6-K - SNDL - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

For the month of November 2024

Commission File Number 001-39005

SNDL INC.

(Registrant’s name)

#300, 919 - 11 Avenue SW

Calgary, AB T2R 1P3

Tel.: (403) 948-5227

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F ☐ Form 40-F ☒

INCORPORATION BY REFERENCE

This report on Form 6-K shall be deemed to be incorporated by reference in SNDL Inc.’s registration statements on Form F-3 (File No. 333-253813) and Form S-8 (File No. 333-233156, File No. 333-262233, File No. 333-267510, File No. 333-269242 and File No. 333-278683) and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SNDL INC.
Date: November 4, 2024	By:	/s/ Alberto Paredero Quiros
	Name:	Alberto Paredero Quiros
	Title:	Chief Financial Officer

EXHIBIT

Exhibit	Description of Exhibit
99.1	Condensed Consolidated Interim Financial Statements for the Three and Nine Months Ended September 30, 2024
99.2	Management’s Discussion and Analysis for the Three and Nine Months Ended September 30, 2024
99.3	Form 52-109F2 Certificate of Interim Filings by CEO (pursuant to Canadian regulations)
99.4	Form 52-109F2 Certificate of Interim Filings by CFO (pursuant to Canadian regulations)

EX-99.1

EXHIBIT 99.1

SNDL Inc.

Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited – expressed in thousands of Canadian dollars)

SNDL Inc.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited - expressed in thousands of Canadian dollars)

As at	Note
Assets
Current assets
Cash and cash equivalents		262,976		195,041
Restricted cash		20,215		19,891
Marketable securities		483		225
Accounts receivable		24,589		27,059
Biological assets	5	901		429
Inventory	6	127,863		129,060
Prepaid expenses and deposits		15,507		22,464
Investments	12	22,900		3,400
Assets held for sale	7	19,051		6,375
Net investment in subleases	10	2,927		2,970
		497,412		406,914
Non-current assets
Long-term deposits and receivables		3,702		4,837
Right of use assets	8	118,409		129,679
Property, plant and equipment	9	128,310		152,916
Net investment in subleases	10	16,820		18,396
Intangible assets	11	77,019		73,149
Investments	12	26,413		29,660
Equity-accounted investees	13	451,068		538,331
Goodwill		123,924		119,282
Total assets		1,443,077		1,473,164
Liabilities
Current liabilities
Accounts payable and accrued liabilities		54,038		68,210
Lease liabilities	15	34,541		30,537
Derivative warrants	14	52		4,400
		88,631		103,147
Non-current liabilities
Lease liabilities	15	122,959		136,492
Other liabilities		7,214		4,185
Total liabilities		218,804		243,824
Shareholders’ equity
Share capital	16(b)	2,383,233		2,375,950
Warrants	16(c)	667		2,260
Contributed surplus		81,591		73,014
Contingent consideration		2,279		2,279
Accumulated deficit		(1,288,505	)	(1,260,851	)
Accumulated other comprehensive income		28,949		19,417
Total shareholders’ equity		1,208,214		1,212,069
Non-controlling interest		16,059		17,271
Total liabilities and shareholders’ equity		1,443,077		1,473,164

Commitments (note 24)

Subsequent events (notes 12, 16(b) and 25)

See accompanying notes to the condensed consolidated interim financial statements.

SNDL Inc.

Condensed Consolidated Interim Statements of Loss and Comprehensive Loss

(Unaudited - expressed in thousands of Canadian dollars, except per share amounts)

		Three months ended <br>September 30						Nine months ended<br>September 30
	Note	2024			2023			2024			2023
Net revenue	18		236,892			237,595			662,769			660,556
Cost of sales	6		173,924			188,990			491,237			527,477
Gross profit			62,968			48,605			171,532			133,079
Investment income	19		5,577			3,416			12,817			1,859
Share of profit (loss) of equity-accounted investees	13		(13,401	)		6,581			999			15,161
General and administrative			49,980			48,235			142,711			149,535
Sales and marketing			2,813			3,271			8,850			10,761
Research and development			76			57			222			217
Depreciation and amortization	8,9,11		13,389			15,545			41,051			45,456
Share-based compensation	17		5,702			5,373			15,428			11,475
Restructuring costs			1,918			708			2,050			6,286
Asset impairment (reversal)	7,8,9		(258	)		1,783			2,317			4,248
Loss on disposition of assets			35			14			441			275
Operating loss			(18,511	)		(16,384	)		(27,722	)		(78,154	)
Other income (expenses)	20		609			(5,443	)		(4,080	)		(8,439	)
Loss before income tax			(17,902	)		(21,827	)		(31,802	)		(86,593	)
Income tax (expense) recovery			(1,434	)		—			2,847			—
Net loss from continuing operations			(19,336	)		(21,827	)		(28,955	)		(86,593	)
Net loss from discontinued operations			—			—			—			(4,535	)
Net loss			(19,336	)		(21,827	)		(28,955	)		(91,128	)
Equity-accounted investees - share of other comprehensive income (loss)	13		(4,802	)		11,124			9,532			(882	)
Comprehensive loss			(24,138	)		(10,703	)		(19,423	)		(92,010	)
Net loss from continuing operations attributable to:
Owners of the Company			(19,328	)		(21,784	)		(27,654	)		(85,337	)
Non-controlling interest			(8	)		(43	)		(1,301	)		(1,256	)
			(19,336	)		(21,827	)		(28,955	)		(86,593	)
Net loss attributable to:
Owners of the Company			(19,328	)		(21,784	)		(27,654	)		(89,872	)
Non-controlling interest			(8	)		(43	)		(1,301	)		(1,256	)
			(19,336	)		(21,827	)		(28,955	)		(91,128	)
Comprehensive loss attributable to:
Owners of the Company			(24,130	)		(10,660	)		(18,122	)		(90,754	)
Non-controlling interest			(8	)		(43	)		(1,301	)		(1,256	)
			(24,138	)		(10,703	)		(19,423	)		(92,010	)
Net loss per common share attributable to owners of the Company
Basic and diluted	21	$	(0.07	)	$	(0.08	)	$	(0.10	)	$	(0.35	)

See accompanying notes to the condensed consolidated interim financial statements.

SNDL Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Unaudited - expressed in thousands of Canadian dollars)

	Note
Balance at December 31, 2023		2,375,950		2,260		73,014		2,279	(1,260,851	)	19,417		17,271		1,229,340
Net loss		—		—		—		—	(27,654	)	—		(1,301	)	(28,955	)
Other comprehensive income		—		—		—		—	—		9,532		—		9,532
Share issuances		164		—		—		—	—		—		—		164
Share issuance costs		(57	)	—		—		—	—		—		—		(57	)
Share issuances by subsidiaries		—		—		52		—	—		—		76		128
Acquisition	3	3,693		—		—		—	—		—		—		3,693
Warrants expired		—		(1,593	)	753		—	—		—		—		(840	)
Share-based compensation	17	—		—		11,255		—	—		—		—		11,255
Employee awards exercised		3,483		—		(3,483	)	—	—		—		—		—
Distribution declared by subsidiaries		—		—		—		—	—		—		13		13
Balance at September 30, 2024		2,383,233		667		81,591		2,279	(1,288,505	)	28,949		16,059		1,224,273
Balance at June 30, 2024		2,380,753		667		79,568		2,279	(1,269,177	)	33,751		16,077		1,243,918
Net loss		—		—		—		—	(19,328	)	—		(8	)	(19,336	)
Other comprehensive loss		—		—		—		—	—		(4,802	)	—		(4,802	)
Share-based compensation	17	—		—		4,503		—	—		—		—		4,503
Employee awards exercised		2,480		—		(2,480	)	—	—		—		—		—
Distribution declared by subsidiaries		—		—		—		—	—		—		(10	)	(10	)
Balance at September 30, 2024		2,383,233		667		81,591		2,279	(1,288,505	)	28,949		16,059		1,224,273

SNDL Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity

(Unaudited - expressed in thousands of Canadian dollars)


Balance at December 31, 2022	2,292,810		2,260	68,961		2,279	(1,091,999	)	32,188		21,156		1,327,655
Net loss	—		—	—		—	(89,872	)	—		(1,256	)	(91,128	)
Other comprehensive loss	—		—	—		—	—		(882	)	—		(882	)
Share repurchases	(5,344	)	—	—		—	3,808		—		—		(1,536	)
Share issuances by subsidiaries	—		—	25		—	—		—		26		51
Acquisition	83,953		—	602		—	—		—		—		84,555
Shares acquired and cancelled	(6,615	)	—	—		—	—		—		—		(6,615	)
Share-based compensation	—		—	9,295		—	—		—		—		9,295
Employee awards exercised	1,971		—	(1,971	)	—	—		—		—		—
Distribution declared by subsidiaries	—		—	—		—	—		—		(4	)	(4	)
Balance at September 30, 2023	2,366,775		2,260	76,912		2,279	(1,178,063	)	31,306		19,922		1,321,391
Balance at June 30, 2023	2,365,845		2,260	73,636		2,279	(1,156,279	)	20,182		19,965		1,327,888
Net loss	—		—	—		—	(21,784	)	—		(43	)	(21,827	)
Other comprehensive income	—		—	—		—	—		11,124		—		11,124
Acquisition	—		—	602		—	—		—		—		602
Share-based compensation	—		—	3,604		—	—		—		—		3,604
Employee awards exercised	930		—	(930	)	—	—		—		—		—
Balance at September 30, 2023	2,366,775		2,260	76,912		2,279	(1,178,063	)	31,306		19,922		1,321,391

See accompanying notes to the condensed consolidated interim financial statements.

SNDL Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited - expressed in thousands of Canadian dollars)

		Three months ended <br>September 30						Nine months ended<br>September 30
	Note	2024			2023			2024			2023
Cash provided by (used in):
Operating activities
Net loss for the period			(19,336	)		(21,827	)		(28,955	)		(91,128	)
Adjustments for:
Income tax expense (recovery)			1,434			—			(2,847	)		—
Interest and fee income	19		(5,577	)		(3,445	)		(12,886	)		(11,077	)
Change in fair value of biological assets			167			1,819			(401	)		6,767
Share-based compensation	17		5,702			5,373			15,428			11,475
Depreciation and amortization	8,9,11		13,970			16,602			42,679			49,535
Loss on disposition of assets			35			14			441			275
Inventory impairment and obsolescence	6		413			9,126			3,395			22,594
Finance costs, net	20		1,740			2,142			5,522			9,773
Change in estimate of fair value of derivative warrants	14		(3,848	)		2,840			(4,348	)		(4,202	)
Unrealized foreign exchange loss			80			68			235			44
Transaction costs			—			—			164			—
Asset impairment (reversal)	7,8,9		(258	)		1,783			2,317			4,248
Share of (profit) loss of equity-accounted investees	13		13,401			(6,581	)		(999	)		(15,161	)
Realized loss on settlement of marketable securities	19		—			46,082			—			138,874
Unrealized (gain) loss on marketable securities	19		—			(46,053	)		69			(129,656	)
Additions to marketable securities			(327	)		—			(327	)		—
Proceeds from settlement of marketable securities			—			3,241			—			6,704
Income distributions from equity-accounted investees			10,715			—			10,715			—
Interest received			4,496			3,325			10,317			10,245
Change in non-cash working capital			(13	)		13,033			(9,722	)		(43,722	)
Net cash provided by (used in) operating activities from continuing operations			22,794			27,542			30,797			(34,412	)
Net cash provided by operating activities from discontinued operations			—			—			—			4,314
Net cash provided by (used in) operating activities			22,794			27,542			30,797			(30,098	)
Investing activities
Additions to property, plant and equipment	9		(1,706	)		(3,042	)		(5,306	)		(5,683	)
Additions to intangible assets	11		(2,421	)		(32	)		(2,421	)		(88	)
Changes to investments	12		(18,952	)		195			(17,584	)		(507	)
Changes to equity-accounted investees	13		—			—			168			(16,989	)
Capital distributions from equity-accounted investees			89,758			—			89,758			—
Proceeds from disposal of property, plant and equipment			—			1,150			126			1,287
Acquisitions, net of cash acquired	3		—			—			(1,654	)		3,695
Change in non-cash working capital			(191	)		730			379			1,857
Net cash provided by (used in) investing activities			66,488			(999	)		63,466			(16,428	)
Financing activities
Change in restricted cash			(243	)		(205	)		(324	)		(323	)
Payments on lease liabilities, net			(9,780	)		(9,793	)		(27,002	)		(29,400	)
Repurchase of common shares, net of costs			—			—			—			(1,536	)
Proceeds from issuance of shares, net of costs			—			—			(57	)		—
Issuance of common shares by subsidiaries			—			—			174			—
Change in non-cash working capital			783			(17	)		881			182
Net cash used in financing activities			(9,240	)		(10,015	)		(26,328	)		(31,077	)
Change in cash and cash equivalents			80,042			16,528			67,935			(77,603	)
Cash and cash equivalents, beginning of period			182,934			185,455			195,041			279,586
Cash and cash equivalents, end of period			262,976			201,983			262,976			201,983

See accompanying notes to the condensed consolidated interim financial statements.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Description of business

SNDL Inc. (“SNDL” or the “Company”) was incorporated under the Business Corporations Act (Alberta) on August 19, 2006. On July 25, 2022, the Company’s shareholders approved a special resolution amending the articles of SNDL to change the name of the Company from “Sundial Growers Inc.” to “SNDL Inc.”.

The Company’s head office is located at 300, 919 11th Avenue SW, Calgary, Alberta, Canada.

The principal activities of the Company are the retailing of wines, beers and spirits, the operation and support of corporate-owned and franchise retail cannabis stores in Canadian jurisdictions where the private sale of recreational cannabis is permitted, the manufacturing of cannabis products providing proprietary cannabis processing services, the production, distribution and sale of cannabis domestically and for export pursuant to the Cannabis Act (Canada) (the “Cannabis Act”), and the deployment of capital to investment opportunities. The Cannabis Act regulates the production, distribution, and possession of cannabis for both medical and adult recreational access in Canada. As at September 30, 2024, the Company also owned approximately 65% of Nova Cannabis Inc. (“Nova”), whose principal activities are the retail sale of cannabis (note 25).

SNDL and its subsidiaries operate solely in Canada. Through its joint venture, SunStream Bancorp Inc. (“SunStream”) (note 13), the Company provides growth capital that pursues indirect investment and financial services opportunities in the cannabis sector, as well as other investment opportunities. The Company also makes strategic portfolio investments in debt and equity securities.

The Company’s liquor retail operations are seasonal in nature. Accordingly, sales will vary by quarter based on consumer spending behaviour. The Company is able to adjust certain variable costs in response to seasonal revenue patterns; however, costs such as occupancy are fixed, causing the Company to report a higher level of earnings in the third and fourth quarters. This business seasonality results in quarterly performance that is not necessarily indicative of the year’s performance. The cannabis retail industry is a growing industry for which seasonality cannot be reliably predicted.

The Company’s common shares trade on the Nasdaq Capital Market under the ticker symbol “SNDL”.

Basis of presentation

Statement of compliance

These condensed consolidated interim financial statements (“financial statements”) have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting as issued by the International Accounting Standards Board and interpretations of the International Financial Reporting Interpretations Committee. These financial statements were prepared using the same accounting policies and methods as those disclosed in the annual consolidated financial statements for the year ended December 31, 2023. These financial statements should be read in conjunction with the annual consolidated financial statements for the Company for the year ended December 31, 2023.

Certain prior period amounts have been reclassified to conform to current year presentation. Specifically, cost of sales, inventory impairment and obsolescence, change in fair value of biological assets and change in fair value realized through inventory have been combined as cost of sales. Interest and fee revenue and investment income (loss) have been combined as investment income (loss). Finance costs (income), change in fair value of derivative warrants, transaction costs and foreign exchange gain (loss) have been combined as other income (expenses).

These financial statements were approved and authorized for issue by the board of directors of the Company (the “Board”) on November 4, 2024.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Business acquisitions

On March 28, 2023, the Company announced that it had entered into an agreement with Lightbox Enterprises Ltd. (“Lightbox”) pursuant to which, in connection with Lightbox’s proceedings under the Companies’ Creditors Arrangement Act (Canada), the Company (or its designee) would acquire the assets comprising four cannabis retail stores operating under the Dutch Love cannabis retail banner (the “Lightbox Transaction”). The Lightbox Transaction consideration was comprised of (i) approximately $1.7 million in cash, (ii) the cancellation of $3.0 million in debt owing by Lightbox to the Company, and (iii) the issuance of 1.1 million SNDL common shares valued at approximately $3.7 million.

On April 1, 2024, the Company announced that it had agreed to assign its rights to own or operate the four cannabis retail stores to Nova. On May 8, 2024, the Company completed the Lightbox Transaction and the assignment of its rights to own or operate the four cannabis retail stores to Nova.

The Company has engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed and related deferred income tax impacts. The purchase price allocation is not final as the Company is continuing to obtain and verify information required to determine the fair value of certain assets and liabilities and the amount of deferred income taxes, if any, arising on their recognition.

Due to the inherent complexity associated with valuations and the timing of the acquisition, the amounts below are provisional and subject to adjustment. The fair value of consideration paid was as follows:


Cash	1,654	—	1,654
Issuance of common shares	3,693	—	3,693
Extinguishment of convertible debenture	3,000	—	3,000
	8,347	—	8,347

The preliminary fair value of the assets and liabilities acquired was as follows:


Inventory	154		—		154
Prepaid expenses and deposits	—		120		120
Right of use assets	2,828		(111	)	2,717
Property, plant and equipment	964		73		1,037
Intangible assets	1,959		546		2,505
Lease liabilities	(2,828	)	—		(2,828	)
Total identifiable net assets acquired	3,077		628		3,705
Goodwill	5,270		(628	)	4,642
	8,347		—		8,347

Goodwill is mainly attributable to the expansion of the store network and the Value Buds brand growth in British Columbia.

As new information is obtained within one year of the date of acquisition, about facts and circumstances that existed at the date of acquisition, the accounting for the acquisition will be revised.

The financial statements incorporate the operations of Lightbox commencing May 9, 2024. During the period May 9, 2024 to September 30, 2024 the Company recorded revenues of $3.9 million and net loss of $0.2 million from the Lightbox operations. Had the Lightbox Transaction closed on January 1, 2024, management estimates that for the period January 1, 2024, to May 8, 2024, revenue would have increased by $3.1 million and net earnings would have increased by $0.2 million. In determining these amounts, management assumes the fair values on the date of acquisition would have been the same as if the acquisition had occurred on January 1, 2024.

The Company incurred costs related to the Lightbox Transaction of $0.7 million which have been included in transaction costs.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Segment information

The Company’s reportable segments are organized by business line and are comprised of four reportable segments: liquor retail, cannabis retail, cannabis operations, and investments.

Liquor retail includes the sale of wines, beers and spirits through owned liquor stores. Cannabis retail includes the private sale of adult-use cannabis through owned and franchise retail cannabis stores. Cannabis operations include the cultivation, distribution and sale of cannabis for the adult-use and medical markets domestically and for export, and providing proprietary cannabis processing services, in addition to product development, manufacturing, and commercialization of cannabis consumer packaged goods. Investments include the deployment of capital to investment opportunities. Certain overhead expenses not directly attributable to any operating segment are reported as “Corporate”.


As at September 30, 2024
Total assets	319,974	211,038	196,622		695,228		20,215		1,443,077
Nine months ended September 30, 2024
Net revenue (2)	401,179	228,519	72,378		—		(39,307	)	662,769
Gross profit	101,470	58,337	11,725		—		—		171,532
Operating income (loss)	22,456	7,255	(1,728	)	13,711		(69,416	)	(27,722	)
Earnings (loss) before income tax	19,314	4,637	(2,133	)	13,136		(66,756	)	(31,802	)
Three months ended September 30, 2024
Net revenue (2)	144,565	81,144	25,007		—		(13,824	)	236,892
Gross profit	36,951	20,710	5,307		—		—		62,968
Operating income (loss)	11,795	4,395	(703	)	(7,824	)	(26,174	)	(18,511	)
Earnings (loss) before income tax	10,900	3,328	(65	)	(7,824	)	(24,241	)	(17,902	)

Total assets include cash and cash equivalents.
The Company has eliminated $39.3 million for the nine months ended September 30, 2024 and $13.8 million for the three months ended September 30, 2024 of cannabis operations revenue and equal cost of sales associated with sales to provincial boards that are expected to be subsequently repurchased by the Company’s licensed retail subsidiaries for resale, at which point the full retail sales revenue will be recognized. The elimination was recorded in the Corporate segment.


As at December 31, 2023
Total assets	320,239	206,988	208,295		717,751	19,891		1,473,164
Nine months ended September 30, 2023
Net revenue (4)	419,402	214,828	61,027		—	(34,701	)	660,556
Gross profit	98,890	53,645	(19,456	)	—	—		133,079
Operating income (loss)	14,535	5,689	(46,995	)	16,963	(68,346	)	(78,154	)
Earnings (loss) before income tax	10,200	3,230	(46,725	)	13,287	(66,585	)	(86,593	)
Three months ended September 30, 2023
Net revenue (4)	151,801	75,539	20,954		—	(10,699	)	237,595
Gross profit	37,263	20,046	(8,704	)	—	—		48,605
Operating income (loss)	8,278	3,432	(13,957	)	9,886	(24,023	)	(16,384	)
Earnings (loss) before income tax	6,449	2,753	(13,774	)	9,834	(27,089	)	(21,827	)

Cannabis retail includes the operations of Superette Inc. for the period February 8, 2023 to September 30, 2023.
Cannabis operations includes the operations of The Valens Company Inc. for the period January 18, 2023 to September 30, 2023.
Total assets include cash and cash equivalents.
The Company has eliminated $34.7 million for the nine months ended September 30, 2023 and $10.7 million for the three months ended September 30, 2023 of cannabis operations revenue and equal cost of sales associated with sales to provincial boards that are expected to be subsequently repurchased by the Company’s licensed retail subsidiaries for resale, at which point the full retail sales revenue will be recognized. The elimination was recorded in the Corporate segment.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Geographical disclosure

As at September 30, 2024, the Company had non-current assets related to credit investments in the United States of $451.1 million (December 31, 2023 – $538.3 million). For the nine months ended September 30, 2024, share of profit of equity-accounted investees related to operations in the United States was a gain of $1.0 million (nine months ended September 30, 2023 – gain of $15.2 million). All other non-current assets relate to operations in Canada and revenues from external customers relate to operations in Canada.

biological assets

The Company’s biological assets consist of cannabis plants in various stages of vegetation, including plants which have not been harvested. The change in carrying value of biological assets is as follows:

As at
Balance, beginning of year	429		3,477
Increase in biological assets due to capitalized costs	4,076		21,501
Net change in fair value of biological assets	(401	)	(7,936	)
Transferred to inventory upon harvest	(3,203	)	(16,613	)
Balance, end of period	901		429

Biological assets are valued in accordance with International Accounting Standard 41 – Agriculture and are presented at their fair value less costs to sell up to the point of harvest. This is determined using a model which estimates the expected harvest yield in grams for plants currently being cultivated, and then adjusts that amount for the expected selling price less costs to produce and sell per gram.

The fair value measurements for biological assets have been categorized as Level 3 fair values based on the inputs to the valuation technique used. The Company’s method of accounting for biological assets attributes value accretion on a straight-line basis throughout the life of the biological asset from initial cloning to the point of harvest.

The Company estimates the harvest yields for cannabis at various stages of growth. As at September 30, 2024, it is estimated that the Company’s biological assets will yield approximately 3,416 kilograms (December 31, 2023 – 2,230 kilograms) of dry cannabis when harvested. During the nine months ended September 30, 2024, the Company harvested 5,529 kilograms of dry cannabis (nine months ended September 30, 2023 – 13,831 kilograms).

Inventory

As at
Retail liquor	79,241	83,923
Retail cannabis	21,729	19,516
Harvested cannabis
Raw materials, packaging and components	7,015	7,781
Extracted cannabis & hemp oils	16,866	11,989
Work-in-progress	—	995
Finished goods	3,012	4,856
	127,863	129,060

During the three and nine months ended September 30, 2024, inventories of $173.3 million and $488.4 million were recognized in cost of sales as an expense (three and nine months ended September 30, 2023 – $180.4 million and $503.4 million).

During the three and nine months ended September 30, 2024, the Company recognized inventory write downs of $0.4 million and $3.4 million (three and nine months ended September 30, 2023 – $9.1 million and $22.6 million).

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Assets held for sale

At September 30, 2024, assets held for sale were measured at their fair value less costs to sell and comprised of the following:

As at
Olds facility	18,800	—
Stellarton facility	—	6,375
Extraction equipment	251	—
	19,051	6,375

The Olds facility is located in Olds, Alberta, and its primary purpose was the cultivation of cannabis for the adult-use cannabis market. Management is committed to a plan to sell the Olds facility and the asset is available for immediate sale.

The Stellarton facility is located in Stellarton, Nova Scotia, and its primary purpose was the packaging and processing of value added and derivative products for the adult-use cannabis market. The Stellarton facility was acquired as part of the Zenabis acquisition. During the nine months ended September 30, 2024, the Company concluded that the Stellarton facility no longer met certain criteria for assets held for sale due to secondary commercial real estate market conditions in Nova Scotia. The facility was reclassified to property, plant and equipment and a $1.3 million impairment loss was recognized.

Right of use assets

Cost
Balance at December 31, 2023	199,032
Acquisition (note 3)	2,717
Additions	1,499
Renewals, remeasurements and dispositions	9,130
Balance at September 30, 2024	212,378
Accumulated depreciation and impairment
Balance at December 31, 2023	69,353
Depreciation	23,529
Impairment	1,087
Balance at September 30, 2024	93,969
Net book value
Balance at December 31, 2023	129,679
Balance at September 30, 2024	118,409

For the nine months ended September 30, 2024, the Company recorded impairment losses of right of use assets of $1.1 million which consists of a net $1.6 million for the three months ended March 31, 2024, a net reversal of $0.4 million for the three months ended June 30, 2024 and a net reversal of $0.1 million for the three months ended September 30, 2024 (September 30, 2023 – nil) with $1.6 million ($1.8 million for the three months ended March 31, 2024, a reversal of $0.3 million for the three months ended June 30, 2024 and impairment of $0.1 million for the three months ended September 30, 2024) in the cannabis retail reporting segment and an impairment reversal of $0.5 million ($0.2 million reversal for the three months ended March 31, 2024, $0.1 million reversal for the three months ended June 30, 2024 and $0.2 million reversal for the three months ended September 30, 2024) in the liquor retail reporting segment. Refer to note 9 for the significant assumptions applied in the impairment test.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Property, plant and equipment


Cost
Balance at December 31, 2023	20,953		179,156		76,899		99,164		8,674		384,846
Acquisition (note 3)	—		—		1,037		—		—		1,037
Additions	—		—		277		5,016		983		6,276
Transfers from CIP	—		—		—		983		(983	)	—
Reclass to assets held for sale	(11,834	)	(143,540	)	—		(411	)	(6,013	)	(161,798	)
Dispositions	—		—		(559	)	(1,775	)	(90	)	(2,424	)
Balance at September 30, 2024	9,119		35,616		77,654		102,977		2,571		227,937
Accumulated depreciation and impairment
Balance at December 31, 2023	—		145,420		28,448		52,241		5,821		231,930
Depreciation	—		956		7,925		8,384		—		17,265
Impairment (recovery)	—		—		16		(111	)	—		(95	)
Reclass to assets held for sale	—		(141,811	)	—		(165	)	(5,821	)	(147,797	)
Dispositions	—		—		(559	)	(1,117	)	—		(1,676	)
Balance at September 30, 2024	—		4,565		35,830		59,232		—		99,627
Net book value
Balance at December 31, 2023	20,953		33,736		48,451		46,923		2,853		152,916
Balance at September 30, 2024	9,119		31,051		41,824		43,745		2,571		128,310

During the nine months ended September 30, 2024, depreciation expense of $1.6 million was capitalized to biological assets and inventory (nine months ended September 30, 2023 – $4.1 million).

During the nine months ended September 30, 2024, the Company determined that indicators of impairment existed relating to certain cannabis retail stores due to underperforming store level operating results as well as indicators of impairment reversal relating to certain previously impaired liquor retail stores now overperforming store level operating results. For impairment testing of retail property, plant and equipment and right of use assets, the Company determined that a cash generating unit (“CGU”) was defined as each individual retail store. The Company completed impairment tests for each CGU determined to have an indicator of potential impairment or impairment reversal using a discounted cash flow model. The recoverable amounts for each CGU were based on the higher of its estimated value in use and fair value less costs of disposal using Level 3 inputs. The significant assumptions applied in the impairment test are described below:

Cash flows: Projected future sales and earnings for cash flows are based on actual operating results and operating forecasts. Management determined forecasted growth rates of sales based on past performance, expectations of future performance for each location and industry averages. Expenditures were based upon a combination of historical percentages of revenue, sales growth rates, forecasted inflation rates and contractual lease payments. The duration of the cash flow projections for individual CGUs is 5 years or based on the remaining lease term of the CGU.
Discount rate: A pre-tax discount rate range of 12.5% – 13.8% was estimated and is based on market assessments of the time value of money and CGU specific risks. To determine a pre-tax discount rate, a weighted average cost of capital was used as a reference point which is based on market capital structure of debt, risk-free rate, equity risk premium, beta adjustment to the equity risk premium based on a review of betas of comparable publicly traded companies, the Company’s historical data, an unsystematic risk premium and after-tax cost of debt based on corporate bond yields.

For the nine months ended September 30, 2024, the Company recorded impairment losses of property, plant and equipment of $1.4 million which consists of net $0.77 million for the three months ended March 31, 2024, a reversal of net $0.21 million for the three months ended June 30, 2024 and impairment of net $0.89 million for the three months ended September 30, 2024 (September 30, 2023 – $0.5 million) in the cannabis retail reporting segment and

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

an impairment reversal of $1.6 million, $0.76 million reversal for the three months ended March 31, 2024, impairment of $0.22 million for the three months ended June 30, 2024 and a reversal of $1.1 million for the three months ended September 30, 2024 (September 30, 2023 – $0.4 million) in the liquor retail reporting segment. The Company also recorded impairment losses and impairment reversals of right of use assets (note 8).

Net investment in subleases


Balance, beginning of year	21,366		23,319
Additions	716		832
Finance income	580		857
Rents recovered (payments made directly to landlords)	(2,672	)	(4,004	)
Dispositions and remeasurements	(243	)	362
Balance, end of period	19,747		21,366
Current portion	2,927		2,970
Long-term	16,820		18,396

Net investment in subleases represent leased retail stores that have been subleased to certain franchise partners. These subleases are classified as a finance lease as the sublease terms are for the remaining term of the head lease.

Intangible assets


Cost
Balance at December 31, 2023	81,900	10,000	5,556	750	98,206
Acquisition (note 3)	—	—	—	2,505	2,505
Additions	—	—	33	3,217	3,250
Balance at September 30, 2024	81,900	10,000	5,589	6,472	103,961
Accumulated amortization and impairment
Balance at December 31, 2023	20,447	3,061	1,549	—	25,057
Amortization	129	938	694	124	1,885
Balance at September 30, 2024	20,576	3,999	2,243	124	26,942
Net book value
Balance at December 31, 2023	61,453	6,939	4,007	750	73,149
Balance at September 30, 2024	61,324	6,001	3,346	6,348	77,019

During the nine months ended September 30, 2024, the Company finalized the addition of two Saskatchewan liquor licenses with indefinite lives for $3.2 million.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Investments

As at
Investments at amortized cost	49,313	24,405
Investments at fair value through profit and loss ("FVTPL")	—	8,655
	49,313	33,060
Current portion	22,900	3,400
Long-term	26,413	29,660

Investments at amortized cost

Indiva

On April 1, 2024, the Company and Indiva Limited (“Indiva”) entered into an amendment to the Second Amended and Restated Promissory Note dated August 28, 2023 (the “Indiva Promissory Note”), whereby Indiva repaid $2.0 million of principal and certain financial and reporting conditions were amended.

On June 12, 2024, the Company agreed to lend Indiva up to an additional $2.4 million as a debtor-in-possession loan, of which $0.9 million was drawn upon as of June 30, 2024.

On July 5, 2024, the Company announced that it had entered into a purchase agreement (the “Bid Agreement”) with Indiva and its direct and indirect subsidiaries (collectively with Indiva, the “Indiva Group”), pursuant to which the Company offered to purchase all of the issued and outstanding shares of Indiva and the business and assets of the Indiva Group (collectively, the “Indiva Assets”) (the “Indiva Transaction”) for consideration comprising of a credit bid of all of the indebtedness of the Indiva Group owing to the Company, the retention of certain liabilities of the Indiva Group, and cash payments sufficient to repay certain priority indebtedness of the Indiva Group and costs associated with the Indiva Group’s proceedings under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”).

The Bid Agreement was entered into in the context of the CCAA proceedings, as part of a sales process where the Indiva Assets will be marketed to prospective purchasers (the “Sale Process”) and, accordingly, is subject to approval by the court overseeing the CCAA proceedings and to potential alternative bids submitted pursuant to the Sale Process.

On August 29, 2024, the Company announced that its stalking horse bid pursuant to the Bid Agreement had been chosen as the successful bid for the Indiva Assets.

On November 4, 2024, the Company announced that it had successfully closed the Indiva Transaction for consideration of approximately $22.7 million. Due to the proximity of the closing of the Indiva Transaction and the date of issuance of the financial statements, the Company has not yet prepared the acquisition date fair value of the total consideration transferred or the amounts recognized as of the acquisition date for each major class of assets acquired and liabilities assumed.

Delta 9

On July 5, 2024, the Company announced that it had completed the acquisition (the “Debt Acquisition”) of the principal indebtedness (the “Purchased Indebtedness”) of Delta-9 Cannabis Inc. (“Delta 9”) from Connect First and Servus Credit Union Ltd. for a purchase price of $28.1 million pursuant to a purchase and sale of indebtedness agreement dated July 5, 2024. As a result of the Debt Acquisition, the Company became Delta 9’s senior secured creditor with a first priority security interest in all of the assets of Delta 9 and certain Delta 9 subsidiaries.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Investments at fair value through profit and loss

On September 12, 2024, the Company received payment through Delta 9’s CCAA proceedings for reimbursement of principal and interest owing on the convertible debenture maturing March 30, 2025 for $11.7 million. Further discussions are being held for the full reimbursement of fees and other costs.

Equity-accounted investees

As at	September 30, 2024		December 31, 2023
Interest in joint venture		451,068		538,331

SunStream is a joint venture in which the Company has a 50% ownership interest. SunStream is a private company, incorporated under the Business Corporations Act (Alberta), which provides growth capital that pursues indirect investment and financial services opportunities in the cannabis sector, as well as other investment opportunities.

SunStream is structured separately from the Company, and the Company has a residual interest in the net assets of SunStream. Accordingly, the Company has classified its interest in SunStream as a joint venture, which is accounted for using the equity-method.

The current investment portfolio of SunStream is comprised of secured debt, hybrid debt and derivative instruments with United States based cannabis businesses. These investments are recorded at fair value each reporting period with any changes in fair value recorded through profit or loss. SunStream actively monitors these investments for changes in credit risk, market risk and other risks specific to each investment.

The following table summarizes the carrying amount of the Company’s interest in the joint venture:


Balance at December 31, 2023	538,331
Capital contributions (refunds)	(168	)
Share of net earnings	999
Share of other comprehensive income (taxes at 23%)	12,379
Distributions	(100,473	)
Balance at September 30, 2024	451,068

SunStream is a related party due to it being classified as a joint venture of the Company. Capital contributions to the joint venture and distributions received from the joint venture are classified as related party transactions.

The following table summarizes the financial information of SunStream:

As at			September 30, 2023
Current assets (including cash and cash equivalents - 2024: 0.8 million, 2023: 0.3 million)	1,958			6,902
Non-current assets	446,036			539,549
Current liabilities	(870	)		(272	)
Net assets (liabilities) (100%)	447,124			546,179
Nine months ended September 30			2023
Revenue	6,768			20,590
Profit from operations	1,581			15,587
Other comprehensive income (loss)	12,379			(882	)
Total comprehensive income (loss)	13,962			14,884

All values are in US Dollars.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Derivative warrants


Balance, beginning of year	4,400		11,002
Change in fair value recognized in profit or loss	(4,348	)	(6,602	)
Balance, end of period	52		4,400

On January 20, 2024, the 50,000 remaining unsecured convertible note warrants expired. The unsecured convertible notes warrants were issued in 2020 as part of the Company’s debt restructuring transactions. A total of 1.45 million derivative warrants were issued in such transactions, of which 1.4 million were exercised during the year ended December 31, 2020.

On September 18, 2024, an additional 9.8 million warrants expired. These warrants were issued in 2021 as part of a series of registered equity offerings.

The following table summarizes outstanding derivative warrants as at September 30, 2024:

	Exercise price (US)	Number of warrants		Weighted average contractual life
2020 Series A Warrants (1)			50,000		0.9

All values are in US Dollars.

The conversion or exercise price, as applicable, is subject to full ratchet antidilution protection upon any subsequent transaction at a price lower than the price then in effect and standard adjustments in the event of any share split, share dividend, share combination, recapitalization or other similar transaction. If the Company issues, sells or enters into any agreement to issue or sell, any variable rate securities, the investors have the additional right to substitute the variable price (or formula) of such securities for the conversion or exercise price, as applicable.
Lease Liabilities


Balance, beginning of year	167,029		169,831
Acquisition (note 3)	2,828		4,336
Additions	2,212		4,362
Lease payments	(29,674	)	(45,017	)
Renewals, remeasurements and dispositions	8,649		25,505
Tenant inducement allowances received	668		91
Accretion expense	5,788		7,921
Balance, end of period	157,500		167,029
Current portion	34,541		30,537
Long-term	122,959		136,492

The following table presents the contractual undiscounted cash flows, excluding periods covered by lessee lease extension options that have been included in the determination of the lease term, related to the Company’s lease liabilities as at September 30, 2024:

	September 30, 2024
Less than one year		42,101
One to three years		69,605
Three to five years		45,761
Thereafter		30,073
Minimum lease payments		187,540

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Share capital and warrants
Authorized

The authorized capital of the Company consists of an unlimited number of voting common shares and preferred shares with no par value.

Issued and outstanding

		September 30, 2024					December 31, 2023
	Note	Number of<br>Shares		Carrying<br>Amount			Number of<br>Shares			Carrying<br>Amount
Balance, beginning of year			262,775,853		2,375,950			235,194,236			2,292,810
Share issuances			96,399		164			931,740			1,900
Share issuance costs			—		(57	)		—			—
Share repurchases			—		—			(546,700	)		(5,344	)
Acquisition	3		1,099,744		3,693			27,605,782			83,953
Shares acquired and cancelled			—		—			(2,261,778	)		(6,879	)
Employee awards exercised			1,428,599		3,483			1,852,573			9,510
Balance, end of period			265,400,595		2,383,233			262,775,853			2,375,950

During the nine months ended September 30, 2024, the Company issued 1.1 million common shares as part of the consideration for the Lightbox Transaction (note 3) and 0.1 million common shares related to the addition of certain franchise stores in Ontario.

Subsequent to September 30, 2024, the Company purchased and cancelled 59,417 common shares at a weighted average price of $2.64 (US$1.90) per common share for a total cost of $0.16 million, and issued an aggregate 159,792 common shares as consideration for the purchase of certain common shares of Nova (note 25).

COMMON SHARE PURCHASE WARRANTS


Balance at December 31, 2023	308,612		2,260
Warrants expired	(190,212	)	(1,593	)
Balance at September 30, 2024	118,400		667

During the nine months ended September 30, 2024, the remaining Inner Spirit Holdings Ltd. warrants that comprised the contingent consideration from the acquisition expired.

The following table summarizes outstanding warrants as at September 30, 2024:

	Warrants outstanding and exercisable
Issued in relation to	Weighted average exercise price		Number of warrants		Weighted average<br>contractual remaining life (years)
Financial services		45.98		54,400		4.8
Acquisition of intellectual property		9.40		64,000		1.3
	$	26.21		118,400		2.9

Share-based compensation

The Company has a number of share-based compensation plans which include simple and performance warrants, stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”). Subsequent to the Company’s initial

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

public offering, the Company established the stock option, RSU and DSU plans to replace the granting of simple warrants and performance warrants.

The components of share-based compensation expense are as follows:

	Three months ended <br>September 30				Nine months ended<br>September 30
	2024		2023		2024		2023
Equity-settled expense
Simple warrants (A)		—		3		—		(332	)
Stock options (B)		—		—		1		(2	)
Restricted share units (1) (C)		4,503		3,602		11,254		9,711
Cash-settled expense
Deferred share units (1)(2) (D)		1,199		1,768		4,173		2,098
		5,702		5,373		15,428		11,475

For the nine months ended September 30, 2024, the Company recognized share-based compensation expense under Nova’s RSU plan of $6 (2023 — $28) and share-based compensation expense under Nova’s DSU plan of $1,110 (2023 — $436).
Cash-settled DSUs are accounted for as a liability and are measured at fair value based on the market value of the Company’s common shares at each period end. Fluctuations in the fair value are recognized during the period in which they occur.

Equity-settled plans

Simple and performance warrants

The Company issued simple warrants and performance warrants to employees, directors and others at the discretion of the Board. Simple and performance warrants granted generally vest annually over a three-year period, simple warrants expire five years after the grant date and performance warrants expire five years after vesting criteria met.

The following table summarizes changes in the simple and performance warrants during the nine months ended September 30, 2024:

			Weighted<br>average<br>exercise price				Weighted<br>average<br>exercise price
Balance at December 31, 2023	66,700		$	39.77	54,400		$	38.62
Forfeited	(7,200	)		34.90	(4,000	)		39.06
Expired	(20,300	)		6.25	(25,600	)		18.75
Balance at September 30, 2024	39,200		$	58.02	24,800		$	59.07

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

The following table summarizes outstanding simple and performance warrants as at September 30, 2024:

						Warrants exercisable
Range of exercise prices		Weighted<br>average<br>exercise<br>price		Weighted<br>average<br>contractual<br>life (years)		Number of<br>warrants		Weighted<br>average<br>exercise<br>price		Weighted<br>average<br>contractual<br>life (years)
Simple warrants
6.25 - 9.38	16,000		9.38		0.67		16,000		9.38		0.67
62.50 - 93.75	17,280		64.81		2.14		17,280		64.81		2.14
125.00 - 312.50	5,920		169.62		2.69		5,920		169.62		2.69
	39,200	$	58.02		1.62		39,200	$	58.02		1.62
Performance warrants
6.25 - 9.38	6,400		6.25	n/a			6,400		6.25		1.41
29.69 - 45.31	6,400		31.25	n/a			6,400		31.25		1.41
62.50 - 93.75	9,334		77.68	n/a			1,334		93.75		1.41
125.00 - 218.75	2,666		187.50	n/a			—		—	n/a
	24,800	$	59.07	n/a			14,134	$	25.83		1.41

All values are in US Dollars.

Stock options

The Company issues stock options to employees and others at the discretion of the Board. Stock options granted generally vest annually over a three-year period and generally expire ten years after the grant date.

The following table summarizes changes in stock options during the nine months ended September 30, 2024:

			Weighted<br>average<br>exercise price
Balance at December 31, 2023	853,705		$	17.92
Forfeited	(94,865	)		16.49
Expired	(164,187	)		38.38
Balance at September 30, 2024	594,653		$	12.50

The following table summarizes outstanding stock options as at September 30, 2024:

				Stock options exercisable
Exercise prices		Weighted<br>average<br>contractual<br>life (years)		Number of<br>options		Weighted<br>average<br>contractual<br>life (years)
11.50	10,000		5.66		10,000		5.66
11.90	8,160		5.74		8,160		5.74
31.50	3,000		3.98		3,000		3.98
11.79 - 38.88	573,493		2.10		573,493		2.10
	594,653		2.22		594,653		2.22

All values are in US Dollars.

Restricted share units

RSUs are granted to employees and the vesting requirements and maximum term are at the discretion of the Board. RSUs are exchangeable for an equal number of common shares.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

The following table summarizes changes in RSUs during the nine months ended September 30, 2024:


Balance at December 31, 2023	8,629,716
Granted	5,537,233
Forfeited	(871,032	)
Exercised	(1,428,599	)
Balance at September 30, 2024	11,867,318

At September 30, 2024, no RSUs were vested or exercisable.

Cash-settled plans

Deferred share units

DSUs are granted to directors and generally vest in equal instalments over one year. DSUs are settled by making a cash payment to the holder equal to the fair value of the Company’s common shares calculated at the date of such payment.

As at September 30, 2024, the Company recognized a liability of $7.0 million relating to the fair value of cash-settled DSUs (December 31, 2023 – $3.9 million). The liability is included as a non-current liability within other liabilities.

The following table summarizes changes in DSUs during the nine months ended September 30, 2024:

	DSUs<br>outstanding
Balance at December 31, 2023		2,398,333
Granted		476,959
Balance at September 30, 2024		2,875,292

At September 30, 2024, 1.97 million DSUs were vested but none were exercisable. At December 31, 2023, 1.5 million DSUs were vested but none were exercisable. DSUs can only be exercised once a director ceases to be on the Board.

NET revenue

Liquor retail revenue is derived from the sale of wines, beers and spirits to customers and proprietary licensing. Cannabis retail revenue is derived from retail cannabis sales to customers, franchise revenue consisting of royalty and franchise fee revenue, and other revenue consisting of millwork, supply and accessories revenue and proprietary licensing. Cannabis operations revenue is derived from contracts with customers and is comprised of sales to provincial boards that sell cannabis through their respective distribution models, sales to licensed producers for further processing, provision of proprietary cannabis processing services, product development, manufacturing and commercialization of cannabis consumer products and sales to medical customers.

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

	Three months ended <br>September 30				Nine months ended<br>September 30
	2024		2023		2024		2023
Liquor retail revenue
Retail		144,152		151,801		400,179		419,402
Other		413		—		1,000		—
Liquor retail revenue		144,565		151,801		401,179		419,402
Cannabis retail revenue
Retail		75,706		69,732		212,798		201,255
Proprietary licensing		4,014		3,974		11,363		8,017
Franchise		1,424		1,814		4,358		5,380
Other		—		19		—		176
Cannabis retail revenue		81,144		75,539		228,519		214,828
Cannabis operations revenue
Provincial boards		17,522		18,976		47,959		52,817
Wholesale		7,923		3,224		23,058		8,153
Analytical testing and other		169		256		827		918
Cannabis operations revenue		25,614		22,456		71,844		61,888
Gross revenue		251,323		249,796		701,542		696,118
Excise taxes		14,431		12,201		38,773		35,562
Net revenue		236,892		237,595		662,769		660,556

Investment income (LOSS)

	Three months ended <br>September 30					Nine months ended<br>September 30
	2024		2023			2024			2023
Interest income from investments at amortized cost		1,123		908			2,737			2,894
Interest and fee income from investments at FVTPL		2,360		250			3,859			1,124
Interest income from cash		2,094		2,287			6,290			7,059
Gains (losses) on marketable securities		—		(29	)		(69	)		(9,218	)
		5,577		3,416			12,817			1,859

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Other income (expenses)

	Three months ended <br>September 30						Nine months ended<br>September 30
	2024			2023			2024			2023
Finance (costs) income
Accretion on lease liabilities		(1,901	)		(1,676	)		(5,788	)		(5,915	)
Change in fair value of investments at FVTPL		—			(52	)		(575	)		(3,677	)
Financial guarantee liability recovery		15			—			34			139
Other finance recoveries (costs)		(48	)		(627	)		227			(968	)
Interest income		194			213			580			648
Total finance costs		(1,740	)		(2,142	)		(5,522	)		(9,773	)
Change in fair value of derivative warrants (note 14)		3,848			(2,840	)		4,348			4,202
Transaction costs		(1,344	)		(226	)		(2,339	)		(2,439	)
Foreign exchange loss		(155	)		(235	)		(567	)		(429	)
		609			(5,443	)		(4,080	)		(8,439	)

Loss per share

	Three months ended <br>September 30						Nine months ended<br>September 30
	2024			2023			2024			2023
Weighted average shares outstanding (000s)
Basic and diluted (1)		265,147			260,435			263,986			258,757
Continuing operations
Net loss attributable to owners of the Company		(19,328	)		(21,784	)		(27,654	)		(85,337	)
Per share - basic and diluted	$	(0.07	)	$	(0.08	)	$	(0.10	)	$	(0.33	)
Discontinued operations
Net loss attributable to owners of the Company		—			—			—			(4,535	)
Per share - basic and diluted		—		$	—		$	—		$	(0.02	)
Net loss attributable to owners of the Company		(19,328	)		(21,784	)		(27,654	)		(89,872	)
Per share - basic and diluted	$	(0.07	)	$	(0.08	)	$	(0.10	)	$	(0.35	)

For the nine months ended September 30, 2024, there were 0.1 million equity classified warrants, 0.1 million derivative warrants, 0.0 million simple warrants, 0.0 million performance warrants, 0.6 million stock options and 11.9 million RSUs that were excluded from the calculation as the impact was anti-dilutive (nine months ended September 30, 2023– 0.3 million equity classified warrants, 9.9 million derivative warrants, 0.1 million simple warrants, 0.1 million performance warrants, 0.95 million stock options and 10.6 million RSUs).
Financial instruments

The financial instruments recognized on the consolidated statement of financial position are comprised of cash and cash equivalents, restricted cash, marketable securities, accounts receivable, investments at amortized cost, investments at FVTPL, accounts payable and accrued liabilities and derivative warrants.

Fair value

The carrying value of cash and cash equivalents, restricted cash, accounts receivable and accounts payable and accrued liabilities approximate their fair value due to the short-term nature of the instruments. The carrying value of

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

investments at amortized cost approximate their fair value as the fixed interest rates approximate market rates for comparable transactions.

Fair value measurements of marketable securities, investments at FVTPL and derivative warrants are as follows:

			Fair value measurements using
September 30, 2024	Carrying<br>amount		Level 1		Level 2		Level 3
Recurring measurements:
Financial assets
Marketable securities		483		483		—		—
Financial liabilities
Derivative warrants (1)		52		—		—		52
			Fair value measurements using
December 31, 2023	Carrying<br>amount		Level 1		Level 2		Level 3
Recurring measurements:
Financial assets
Marketable securities		225		225		—		—
Investments at FVTPL		8,655		—		—		8,655
Financial liabilities
Derivative warrants (1)		4,400		—		—		4,400

The carrying amount is an estimate of the fair value of the derivative warrants and is presented as a current liability. The Company has no cash obligation with respect to the derivative warrants, rather it will deliver common shares if and when warrants are exercised.

There were no transfers between Levels 1, 2 and 3 inputs during the period.

RELATED PARTIES

The Company entered into the following related party transactions during the periods noted, in addition to those disclosed in note 13 relating to the Company’s joint venture.

A former member of key management personnel (retired from SNDL on September 10, 2024) jointly controls a company that owns property leased to SNDL for one of its retail liquor stores. The lease term is from November 1, 2017 to October 31, 2027 and includes extension terms from November 1, 2027 to October 31, 2032 and November 1, 2032 to October 31, 2037. Monthly rent for the location includes base rent, common area costs and sign rent. The rent amounts are subject to increases in accordance with the executed lease agreement. For the period January 1, 2024 to September 10, 2024, the Company paid $125.2 thousand in total rent with respect to this lease (nine months ended September 30, 2023 — $125.2 thousand).

Commitments and contingencies

The following table summarizes contractual commitments at September 30, 2024:


Accounts payable and accrued liabilities	54,038	—	—	—	54,038
Financial guarantee liability	—	234	—	—	234
Balance, end of year	54,038	234	—	—	54,272

SNDL Inc.

Notes to the Condensed Consolidated Interim Financial Statements

For the three and nine months ended September 30, 2024

(Unaudited, expressed in thousands of Canadian dollars, except where otherwise noted)

Commitments

The Company has entered into certain supply agreements to provide dried cannabis and cannabis products to third parties. The contracts require the provision of various amounts of dried cannabis on or before certain dates. Should the Company not deliver the product in the agreed timeframe, financial penalties apply which may be paid either in product in-kind or cash. The Company has settled the existing $2.5 million financial penalty previously accrued and amended its pre-existing data arrangement with the customer.

Contingencies

From time to time, the Company and its subsidiaries are or may become involved in various legal claims and actions which arise in the ordinary course of their business and operations. While the outcome of any such claim or action is inherently uncertain, after consulting with counsel, the Company believes that the losses that may result, if any, will not be material to the financial statements.

Subsequent Events

Acquisition of remaining minority interest IN nova cannabis

On October 21, 2024, the Company announced that it had completed the acquisition of all of the issued and outstanding common shares of Nova (“Nova Shares”) not already owned by the Company, representing approximately 35% of Nova Shares, by way of a statutory plan of arrangement under the Business Corporations Act (Alberta) for aggregate consideration of approximately $40 million (the “Nova Transaction”).

Pursuant to the Nova Transaction, each holder of Nova Shares (other than SNDL and its affiliates that hold Nova Shares) (“Nova Shareholders”) was entitled to receive $1.75 in cash for each Nova Share held (the “Cash Consideration”), provided that Nova Shareholders could elect to receive, in lieu of the Cash Consideration, 0.58 of a common share of SNDL (“SNDL Shares”) for each Nova Share held (the “Share Consideration” and, collectively with the Cash Consideration, the “Consideration”), subject to proration and a maximum of 50% of the aggregate Consideration being payable in SNDL Shares. Upon the closing of the Nova Transaction, an aggregate of 159,792 SNDL Shares were issued as Share Consideration to Nova Shareholders and an aggregate of $37.3 million was paid as Cash Consideration to validly electing Nova Shareholders.

EX-99.2

EXHIBIT 99.2

SNDL Inc.

Management’s Discussion and Analysis

For the three and nine months ended September 30, 2024

Management’s Discussion and Analysis

This Management’s Discussion and Analysis (“MD&A”) of the financial condition and performance of SNDL Inc. (“SNDL” or the “Company”) for the three and nine months ended September 30, 2024 is dated November 4, 2024. This MD&A should be read in conjunction with the Company’s condensed consolidated interim financial statements and the notes thereto for the three and nine months ended September 30, 2024 (the “Interim Financial Statements”) and the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 (the “Audited Financial Statements”) and the risks identified in the Company’s Annual Information Form for the year ended December 31, 2023 (the “AIF”) and elsewhere in this MD&A. This MD&A has been prepared in accordance with National Instrument 51-102 - Continuous Disclosure Obligations and is presented in thousands of Canadian dollars, except where otherwise indicated.

MD&A – Table of Contents

COMPANY OVERVIEW	1
RECENT DEVELOPMENTS	2
Other developments	2
FINANCIAL HIGHLIGHTS	3
CONSOLIDATED RESULTS	3
OPERATING SEGMENTS	7
LIQUOR RETAIL SEGMENT RESULTS	8
CANNABIS RETAIL SEGMENT RESULTS	9
CANNABIS OPERATIONS SEGMENT RESULTS	10
INVESTMENTS SEGMENT RESULTS	11
SELECTED QUARTERLY INFORMATION	11
LIQUIDITY AND CAPITAL RESOURCES	12
CONTRACTUAL COMMITMENTS AND CONTINGENCIES	15
NON-IFRS FINANCIAL MEASURES AND OTHER MEASURES	16
RELATED PARTIES	17
OFF BALANCE SHEET ARRANGEMENTS	17
CRITICAL ACCOUNTING POLICIES AND ESTIMATES	17
NEW ACCOUNTING PRONOUNCEMENTS	18
RISK FACTORS	18
DISCLOSURE CONTROLS AND PROCEDURES	18
INTERNAL CONTROL OVER FINANCIAL REPORTING	18
REMEDIATION	19
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING	19
ABBREVIATIONS	19
FORWARD-LOOKING INFORMATION	19
ADDITIONAL INFORMATION	21

COMPANY OVERVIEW

SNDL operates under four reportable segments:

Liquor retail sales of wines, beers and spirits;
Cannabis retail sales of cannabis products and accessories through corporate-owned and franchised cannabis retail operations;
Cannabis operations as a licensed producer that grows cannabis using indoor facilities and manufactures cannabis products, providing proprietary cannabis processing services; and
Investments targeting the cannabis industry.

The principal activities of the Company are the retailing of wines, beers and spirits under the Wine and Beyond, Ace Liquor and Liquor Depot retail banners; the operation and support of corporate-owned and franchise retail cannabis stores in certain Canadian jurisdictions where the private sale of recreational cannabis is permitted, under the Value Buds, Spiritleaf, Superette and Firesale retail banners; the manufacturing of cannabis products providing proprietary cannabis processing services, the production, distribution and sale of cannabis domestically and for export pursuant to the Cannabis Act (Canada) (the “Cannabis Act”) through a cannabis brand portfolio that includes Top Leaf, Contraband, Citizen Stash, Sundial Cannabis, Vacay, Spiritleaf Selects, Palmetto, Value Buds, Versus, Bonjak, Namaste, Re-up and Grasslands; and, the provision of financial services through the deployment of capital to direct and indirect investments and partnerships throughout the cannabis industry.

The Company produces and markets cannabis products for the Canadian adult-use market and for the international medicinal market. SNDL’s operations cultivate cannabis using approximately 380,000 square feet of total space in Atholville, New Brunswick. SNDL’s extraction and manufacturing operations include approximately 84,506 square feet of total space in British Columbia and approximately 25,500 square feet of total space in Ontario. The Company has a distribution network that covers 98% of the national adult-use cannabis market.

SNDL and its subsidiaries operate solely in Canada. Through its joint venture, SunStream Bancorp Inc. (“SunStream”), the Company provides growth capital that pursues indirect investment and financial services opportunities in the cannabis sector, as well as other investment opportunities. The current investment portfolio of SunStream is comprised of secured debt, hybrid debt and derivative instruments issued by United States based cannabis businesses. The Company also makes strategic portfolio investments in debt and equity securities.

As at September 30, 2024, the Company also owned approximately 65% of Nova Cannabis Inc. (“Nova”), whose principal activities are related to the retail sale of cannabis. On October 21, 2024, the Company closed its acquisition of all remaining common shares of Nova. Refer to “Recent Developments – Acquisition of Remaining Minority Interest in Nova Cannabis” below for further details.

SNDL was incorporated under the Business Corporations Act (Alberta) on August 19, 2006. The Company’s common shares are listed under the symbol “SNDL” on the Nasdaq Capital Market.

SNDL is headquartered in Calgary, Alberta, with operations in Edmonton, Alberta, Kelowna, British Columbia, Bolton, Ontario, Toronto, Ontario and Atholville, New Brunswick, and corporate-owned and franchised retail liquor and cannabis stores in five provinces across Canada.

SNDL’s overall strategy is to build sustainable, long-term shareholder value by improving liquidity and cost of capital while optimizing the capacity and capabilities of its production facilities in the creation of a consumer-centric brand and product portfolio. SNDL’s retail operations will continue to build a Canadian retail liquor brand and a network of retail cannabis stores across Canadian jurisdictions where the private distribution of cannabis is legal. SNDL’s investment operations seek to deploy capital through direct and indirect investments and partnerships throughout the cannabis industry.

RECENT DEVELOPMENTS

Acquisition of Remaining Minority Interest IN Nova Cannabis

Indiva

On August 29, 2024, the Company announced that, in the context of proceedings pursuant to Indiva Limited’s (“Indiva”) filing under the Companies' Creditors Arrangement Act (Canada) (the “CCAA”) and the sales and investment solicitation process, the Company’s stalking horse bid had been chosen as the successful bid in the acquisition of the Indiva business and assets (the “Indiva Transaction”), subject to approval by the court overseeing the CCAA proceedings.

The acquisition would include Indiva's 40,000 square foot production facility on Hargrieve Road in south London, Ontario, and a portfolio of owned and licensed brands including Pearls by Grön, No Future, Wana, and Bhang Chocolate.

On November 4, 2024, the Company announced that it had successfully closed the Indiva Transaction for consideration of approximately $22.7 million.

OTHER DEVELOPMENTS

Overheads restructuring project and operational adjustments

On July 16, 2024, the Company announced a restructuring project aimed at reducing corporate overheads and improving the efficiency of its organizational structure to position the Company for future growth (the “Restructuring Project”). The Restructuring Project is expected to deliver over $20 million in annualized cost savings driven primarily by the optimization of corporate overhead spending, including the reduction in 106 full-time employees. The Restructuring Project will require a one-time investment of $11 million over the next 18 months.

As part of these operational adjustments, the Company is consolidating its cannabis segments into a single unit under the leadership of Tyler Robson. This consolidation is intended to enhance efficiency, improve alignment and improve process speed within the Company’s vertical model. The Company expects to achieve most of the anticipated annualized savings by mid-2025, while starting to capture some of the opportunities as early as Q3 2024.

share repurchase program

On November 13, 2023, the Company announced that the board of directors of the Company (the “Board”) approved a renewal of the share repurchase program upon its expiry on November 20, 2023. The share repurchase program authorizes the Company to repurchase up to $100 million of its outstanding common shares through open market purchases at prevailing market prices. SNDL may purchase up to a maximum of approximately 13.1 million common shares under the share repurchase program, representing approximately 5% of the issued and outstanding common shares as at the date of announcement, and will expire on November 20, 2024. The share repurchase program does not require the Company to purchase any minimum number of common shares and repurchases may be suspended or terminated at any time at the Company’s discretion. The actual number of common shares which may be purchased pursuant to the share repurchase program and the timing of any purchases will be determined by SNDL’s management

and the Board. All common shares purchased pursuant to the share repurchase program will be returned to treasury for cancellation.

The Company did not repurchase any common shares for cancellation during the period. Subsequent to September 30, 2024, the Company purchased and cancelled 59,417 common shares at a weighted average price of $2.64 (US$1.90) per common share for a total cost of $0.16 million. Refer to “Liquidity and Capital Resources – Equity” below for further details regarding common shares purchased and cancelled.

FINANCIAL HIGHLIGHTS

The following table summarizes selected financial information of the Company for the periods noted.

($000s, except per share amounts)
Financial Results
Net revenue	236,892		237,595		(703	)	0	%
Cost of sales	173,924		188,990		(15,066	)	-8	%
Gross profit	62,968		48,605		14,363		30	%
Gross profit % (1)	27	%	20	%			6	%
Operating loss	(18,511	)	(16,384	)	(2,127	)	-13	%
Adjusted operating income (loss) (2)	(16,593	)	(15,549	)	(1,044	)	-7	%
Net loss attributable to owners of the Company	(19,328	)	(21,784	)	2,456		11	%
Per share, basic and diluted	(0.07	)	(0.08	)	0.01		13	%
Change in cash and cash equivalents	80,042		16,528		63,514		384	%
Free cash flow (1)	9,236		16,333		(7,097	)	-43	%
Statement of Financial Position
Cash and cash equivalents	262,976		201,983		60,993		30	%
Inventory	127,863		142,550		(14,687	)	-10	%
Property, plant and equipment	128,310		176,144		(47,834	)	-27	%
Total assets	1,443,077		1,563,291		(120,214	)	-8	%

Gross profit % is a supplementary financial measure calculated by dividing gross profit by net revenue for the periods noted. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.
Adjusted operating income (loss) and free cash flow are specified financial measures that do not have standardized meanings prescribed by International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and therefore may not be comparable to similar measures used by other companies. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

CONSOLIDATED RESULTS

General and administrative

	Three months ended <br>September 30				Nine months ended<br>September 30
($000s)	2024		2023		2024		2023
Salaries and wages		31,625		27,061		91,239		85,629
Consulting fees		283		1,741		2,818		3,487
Office and general		13,603		13,494		36,765		40,001
Professional fees		1,792		1,884		5,334		7,575
Merchant processing fees		1,740		1,648		4,889		4,528
Director fees		202		135		564		400
Other		735		2,272		1,102		7,915
		49,980		48,235		142,711		149,535

General and administrative expenses for the three months ended September 30, 2024 were $50.0 million compared to $48.2 million for the three months ended September 30, 2023. The increase of $1.8 million was mainly due to an increase

in salaries and wages, partially offset by decreases in consulting fees and other expenses. The decrease in other expenses was mainly due to decreases in expected credit losses.

General and administrative expenses for the nine months ended September 30, 2024 were $142.7 million compared to $149.5 million for the nine months ended September 30, 2023. The decrease of $6.8 million was mainly due to decreases in office and general, professional fees and other expenses, partially offset by an increase in salaries and wages. The decrease in other expenses was mainly due to decreases in expected credit losses.

Share-based compensation

	Three months ended <br>September 30				Nine months ended<br>September 30
($000s)	2024		2023		2024		2023
Equity-settled expense
Simple warrants		—		3		—		(332	)
Stock options		—		—		1		(2	)
Restricted share units		4,503		3,602		11,254		9,711
Cash-settled expense
Deferred share units		1,199		1,768		4,173		2,098
		5,702		5,373		15,428		11,475

Share-based compensation expense includes the expense related to the Company’s issuance of simple and performance warrants, stock options, restricted share units (“RSUs”) and deferred share units (“DSUs”) to employees, directors, and others at the discretion of the Board. DSUs are accounted for as a liability instrument and measured at fair value based on the market value of the Company’s common shares at each period end. Share-based compensation also includes the expense related to Nova’s issuance of RSUs and DSUs during the applicable period (which pre-dated the completion of the Nova Transaction).

Share-based compensation expense for the three months ended September 30, 2024 was $5.7 million compared to $5.4 million for the three months ended September 30, 2023. The increase of $0.3 million was due to an increase in RSU expense, partially offset by a decrease in DSU expense. The increase in RSU expense was due to the issuance of new RSUs, partially offset by the vesting of RSUs granted in prior years. The decrease in DSU expense was caused by the change in fair value. Both the current and comparative periods experienced increases in fair value resulting from an increase in the Company’s share price, however, the current period increase was less than the comparative period.

Share-based compensation expense for the nine months ended September 30, 2024 was $15.4 million compared to $11.5 million for the nine months ended September 30, 2023. The increase of $3.9 million was due to an increase in DSU expense and RSU expense. The increase in DSU expense was caused by the change in fair value. The current period had an increase in fair value resulting from an increase in the Company’s share price compared to the prior period which had a minimal increase in fair value. The increase in RSU expense was due to the issuance of new RSUs, partially offset by the vesting of RSUs granted in prior years.

Finance costs

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Cash finance expense
Other finance costs		—			2			93			47
		—			2			93			47
Non-cash finance expense
Change in fair value of investments at fair value through profit or loss		—			52			575			3,677
Accretion on lease liabilities		1,901			1,676			5,788			5,915
Financial guarantee liability recovery		(15	)		—			(34	)		(139	)
Other		48			625			(320	)		921
		1,934			2,353			6,009			10,374
Interest income		(194	)		(213	)		(580	)		(648	)
		1,740			2,142			5,522			9,773

Finance costs include accretion expense related to lease liabilities, finance income related to net investment in subleases, change in fair value of investments at fair value through profit or loss (“FVTPL”) and certain other expenses.

Finance costs for the three months ended September 30, 2024 were $1.7 million compared to $2.1 million for the three months ended September 30, 2023. The decrease of $0.4 million was due to a decrease in other expenses caused by lease remeasurements in the comparative period, partially offset by an increase in accretion on lease liabilities.

Finance costs for the nine months ended September 30, 2024 were $5.5 million compared to $9.8 million for the nine months ended September 30, 2023. The decrease of $4.3 million was due to the comparative period change in fair value of investments at FVTPL, caused by a decrease in the value of the Superette promissory note, and a decrease in other expenses caused by lease remeasurements in the comparative period.

Change in estimate of fair value of derivative warrants

	Three months ended <br>September 30					Nine months ended<br>September 30
($000s)	2024			2023		2024			2023
Change in estimate of fair value of derivative warrants		(3,848	)		2,840		(4,348	)		(4,202	)

Change in estimate of fair value of derivative warrants for the three months ended September 30, 2024 was a recovery of $3.8 million compared to an expense of $2.8 million for the three months ended September 30, 2023. The recovery in the current period relates to the expiration of the 9.8 million new warrants that were issued in 2021 and a minimal decrease in fair value of the remaining warrants. The expense in the prior period relates to an increase in fair value, mainly due to an increase in the Company’s share price from US$1.37 on June 30, 2023, to US$1.90 on September 30, 2023.

Change in estimate of fair value of derivative warrants for the nine months ended September 30, 2024 was a recovery of $4.3 million compared to a recovery of $4.2 million for the nine months ended September 30, 2023. The recovery in the current period relates to the expiration of the 9.8 million new warrants that were issued in 2021 and a minimal decrease in fair value of the remaining warrants. The recovery in the prior period relates to a decrease in fair value, mainly due to a decrease in the Company’s share price from US$2.09 on December 31, 2022, to US$1.90 on September 30, 2023.

Operating income (loss)

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Operating income (loss)		(18,511	)		(16,384	)		(27,722	)		(78,154	)

Operating loss for the three months ended September 30, 2024 was $18.5 million compared to $16.4 million for the three months ended September 30, 2023. The increase in operating loss of $2.1 million was due to a decrease in share of profit of equity-accounted investees ($20.0 million), an increase in general and administrative expenses ($1.7 million) and an

increase in restructuring costs ($1.2 million), partially offset by increases in gross profit ($14.4 million) and investment income ($2.2 million), decreased depreciation and amortization expense ($2.2 million) and asset impairment ($2.0 million).

Operating loss for the nine months ended September 30, 2024 was $27.7 million compared to $78.2 million for the nine months ended September 30, 2023. The decrease in operating loss of $50.5 million was primarily due to increases in gross profit ($38.4 million) and investment income ($11.0 million), decreased general and administrative expenses ($6.8 million), depreciation and amortization ($4.4 million) and restructuring costs ($4.2 million), partially offset by decreased share of profit of equity-accounted investees ($14.2 million) and increased share-based compensation expense ($4.0 million).

Net loss from continuing operations

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Net loss from continuing operations		(19,336	)		(21,827	)		(28,955	)		(86,593	)

Net loss from continuing operations for the three months ended September 30, 2024 was $19.3 million compared to $21.8 million for the three months ended September 30, 2023. The decrease in net loss from continuing operations of $2.5 million was largely due to increases in gross profit ($14.4 million) and investment income ($2.2 million), depreciation and amortization expense ($2.2 million) and asset impairment ($2.0 million), partially offset by decreased share of profit of equity-accounted investees ($20.0 million), increased general and administrative expenses ($1.7 million) and an increase in restructuring costs ($1.2 million).

Net loss from continuing operations for the nine months ended September 30, 2024 was $29.0 million compared to $86.6 million for the nine months ended September 30, 2023. The decrease in net loss from continuing operations of $57.6 million was largely due to increases in gross profit ($38.4 million) and investment income ($11.0 million), decreased general and administrative expenses ($6.8 million), depreciation and amortization ($4.4 million), restructuring costs ($4.2 million) and finance costs ($4.3 million), partially offset by decreased share of profit of equity-accounted investees ($14.2 million) and increased share-based compensation expense ($4.0 million).

OPERATING SEGMENTS

The Company’s reportable segments are organized by business line and are comprised of four reportable segments: liquor retail, cannabis retail, cannabis operations, and investments.

Liquor retail includes the sale of wines, beers and spirits through wholly owned liquor stores. Cannabis retail includes the private sale of recreational cannabis through wholly owned and franchise retail cannabis stores. Cannabis operations include the cultivation, distribution and sale of cannabis for the adult-use and medical markets domestically and for export, and providing proprietary cannabis processing services, in addition to product development, manufacturing, and commercialization of cannabis consumer packaged goods. Investments include the deployment of capital to investment opportunities. Certain overhead expenses not directly attributable to any operating segment are reported as “Corporate”.

($000s)
As at September 30, 2024
Total assets	319,974	211,038	196,622		695,228		20,215		1,443,077
Nine months ended September 30, 2024
Net revenue (2)	401,179	228,519	72,378		—		(39,307	)	662,769
Gross profit	101,470	58,337	11,725		—		—		171,532
Operating income (loss)	22,456	7,255	(1,728	)	13,711		(69,416	)	(27,722	)
Adjusted operating income (loss) (3)	22,456	7,255	(1,348	)	13,711		(67,746	)	(25,672	)
Three months ended September 30, 2024
Net revenue (2)	144,565	81,144	25,007		—		(13,824	)	236,892
Gross profit	36,951	20,710	5,307		—		—		62,968
Operating income (loss)	11,795	4,395	(703	)	(7,824	)	(26,174	)	(18,511	)
Adjusted operating income (loss) (3)	11,795	4,395	(578	)	(7,824	)	(24,381	)	(16,593	)

Total assets include cash and cash equivalents.
The Company has eliminated $39.3 million for the nine months ended September 30, 2024 and $13.8 million for the three months ended September 30, 2024 of cannabis operations revenue and equal cost of sales associated with sales to provincial boards that are expected to be subsequently repurchased by the Company’s licensed retail subsidiaries for resale, at which point the full retail sales revenue will be recognized. The elimination was recorded in the Corporate segment.
Adjusted operating income (loss) is a specified financial measure that does not have standardized meaning prescribed by IFRS Accounting Standards and therefore may not be comparable to similar measures used by other companies. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

($000s)
As at December 31, 2023
Total assets	320,239	206,988	208,295		717,751	19,891		1,473,164
Nine months ended September 30, 2023
Net revenue (4)	419,402	214,828	61,027		—	(34,701	)	660,556
Gross profit	98,890	53,645	(19,456	)	—	—		133,079
Operating income (loss)	14,535	5,689	(46,995	)	16,963	(68,346	)	(78,154	)
Adjusted operating income (loss) (5)	14,535	5,689	(45,013	)	16,963	(63,108	)	(70,934	)
Three months ended September 30, 2023
Net revenue (4)	151,801	75,539	20,954		—	(10,699	)	237,595
Gross profit	37,263	20,046	(8,704	)	—	—		48,605
Operating income (loss)	8,278	3,432	(13,957	)	9,886	(24,023	)	(16,384	)
Adjusted operating income (loss) (5)	8,278	3,432	(14,153	)	9,886	(22,992	)	(15,549	)

Cannabis retail includes the operations of Superette Inc. (“Superette”) for the period February 8, 2023 to September 30, 2023.
Cannabis operations include the operations of The Valens Company Inc. (“Valens”) for the period January 18, 2023 to September 30, 2023.
Total assets include cash and cash equivalents.
The Company has eliminated $34.7 million for the nine months ended September 30, 2023 and $10.7 million for the three months ended September 30, 2023 of cannabis operations revenue and equal cost of sales associated with sales to provincial boards that are expected to be subsequently repurchased by the Company’s licensed retail subsidiaries for resale, at which point the full retail sales revenue will be recognized. The elimination was recorded in the Corporate segment.
Adjusted operating income (loss) is a specified financial measure that does not have standardized meaning prescribed by IFRS Accounting Standards and therefore may not be comparable to similar measures used by other companies. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

LIQUOR RETAIL SEGMENT RESULTS

Operating income (loss)

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Net revenue		144,565			151,801			401,179			419,402
Cost of sales		107,614			114,538			299,709			320,512
Gross profit		36,951			37,263			101,470			98,890
Gross profit % (1)		25.6	%		24.5	%		25.3	%		23.6	%
General and administrative		17,771			17,153			53,757			51,510
Sales and marketing		522			777			1,812			3,269
Depreciation and amortization		8,072			9,436			25,440			27,943
Asset impairment		(1,242	)		1,640			(2,075	)		1,640
Loss on disposition of assets		33			(21	)		80			(7	)
Operating income (loss)		11,795			8,278			22,456			14,535

Gross profit % is a supplementary financial measure calculated by dividing gross profit by net revenue for the periods noted. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

Net revenue for the three months ended September 30, 2024 was $144.6 million compared to $151.8 million for the three months ended September 30, 2023. The decrease of $7.2 million was due to a reduction in overall customer traffic and changing consumer preferences.

Net revenue for the nine months ended September 30, 2024 was $401.2 million compared to $419.4 million for the nine months ended September 30, 2023. The decrease of $18.2 million was due to a reduction in overall customer traffic and changing consumer preferences.

Cost of sales for liquor retail operations is comprised of the cost of wine, beer and spirits. Cost of sales for the three months ended September 30, 2024 was $107.6 million compared to $114.5 million for the three months ended September 30, 2023. The decrease of $6.9 million was due to an overall decrease in sales and shifting consumer purchases from lower to higher margin item categories.

Cost of sales for the nine months ended September 30, 2024 was $299.7 million compared to $320.5 million for the nine months ended September 30, 2023. The decrease of $20.8 million was due to decreases in sales, further optimization of the Company’s preferred label offerings and procurement productivity.

Gross profit for the three months ended September 30, 2024 was $37.0 million (25.6%) compared to $37.3 million (24.5%) for the three months ended September 30, 2023. The decrease of $0.3 million was partly due to the reduction in net revenue and cost of sales as noted above, partially offset by the introduction of new proprietary licensing arrangements.

Gross profit for the nine months ended September 30, 2024 was $101.5 million (25.3%) compared to $98.9 million (23.6%) for the nine months ended September 30, 2023. The increase of $2.6 million was due to the introduction of new proprietary licensing arrangements and the factors contributing to the reduction to cost of sales noted above, partially offset by a reduction in net revenue.

At November 4, 2024, the Ace Liquor store count was 134, the Liquor Depot store count was 19 and the Wine and Beyond store count was 13.

CANNABIS RETAIL SEGMENT RESULTS

Operating income (loss)

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023 (1)
Net revenue		81,144			75,539			228,519			214,828
Cost of sales		60,434			55,493			170,182			161,183
Gross profit		20,710			20,046			58,337			53,645
Gross profit % (2)		25.5	%		26.5	%		25.5	%		25.0	%
Interest and fee revenue		—			17			—			75
General and administrative		11,228			11,874			35,257			35,005
Sales and marketing		180			258			878			984
Depreciation and amortization		3,921			4,340			11,478			11,391
Share-based compensation		—			2			1			6
Asset impairment		984			108			3,014			566
Loss on disposition of assets		2			49			454			79
Operating income (loss)		4,395			3,432			7,255			5,689

Cannabis retail results include the operations of Superette from February 8, 2023 to September 30, 2023.
Gross profit % is a supplementary financial measure calculated by dividing gross profit by net revenue for the periods noted. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

Net revenue for the three months ended September 30, 2024 was $81.1 million compared to $75.5 million for the three months ended September 30, 2023. The increase of $5.6 million is mainly attributable to an increase in corporate store sales and an increase in the number of stores. Corporate store sales increased partly as a result of newly opened and acquired stores.

Net revenue for the nine months ended September 30, 2024 was $228.5 million compared to $214.8 million for the nine months ended September 30, 2023. The increase of $13.7 million is mainly attributable to an increase in corporate store sales, an increase in the number of stores and proprietary licensing arrangements. Corporate store sales increased partly as a result of newly opened and acquired stores and the increase in proprietary licensing arrangements was due to a new variable services agreement.

Cost of sales for the three months ended September 30, 2024 was $60.4 million compared to $55.5 million for the three months ended September 30, 2023. The increase of $4.9 million was due to an increase in corporate store sales and an increase in the number of stores.

Cost of sales for the nine months ended September 30, 2024 was $170.2 million compared to $161.2 million for the nine months ended September 30, 2023. The increase of $9.0 million was due to an increase in corporate store sales and an increase in the number of stores.

Gross profit for the three months ended September 30, 2024 was $20.7 million (25.5%) compared to $20.0 million (26.5%) for the three months ended September 30, 2023. The increase of $0.7 million was due to increased corporate store sales and shifting consumer purchases from lower to higher margin item categories.

Gross profit for the nine months ended September 30, 2024 was $58.3 million (25.5%) compared to $53.6 million (25.0%) for the nine months ended September 30, 2023. The increase of $4.7 million was due to proprietary licensing arrangements which do not have an associated cost of sales, increased corporate store sales and shifting consumer purchases from lower to higher margin item categories.

At November 4, 2024, the Spiritleaf store count was 81 (20 corporate stores and 61 franchise stores), the Superette store count was 4 corporate stores and the Value Buds store count was 102 corporate stores.

CANNABIS OPERATIONS SEGMENT RESULTS

Operating income (loss)

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023 (1)
Net revenue		25,007			20,954			72,378			61,027
Cost of sales		19,700			29,658			60,653			80,483
Gross profit		5,307			(8,704	)		11,725			(19,456	)
Gross profit % (2)		21.2	%		-41.5	%		16.2	%		-31.9	%
Gain (loss) on marketable securities		—			(114	)		—			(611	)
General and administrative		3,513			2,913			4,980			16,293
Sales and marketing		1,661			1,517			4,692			4,364
Research and development		76			57			222			228
Depreciation and amortization		635			954			1,894			2,750
Restructuring costs		125			(323	)		380			1,048
Asset impairment		—			35			1,378			2,042
(Gain) loss on disposition of assets		—			(14	)		(93	)		203
Operating income (loss)		(703	)		(13,957	)		(1,728	)		(46,995	)

Cannabis operations include the operations of Valens for the period January 18, 2023 to September 30, 2023.
Gross profit % is a supplementary financial measure calculated by dividing gross profit by net revenue for the periods noted. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information.

The Company’s revenue comprises bulk and packaged sales under the Cannabis Act pursuant to its supply agreements with Canadian provincial boards, other licensed producers and international exports, proprietary extraction services, white label product formulation and manufacturing, the sale of bulk winterized oil and distillate, toll processing and co-packaging services and analytical testing.

Net revenue for the three months ended September 30, 2024 was $25.0 million compared to $21.0 million for the three months ended September 30, 2023. The increase of $4.0 million was mainly due to increased provincial board, wholesale and international sales.

Net revenue for the nine months ended September 30, 2024 was $72.4 million compared to $61.0 million for the nine months ended September 30, 2023. The increase of $11.4 million was mainly due to increased wholesale and international sales.

Cost of sales for the three months ended September 30, 2024 were $19.7 million compared to $29.7 million for the three months ended September 30, 2023. The decrease of $10.0 million was mainly due to a decrease in inventory impairment and obsolescence of $8.7 million and a higher proportion of wholesale and international sales which have lower per unit costs.

Cost of sales for the nine months ended September 30, 2024 were $60.7 million compared to $80.5 million for the nine months ended September 30, 2023. The decrease of $19.8 million was mainly due to a decrease in inventory impairment and obsolescence of $19.2 million.

Gross profit for the three months ended September 30, 2024 was $5.3 million (21.2%) compared to negative $8.7 million (-41.5%) for the three months ended September 30, 2023. The increase of $14.0 million was due to the increase in net revenue, decrease in inventory impairment and obsolescence and increased production efficiencies.

Gross profit for the nine months ended September 30, 2024 was $11.7 million (16.2%) compared to negative $19.5 million (-31.9%) for the nine months ended September 30, 2023. The increase of $31.2 million was due to the increase in net revenue, decrease in inventory impairment and obsolescence and increased production efficiencies.

The decrease in general and administrative expenses for the nine months ended September 30, 2024 was due to the reversal of expected credit losses in the current period and a decrease in costs from the closure of the Olds facility.

INVESTMENTS SEGMENT RESULTS

Operating income (loss)

	Three months ended <br>September 30					Nine months ended<br>September 30
($000s)	2024			2023		2024		2023
Investment income		5,577			3,411		12,817		2,116
Share of profit (loss) of equity-accounted investees		(13,401	)		6,581		999		15,161
General and administrative		—			106		105		314
Operating income (loss)		(7,824	)		9,886		13,711		16,963

Investment income for the three months ended September 30, 2024 was $5.6 million compared to income of $3.4 million for the three months ended September 30, 2023. The increase of $2.2 million was mainly due to the reimbursement of principal and interest owed on a convertible debenture that has been extinguished.

Investment income for the nine months ended September 30, 2024 was $12.8 million compared to $2.1 million for the nine months ended September 30, 2023. The increase of $10.7 million was mainly due to a decrease in loss on marketable securities and the reimbursement of principal and interest owed on a convertible debenture that has been extinguished. The Company disposed of the majority of its marketable securities in the prior year resulting in a minor loss in the current period.

Share of profit (loss) of equity-accounted investees is comprised of the Company’s share of the net profit (or loss) generated from its investments in SunStream. The current investment portfolio of SunStream is comprised of secured debt, hybrid debt and derivative instruments issued by United States based cannabis businesses.

Share of loss of equity-accounted investees for the three months ended September 30, 2024 was $13.4 million compared to profit of $6.6 million for the three months ended September 30, 2023. The decrease of $20.0 million was due to accounting fair value adjustments to the investments.

Share of profit of equity-accounted investees for the nine months ended September 30, 2024 was $1.0 million compared to profit of $15.2 million for the nine months ended September 30, 2023. The decrease of $14.2 million was due to accounting fair value adjustments to the investments.

SELECTED QUARTERLY INFORMATION

The following table summarizes selected consolidated operating and financial information of the Company for the preceding eight quarters.

	2024									2023												2022
($000s, except per share amounts)	Q3			Q2			Q1			Q4			Q3			Q2			Q1			Q4
Net revenue		236,892			228,127			197,750			248,450			237,595			231,916			191,045			240,405
Gross profit		62,968			58,164			50,400			57,336			48,605			51,933			32,541			43,568
Investment (loss) income		5,577			3,204			4,036			3,400			3,416			(599	)		(958	)		(879	)
Net loss from continuing operations attributable to owners of the Company		(19,328	)		(5,772	)		(2,554	)		(82,788	)		(21,784	)		(29,350	)		(34,203	)		(125,801	)
Per share, basic and diluted		(0.07	)		(0.02	)		(0.01	)		(0.32	)		(0.08	)		(0.11	)		(0.13	)		(0.53	)
Net loss attributable to owners of the Company		(19,328	)		(5,772	)		(2,554	)		(82,788	)		(21,784	)		(32,520	)		(35,568	)		(125,801	)
Per share, basic and diluted		(0.07	)		(0.02	)		(0.01	)		(0.32	)		(0.08	)		(0.12	)		(0.14	)		(0.53	)

During the eight most recent quarters the following items have had a significant impact on the Company’s financial results and results of operations:

Implementing several streamlining and efficiency initiatives which included workforce optimizations;
Entering into and acquiring several cannabis-related investments;
Disposing of marketable securities;
Price discounts and provisions for product returns;
Impairment of property, plant and equipment;
Provisions for inventory obsolescence and impairment;
Investments in and distributions from SunStream;
Acquisitions of Zenabis Ltd., Valens and Superette;
Impairment of goodwill and intangible assets from the acquisition of Alcanna Inc.;
Impairment of goodwill from the acquisition of Valens;
Impairment of the Olds facility due to the consolidation of all cultivation activities to the Atholville facility; and
Repayment and exiting cannabis-related investments.

LIQUIDITY AND CAPITAL RESOURCES

($000s)	September 30, 2024		December 31, 2023
Cash and cash equivalents		262,976		195,041

Capital resources are financing resources available to the Company and are defined as the Company’s debt and equity. The Company manages its capital resources with the objective of maximizing shareholder value and sustaining future development of the business. The Company manages its capital structure and adjusts it, based on the funds available to the Company, in order to support the Company’s activities. The Company may adjust capital spending, issue new equity or issue new debt, subject to the availability of such debt or equity financing on commercial terms.

The Company’s primary need for liquidity is to fund investment opportunities, capital expenditures, working capital requirements and for general corporate purposes. The Company’s primary source of liquidity historically has been from funds received from the proceeds of common share issuances and debt financing. The Company’s ability to fund operations and investments and make planned capital expenditures depends on future operating performance and cash flows, as well as the availability of future financing–all of which is subject to prevailing economic conditions and financial, business and other factors.

Management believes its current capital resources will be sufficient to satisfy cash requirements associated with funding the Company’s operating expenses and future development activities for at least the next 12 months. However, no assurance can be given that this will be the case or that future sources of capital will not be necessary.

Debt

As at September 30, 2024, the Company had no outstanding bank debt or other debt.

Equity

As at September 30, 2024, the Company had the following share capital instruments outstanding:

(000s)
Common shares	265,401	262,776
Common share purchase warrants (1)	118	309
Simple warrants (2)	39	67
Performance warrants (3)	25	54
Stock options (4)	595	854
Restricted share units	11,867	8,630
Derivative warrants (5)	50	9,933

0.1 million warrants were exercisable as at September 30, 2024.
39,200 simple warrants were exercisable as at September 30, 2024.
14,134 performance warrants were exercisable as at September 30, 2024.
0.6 million stock options were exercisable as at September 30, 2024.
0.1 million derivative warrants were exercisable as at September 30, 2024.

Common shares were issued during the nine months ended September 30, 2024 in connection with the following transactions:

The Company issued 1.4 million common shares in connection with the vesting of RSUs under its long term incentive plan;
The Company issued 0.1 million common shares related to the acquisition of certain franchise stores in Ontario; and
The Company issued 1.1 million common shares valued at $3.3 million as part of the consideration for the acquisition of cannabis retail stores from Lightbox Enterprises Ltd.

The Company did not repurchase any common shares for cancellation during the period.

Subsequent to September 30, 2024:

The Company purchased and cancelled 59,417 million common shares at a weighted average price of $2.64 (US$1.90) per common share for a total cost of $0.16 million.
The Company issued an aggregate 159,792 common shares as consideration for the purchase of certain common shares of Nova. Refer to “Recent Developments – Acquisition of Remaining Minority Interest in Nova Cannabis” for further details.

As at November 4, 2024, a total of 265.5 million common shares were outstanding.

Cash Flow Summary

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Cash provided by (used in):
Operating activities		22,794			27,542			30,797			(30,098	)
Investing activities		66,488			(999	)		63,466			(16,428	)
Financing activities		(9,240	)		(10,015	)		(26,328	)		(31,077	)
Change in cash and cash equivalents		80,042			16,528			67,935			(77,603	)

Cash Flow – Operating Activities

Net cash provided by operating activities was $22.8 million for the three months ended September 30, 2024 compared to $27.5 million provided by operating activities for the three months ended September 30, 2023. The decrease of $4.7 million was due to proceeds received in the comparative period for the disposition of marketable securities and the change in non-cash working capital, partially offset by a decrease in net loss adjusted for non-cash items and an increase in income distributions from equity-accounted investees. The change in non-cash working capital is comprised of changes in inventory, accounts receivable, prepaid expenses and deposits and accounts payable.

Net cash provided by operating activities was $30.8 million for the nine months ended September 30, 2024 compared to $30.1 million used in operating activities for the nine months ended September 30, 2023. The increase of $60.9 million was due to a decrease in net loss adjusted for non-cash items, an increase in income distributions from equity-accounted investees and the change in non-cash working capital, partially offset by proceeds received in the comparative period for the disposition of marketable securities. The change in non-cash working capital is comprised of changes in inventory, accounts receivable, prepaid expenses and deposits and accounts payable.

Cash Flow – Investing Activities

Net cash provided by investing activities was $66.5 million for the three months ended September 30, 2024 compared to $1.0 million used in investing activities for the three months ended September 30, 2023. The increase of $67.5 million was primarily due to capital distributions from equity-accounted investees, partially offset by and an increase in additions to investments.

Net cash provided by investing activities was $63.5 million for the nine months ended September 30, 2024 compared to $16.4 million used in investing activities for the nine months ended September 30, 2023. The increase of $79.9 million was primarily due to capital distributions from equity-accounted investees and lower additions to equity-accounted investees, partially offset by an increase in additions to investments and acquisitions, net of cash acquired.

Cash Flow – Financing Activities

Net cash used in financing activities was $9.2 million for the three months ended September 30, 2024 compared to $10.0 million used in financing activities for the three months ended September 30, 2023. The decrease of $0.8 million was largely due to the change in non-cash working capital.

Net cash used in financing activities was $26.3 million for the nine months ended September 30, 2024 compared to $31.1 million used in financing activities for the nine months ended September 30, 2023. The decrease of $4.8 million was largely due to decreased payments on lease liabilities and no repurchases of common shares in the current period.

Free cash flow

	Three months ended <br>September 30				Nine months ended<br>September 30
($000s)	2024		2023		2024			2023
Free cash flow		9,236		16,333		(2,753	)		(62,266	)

Free cash flow is a specified financial measure that does not have standardized meaning prescribed by IFRS Accounting Standards and therefore may not be comparable to similar measures used by other companies. Refer to the “Non-IFRS Financial Measures and Other Measures” section of this MD&A for further information. The Company defines free cash flow as the total change in cash and cash equivalents less cash used for common share repurchases, dividends (if any), changes to debt instruments, changes to long-term investments, net cash used for acquisitions plus cash provided by dispositions (if any).

Free cash flow was $9.2 million for the three months ended September 30, 2024 compared to $16.3 million for the three months ended September 30, 2023. The decrease of $7.1 million was mainly due to an increase in non-cash working capital ($15.3 million), a decrease in proceeds received in the comparative period for the disposition of marketable securities ($3.2 million) and additions to intangible assets ($3.2 million), partially offset by a decrease in net loss adjusted for non-cash items ($2.9 million) and income distributions from equity-accounted investees ($10.7 million).

Free cash flow was negative $2.8 million for the nine months ended September 30, 2024 compared to negative $62.3 million for the nine months ended September 30, 2023. The increase of $59.5 million was mainly due to a decrease in net loss adjusted for non-cash items ($30.4 million), a decrease in non-cash working capital ($31.1 million), income distributions from equity-accounted investees ($10.7 million) and a decrease in payments on lease liabilities ($2.4 million), partially offset by a decrease in proceeds received in the comparative period for the disposition of marketable securities ($6.7 million) and additions to intangible assets ($3.2 million).

Financial Instruments

Refer to note 22 in the Interim Financial Statements for additional information on the Company’s financial instruments and the related fair value estimates and disclosures.

Liquidity risks associated with financial instruments

Credit risk

Credit risk is the risk of financial loss if the counterparty to a financial transaction fails to meet its obligations. The maximum amount of the Company’s credit risk exposure is the carrying amounts of cash and cash equivalents, accounts receivable, and investments. The Company attempts to mitigate such exposure to its cash and cash equivalents by investing only in financial institutions with investment grade credit ratings or secured investments. The Company manages risk over its accounts receivable by issuing credit only to creditworthy counterparties. The Company limits its exposure to credit risk over its investments by ensuring the agreements governing the investments are secured in the event of counterparty default. The Company considers financial instruments to have low credit risk when its credit risk rating is equivalent to investment grade. The Company assumes that the credit risk on a financial asset has increased significantly if it is outstanding past the contractual payment terms. The Company considers a financial asset to be in default when the debtor is unlikely to pay its credit obligations to the Company.

The Company applies the simplified approach under IFRS 9 for its trade receivables and has calculated expected credit losses based on lifetime expected credit losses, taking into consideration historical credit loss experience and financial factors specific to the debtors and general economic conditions.

Liquidity risk

Liquidity risk is the risk that the Company cannot meet its financial obligations when due. The Company manages liquidity risk by monitoring operating and growth requirements. The Company prepares forecasts to ensure sufficient liquidity to fulfil obligations and operating plans. Management believes its current capital resources will be sufficient to satisfy cash requirements associated with funding the Company’s operating expenses and future development activities for at least the next 12 months. However, no assurance can be given that this will be the case or that future sources of capital will not be necessary.

Market risk

Market risk is the risk that changes in market prices will affect the Company’s income or value of its holdings of financial instruments. The Company is exposed to market risk in that changes in market prices will cause fluctuations in the fair value of its marketable securities. The fair value of marketable securities is based on quoted market prices as the Company’s marketable securities are shares of publicly traded entities.

Regulatory risk

Regulatory risk pertains to the risk that the Company’s business objectives are contingent, in part, upon compliance with regulatory requirements. Due to the nature of the industries in which the Company operates, the Company recognizes that regulatory requirements are more stringent and punitive in nature than most other sectors of the economy. Any delays in obtaining, or failure to obtain, regulatory approvals could significantly delay operational and/or product development and could have a material adverse effect on the Company’s business, results of operations, and financial condition. The Company is cognizant of the advent of regulatory changes in these industries on the city, provincial, and national levels in Canada and is aware of the effect that unforeseen regulatory changes in these industries could have on the goals and operations of the business as a whole.

CONTRACTUAL COMMITMENTS AND CONTINGENCIES

Commitments

The information presented in the table below reflects management’s estimate of the contractual maturities of the Company’s obligations at September 30, 2024.

($000s)
Accounts payable and accrued liabilities	54,038	—	—	—	54,038
Lease liabilities	42,101	69,605	45,761	30,073	187,540
Financial guarantee liability	—	234	—	—	234
Total	96,139	69,839	45,761	30,073	241,812

Contingencies

From time to time, the Company and its subsidiaries are or may become involved in various legal claims and actions which arise in the ordinary course of their business and operations. While the outcome of any such claim or action is inherently uncertain, the Company believes that the losses that may result, if any, will not be material to the financial statements.

NON-IFRS FINANCIAL MEASURES AND OTHER MEASURES

Certain specified financial measures in this MD&A including adjusted operating income (loss) and free cash flow are non-IFRS measures. These terms are not defined by IFRS Accounting Standards and, therefore, may not be comparable to similar measures reported by other companies. These non-IFRS financial measures should not be considered in isolation or as an alternative for measures of performance prepared in accordance with IFRS Accounting Standards.

GROSS PROFIT %

Gross profit % is a supplementary financial measure calculated by dividing gross profit by net revenue for the periods noted.

Adjusted operating income (loss)

Adjusted operating income (loss) is a non-IFRS financial measure which the Company uses to evaluate its operating performance. Adjusted operating income (loss) provides information to investors, analysts, and others to aid in understanding and evaluating the Company’s operating results in a similar manner to its management team. The Company defines adjusted operating income (loss) as operating income (loss) less restructuring costs (recovery), goodwill and intangible asset impairments and asset impairments triggered by restructuring activities.

The following tables reconcile adjusted operating income (loss) to operating income (loss) for the periods noted.

($000s)	Liquor<br>Retail		Cannabis<br>Retail		Cannabis<br>Operations			Investments			Corporate			Total
Three months ended September 30, 2024
Operating income (loss)		11,795		4,395		(703	)		(7,824	)		(26,174	)		(18,511	)
Adjustments:
Restructuring costs		—		—		125			—			1,793			1,918
Adjusted operating income (loss)		11,795		4,395		(578	)		(7,824	)		(24,381	)		(16,593	)
($000s)	Liquor<br>Retail		Cannabis<br>Retail		Cannabis<br>Operations			Investments		Corporate			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Nine months ended September 30, 2024
Operating income (loss)		22,456		7,255		(1,728	)		13,711		(69,416	)		(27,722	)
Adjustments:
Restructuring costs		—		—		380			—		1,670			2,050
Adjusted operating income (loss)		22,456		7,255		(1,348	)		13,711		(67,746	)		(25,672	)
($000s)	Liquor<br>Retail		Cannabis<br>Retail		Cannabis<br>Operations			Investments		Corporate			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Three months ended September 30, 2023
Operating income (loss)		8,278		3,432		(13,957	)		9,886		(24,023	)		(16,384	)
Adjustments:
Restructuring costs (recovery)		—		—		(323	)		—		1,031			708
Intangible asset impairments		—		—		127			—		—			127
Adjusted operating income (loss)		8,278		3,432		(14,153	)		9,886		(22,992	)		(15,549	)
($000s)	Liquor<br>Retail		Cannabis<br>Retail		Cannabis<br>Operations			Investments		Corporate			Total
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
Nine months ended September 30, 2023
Operating income (loss)		14,535		5,689		(46,995	)		16,963		(68,346	)		(78,154	)
Adjustments:
Restructuring costs		—		—		1,048			—		5,238			6,286
Intangible asset impairments		—		—		934			—		—			934
Adjusted operating income (loss)		14,535		5,689		(45,013	)		16,963		(63,108	)		(70,934	)

Free cash flow

Free cash flow is a non-IFRS financial measure which the Company uses to evaluate its financial performance. Free cash flow provides information which management believes to be useful to investors, analysts and others in understanding and evaluating the Company’s ability to generate positive cash flows as it removes cash used for non-operational items. The Company defines free cash flow as the total change in cash and cash equivalents less cash used for common share repurchases, dividends (if any), changes to debt instruments, changes to long-term investments, net cash used for acquisitions plus cash provided by dispositions (if any).

The following table reconciles free cash flow to change in cash and cash equivalents for the periods noted.

	Three months ended <br>September 30						Nine months ended<br>September 30
($000s)	2024			2023			2024			2023
Change in cash and cash equivalents		80,042			16,528			67,935			(77,603	)
Adjustments
Repurchase of common shares		—			—			—			1,536
Changes to long-term investments		(70,806	)		(195	)		(72,342	)		17,496
Acquisitions, net of cash acquired		—			—			1,654			(3,695	)
Free cash flow		9,236			16,333			(2,753	)		(62,266	)

RELATED PARTIES

SunStream is a joint venture in which the Company has a 50% ownership interest and is a related party due to it being classified as a joint venture of the Company. SunStream is a private company, incorporated under the Business Corporations Act (Alberta), which provides growth capital that pursues indirect investment and financial services opportunities in the cannabis sector, as well as other investment opportunities. Capital contributions to the joint venture and distributions received from the joint venture are classified as related party transactions.

A former member of key management personnel (Tank Vander – former President, Liquor Retail; retired from SNDL on September 10, 2024) jointly controls a company that owns property leased to SNDL for one of its retail liquor stores. The lease term is from November 1, 2017 to October 31, 2027 and includes extension terms from November 1, 2027 to October 31, 2032 and November 1, 2032 to October 31, 2037. Monthly rent for the location includes base rent, common area costs and sign rent. The rent amounts are subject to increases in accordance with the executed lease agreement. For the period January 1, 2024 to September 10, 2024, the Company paid $125.2 thousand in total rent with respect to this lease (nine months ended September 30, 2023 – $125.2 thousand).

OFF BALANCE SHEET ARRANGEMENTS

As at September 30, 2024, the Company did not have any off-balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company makes assumptions in applying critical accounting estimates that are uncertain at the time the accounting estimate is made and may have a significant effect on its consolidated financial statements. Critical accounting estimates include the classification and recoverable amounts of cash generating units, value of inventory, estimating potential future returns on revenue, convertible instruments, value of investments, value of equity-accounted investees, value of leases, acquisitions and fair value of assets acquired and liabilities assumed in a business combination. Critical accounting estimates are based on variable inputs including but not limited to:

Demand for cannabis for recreational and medical purposes;
Price of cannabis;
Expected cannabis sales volumes;
Demand for liquor;
Price of liquor;
Expected liquor sales volumes;
Changes in market interest and discount rates;
Future development and operating costs;
Costs to convert harvested cannabis to finished goods;
Expected yields from cannabis plants;
Potential returns and pricing adjustments; and
Market prices, volatility and discount rates used to determine fair value of equity-accounted investees.

Changes in critical accounting estimates can have a significant effect on profit or loss as a result of their impact on revenue, costs of sales, provisions and impairments. Changes in critical accounting estimates can have a significant effect on the valuation of biological assets, inventory, property, plant and equipment, provisions and derivative financial instruments.

For a detailed discussion regarding the Company’s critical accounting policies and estimates, refer to the notes to the Audited Financial Statements.

NEW ACCOUNTING PRONOUNCEMENTS

The International Accounting Standards Board and the IFRS Interpretations Committee regularly issue new and revised accounting pronouncements which have future effective dates and therefore are not reflected in the Company’s consolidated financial statements. Once adopted, these new and amended pronouncements may have an impact on the Company’s consolidated financial statements. The Company’s analysis of recent accounting pronouncements is included in the notes to the Audited Financial Statements.

RISK FACTORS

In addition to the risks described elsewhere in this document, for a detailed discussion regarding the Company’s risk factors, refer to the “Risk Factors” section of the AIF.

DISCLOSURE CONTROLS AND PROCEDURES

The Company has designed disclosure controls and procedures (as defined in National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) and Rules 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”)) to provide reasonable assurance that: (i) material information relating to the Company is made known to the Company’s Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which the annual and interim filings are being prepared; and (ii) information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time period specified in such securities legislation.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2024. Based upon evaluation of the Company’s disclosure controls and procedures as of September 30, 2024, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as September 30, 2024, due to a material weakness described in our MD&A for the year ended December 31, 2023.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in NI 52-109 and Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Refer to our MD&A for the year ended December 31, 2023, for a discussion regarding our internal control over financial reporting and the material weakness identified.

REMEDIATION

Management has implemented and continues to implement measures designed to ensure that control deficiencies are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions include:

continuing to strengthen procedures and controls related to the provisioning of and periodic review of user access to IT systems;
enhancing the timeliness and precision of executing user access reviews;
working with our advisors to continue to assist with process improvements and strengthening of controls over financial systems; and
augmentation of our internal audit staff with the hiring of 3 qualified personnel to leverage co-sourcing with external advisors to enhance the effectiveness and scope of our internal audit function.

At November 4, 2024 the above remediation measures are in progress but will not be considered remediated until the updated controls operate for a sufficient period of time, and management has concluded through testing, that these controls are operating effectively.

The Company is pursuing remediation of the above material weakness during the 2024 fiscal year.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Except for the remediation activities described above, as of September 30, 2024, there have been no other changes in our internal control over financial reporting (as defined in NI 52-109 and Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ABBREVIATIONS

The following provides a summary of common abbreviations used in this document:

Financial and Business Environment
$ or C$	Canadian dollars
U.S.	United States
US$	United States dollars

FORWARD-LOOKING INFORMATION

This MD&A may contain forward-looking information concerning the Company’s business, operations and financial performance and condition, as well as the Company’s plans, objectives and expectations for its business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim”, “anticipate”, “assume”, “believe”, “contemplate”, “continue”, “could”, “due”, “estimate”, “expect”, “goal”, “intend”, “may”, “objective”, “plan”, “predict”, “potential”, “positioned”, “pioneer”, “seek”, “should”, “target”, “will”, “would”, and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

These forward-looking statements include, but are not limited to, statements about:

the Company’s strategy;
expectations with respect to retail and investment operations;
expectations with respect to the Restructuring Project, including the costs and savings associated therewith and the timing thereof;
the impact of consolidating cannabis segments;
expectations with respect to the CCAA proceedings involving Indiva, including the timing of closing;
the value of the credit bid and cash consideration payable by the Company under the Bid Agreement;
the Company’s share repurchase program;
expectations with respect to sales to provincial boards;
the Company’s ability to adjust its capital resources;
the Company’s liquidity needs, including its ability to source its liquidity requirements;
the sufficiency of the Company’s capital resources;
risks associated with financial instruments and the methods by which the Company manages such risks;
expectations with respect to various contingencies, including the impact of such on the Company’s financial statements;
the impact of changes to critical accounting estimates and new accounting pronouncements; and
expectations with respect to remediation measures to control deficiencies.

Although the forward-looking statements contained in this MD&A are based on assumptions that the Company believes are reasonable, you are cautioned that actual results and developments (including Company results of operations, financial condition and liquidity, and the development of the industry in which the Company operates) may differ materially from those made in or suggested by the forward-looking statements contained in this MD&A. In addition, even if results and developments are consistent with the forward-looking statements contained in this MD&A, those results and developments may not be indicative of results or developments in subsequent periods.

These forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company’s business and the industry in which it operates and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond its control. As a result, any or all of the forward-looking information in this MD&A may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” in the AIF and otherwise described in this MD&A. Readers of this MD&A are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this MD&A and, except as required by applicable law, the Company assumes no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should, however, review the factors and risks we describe in the reports we will file from time to time with applicable securities regulators, including the Canadian securities regulators and the U.S. Securities and Exchange Commission (the “SEC”), after the date of this MD&A.

This MD&A contains estimates, projections and other information concerning the Company’s industry, its business and the markets for its products. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. Unless otherwise expressly stated, the Company obtained this industry, business, market and other data from its own internal estimates and research as well as from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources. Certain statements included in this MD&A may be considered “financial outlook” for purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this MD&A. The purpose of the financial outlook is to provide readers with disclosure of the Company’s reasonable expectations of its anticipated results. The financial outlook is provided as of the date of this MD&A.

In addition, assumptions and estimates of the Company’s and industry’s future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled “Risk Factors” in the AIF and elsewhere in this MD&A. These and other factors could cause the Company’s future performance to differ materially from the Company’s assumptions and estimates. Readers of this MD&A are cautioned against placing undue reliance on forward-looking statements.

Further information regarding the assumptions and risks inherent in the making of forward-looking statements can be found in the AIF, along with the Company’s other public disclosure documents. Copies of the AIF and other public disclosure documents are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR+”) at www.sedarplus.ca and on the EDGAR section of the SEC’s website at www.sec.gov.

ADDITIONAL INFORMATION

Additional information relating to the Company, including the Company’s most recent AIF, can be viewed under the Company’s profile on SEDAR+ at www.sedarplus.ca, on the EDGAR section of the SEC’s website at www.sec.gov, or on the Company’s website at www.sndl.com. The information on or accessible through our website is not part of and is not incorporated by reference into this MD&A, and the inclusion of our website address in this MD&A is only for reference.

EX-99.3

EXHIBIT 99.3

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Zachary George, Chief Executive Officer of SNDL Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of SNDL Inc. (the “issuer”) for the interim period ended September 30, 2024.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is “Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO)”.

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

5.3 Limitation on scope of design: N/A

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 4, 2024

/s/ Zachary George

_______________________

Zachary George

Chief Executive Officer

EX-99.4

EXHIBIT 99.4

Form 52-109F2

Certification of Interim Filings

Full Certificate

I, Alberto Paredero Quiros, Chief Financial Officer of SNDL Inc., certify the following:

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of SNDL Inc. (the “issuer”) for the interim period ended September 30, 2024.
No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

5.2 ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period

(a) a description of the material weakness;

(b) the impact of the material weakness on the issuer’s financial reporting and its ICFR; and

5.3 Limitation on scope of design: N/A

Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 4, 2024

/s/ Alberto Paredero Quiros

_______________________

Alberto Paredero Quiros

Chief Financial Officer