Amigula Inc. (AMJL)

[dapoopa]

AMJL investment case until election

AMJL stock now has a new catalyst after news that the governing Liberal party in the Canadian parliament is prepared to let Bill C-10 die before calling an election to be held in late June. So now that the bill is being shelved, the catalyst for AMJL stock shifts to the upcoming parliamentary election and the showing of the NDP (New Democratic Party), which supports cannabis regulation. So obviously, the more votes the NDP gets the better, especially at the expense of the Conservatives.

And the chances are good that the NDP will be a significant factor; the latest poll puts their support among eligible voters at 16%, vs. 38% for the Liberals and 26% for the Conservatives. Based on these numbers, the Liberals would be forced to form a coalition with the NDP to govern, which means they would have to adopt some of their minority partner’s legislative agenda. Those investing in AMJL stock are betting that one of these demands will be to start regulating cannabis, particularly medical. Thus, pending the outcome of the ballot, investors should be monitoring any statements from the major parties regarding cannabis reform, particularly as regards medical cannabis.

So although this news could weigh on AMJL stock in the short-term, in the longer term it may turn out to have been the best outcome. But only time will tell, and the longer this investment case drags out the more downward pressure we will see. At the end of Friday’s trade AMJL stock was at $0.28, with an after-hours deal recorded at a level of $0.27. Volume was modest at 101,000 shares, which suggests the lack of a definitive move. The candlestick analysis at americanbulls.com is particularly interesting:

http://www.americanbulls.com/main/StockPage.asp?CompanyTicker=AMJL&MarketTicker=OTC&Typ=S

Perhaps we will see a press release from the company commenting on this latest turn of legislative events. In the meantime, investors should remember that court rulings have traditionally been the main avenue of decriminalization in Canada, whereas legislative acts will be necessary for the transition to regulation (i.e. legalization). As such, the apparent death of Bill C-10 has little bearing on the issue of regulation per se, although it would have set forth certain guidelines for future steps in this direction.