ago looks nothing like the company before investors today. Aurora has closed five of its smaller production facilities, sold a 1-million-square-foot greenhouse that was never retrofit for cannabis production (Exeter), and halted construction on two of its largest projects to conserve capital. On a peak production basis, it may not even be the world's top producer anymore.

Aurora Cannabis has also done some serious (and much-needed) balance sheet housecleaning. On Sept. 8, the company announced its new CEO, provided sales guidance for the fiscal fourth quarter, which it'll be reporting on Tuesday, Sept. 22, and outlined a series of impairments and charges that it'll be taking. These charges include goodwill and intangible asset impairments that could total as much as $1.8 billion Canadian. For the calendar year, Aurora will have taken close to CA$3 billion in charges, once it releases its report.

But even with management drastically cutting costs in an effort to backpedal into profitability, a number of question marks remain.

A professional stock trader grasping his head as he looks at losses on his computer screen.

Image source: Getty Images.

Will the dilution ever stop?

With the balance sheet no longer the company's biggest problem, all eyes can now turn to what's been the longest lasting issue for Aurora Cannabis and its shareholders: ongoing dilution.

Aurora's poor operating performance hasn't exactly encouraged Canadian banks to lend the company money. This means Aurora's only consistent means of raising capital has been to sell its own stock. The company has used its common stock as collateral for all of its major acquisitions, and has already completed a $400 million (that's U.S.) at-the-market offering. Aurora's board authorized an additional $350 million at-the-market offering earlier this year, of which $220 million remains, as of June 30. In other words, Aurora is burning through a ridiculous amount of cash and relying on share issuances to fill its funding void. 

Taking into account the 1-for-12 reverse split enacted on May 11 to avoid being delisted from the New York Stock Exchange, the company's outstanding share count has ballooned from approximately 1.3 million six years ago to what I suspect could be more than 120 million shares, as of June 30.

Even with the company's aggressive cost-cutting, it still looks to be more than a year away from any shot at a recurring profit. It's really anyone's guess at this point when Aurora Cannabis will stop burying its shareholders in newly issued stock.

A person holding cannabis leaves in front of a globe of the Earth.

Image source: Getty Images.

Are international sales ever going to pick up?

Additionally, investors have hopefully come to realize that Canada, while early to the legalization game, is a relatively small player in the global marijuana market. Aurora Cannabis' future unquestionably lies with international markets.

As noted, the company has access to more overseas markets than any other licensed producer in Canada. However, this access hasn't resulted in much in the way of sales. A typical quarter for Aurora Cannabis has produced CA$4 million to CA$5 million in international revenue.

To some extent, this isn't entirely the fault of management. While a number of European countries have chosen to legalize medical marijuana, they're still in the process of setting up rules and regulations for their industries and establishing production and importation parameters. This doesn't just happen overnight. Thus, some of the markets Aurora operates in aren't yet importing cannabis.

Then again, Canopy Growth operates in a number of similar international markets and has been running circles around Aurora Cannabis in the overseas medical marijuana sales.

Next to knowing when the company will stop punishing its shareholders with dilution, the question that needs to be answered is, when are international sales going to pick up? Without significant overseas growth, Aurora should remain off of investors' radars.

A neat stack of one hundred dollar bills locked up by thick chain.

Image source: Getty Images.

Will the adjusted EBITDA goalposts ever stop moving?

Third and finally, the question need to be asked if Aurora Cannabis' management team is ever going to stop moving the goalposts when it comes to adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).

In early August of 2019, Aurora provided an update on its fiscal fourth-quarter operating results that suggested it was tracking toward positive adjusted EBITDA. However, the company produced negative CA$11.7 million in Q4 2019 adjusted EBITDA, and has continued to deliver negative adjusted EBITDA in every subsequent quarter since claiming it was "on track" toward positive adjusted EBITDA.

What's more, the company announced that it had reworked its debt covenants in February 2020 to give it more financial flexibility. As part of the new agreement, Aurora Cannabis was to achieve positive adjusted EBITDA by the first fiscal quarter of 2021 (ended Sept. 30, 2020). But in the corporate update provided on Sept. 8, we see that management has again reworked its debt covenant and pushed back its expected turn to positive adjusted EBITDA until Q2 2021 (the quarter ended Dec. 31, 2020).

Aurora Cannabis' management team has been redrawing the finish line over and over again for more than a year. Until the company can actually make good on its promises, it's going to be hard to rebuild shareholder trust.