The owner of Ace Liquor and Spiritleaf raises its bet on U.S. cannabis, as its manufacturing arm faces a strategic review. Graison Foster Updated Wed, October 28, 2026 at 4:00 a.m. PDT An Edmonton-based cannabis and liquor retailer is weighing a possible sale of money-losing weed assets in Canada as it cuts its British Columbia workforce and expands into the United States. SNDL Inc., which owns Ace Liquor, Value Buds and Spiritleaf, said it is also ditching the traditional bud. It is formally getting out of the dried flower business, which it said is unprofitable, and focusing on higher-value products. Chief executive Zach George told analysts on the earnings call that cannabis operations "remains below expectations." The company reported a $52-million write-down on Tuesday, which means its cannabis production business is worth that much less than what its books had previously showed. "This is an accounting charge," said Fredrico Gomes, a director at ATB Cormack Capital Markets who covers SNDL. The company bought its cannabis assets over the years, and its books now say they are worth less than what it paid for them. SNDL said it started a strategic review of its Canadian cannabis business that will consider options ranging from selling assets to making larger productivity gains. Sales at its weed production segment fell 28 per cent from a year earlier, and the products it sold cost more to make than they brought in. The company ties most of the drop to its decision to get out of the bud business. Gomes said scale is part of the reason for the exit. SNDL has no big, low-cost growing operations, and "it's hard for them to compete without having efficient cultivation assets." In the same three months, the company invested $60.8 million in the United States. It put the money behind Parallel, an American grower and seller of cannabis in Florida, Texas and Massachusetts. SNDL ended up with most of Parallel almost by accident. Parallel, the name for Surterra Holdings, Inc. and its affiliates, owed money to a partnership SNDL has a stake in. The partnership took over its assets in July. SNDL's share is now about 92 per cent. Parallel has more than 50 retail locations in Florida, Texas, and Massachusetts. SNDL's money is helping build a new growing facility in Gainesville, Fla., which the company expects to help the business run more cheaply. Florida is one of the biggest cannabis markets in the United States, and it allows only medical use. SNDL has its eye on owning Parallel's medical cannabis business itself, instead of through the partnership. It would have to meet legal, regulatory and accounting rules, and those of Nasdaq, where SNDL is listed. As long as the business stays medical-only, Gomes said, "they can operate the business while remaining listed on Nasdaq." The workforce at SNDL's Kelowna, B.C., manufacturing facility is down by more than 30 per cent, and the company expects the savings to begin showing results in the fourth quarter. Three months earlier, on July 28, George told analysts SNDL had "acute issues that we are managing through, specifically with regards to the team in Kelowna," and called them fixable. SNDL has not said how many jobs that represents, and its investor relations office did not respond to questions by deadline. The stores earned their keep. A dollar spent at either its liquor stores or its cannabis stores left SNDL 27 cents after paying for the goods, a record quarter for both, though sales slipped at stores open a year or more. SNDL had its best quarter yet for free cash flow, $20 million, but about half of it came from starting to wind down an insurance arrangement the company ran for itself. Without that, the number would still be above zero, Gomes said. The company carries no debt. Since late 2024, SNDL has bought back about eight per cent of its own shares, the company said on the call, and it may make an offer for up to $50 million more. To Gomes, that shows management believes the stock is materially undervalued, and returning that much cash to shareholders is "something that you don't see often in Canada." SNDL is not finished buying its own shares. George has said the company intends to "remain aggressive when we believe the opportunity to acquire our shares represents an attractive use of capital." You can also support our journalism by becoming a digital subscriber. Subscribers gain unlimited access to The Edmonton Journal, Edmonton Sun, National Post and 13 other Canadian news sites. Support us by subscribing today: The Edmonton Journal | The Edmonton Sun.

SNDL's record retail margins offset by impairments and net loss in Q3 2026. SNDL Inc. reported net revenue of $238 million in the three months ended September 30 (Q3 2026), gross profit of $57.9 million, and a net loss of $50.8 million. Net revenue fell 3% year-over-year, gross profit fell 10%, and net loss increased from a $13.3 million net loss in Q3 2025. Pending final agreements and payment of a fine, SNDL says it expects Ontario's retail cannabis regulator to allow Value Buds franchises to resume Ontario expansion, deconsolidating retail stores from its financial statements while retaining overall commercial returns without operational control. Net revenue from SNDL's retail cannabis operations was $85.6 million, with $23.1 million in gross profit and $5.3 million in income. Net revenue from the company's cannabis operations was another $27 million, with a $64.7 million loss. Total net revenue from cannabis retail and production was $103.2 million, with a $59.4 million loss. The company also generated $134.8 million in net revenue from liquor retail, with $6 million in adjusted operating income. The $0.6 million YOY increase in net revenue from the company's retail cannabis operation was mainly attributable to higher proprietary licensing revenue, partially offset by lower retail sales and a minor decrease in franchise revenue. SNDL's cannabis operations declined by $10.4 million, mainly due to lower sales to provincial boards and wholesale sales. The company says its cannabis operations results remain below expectations, with most of the third-quarter revenue decline attributable to its exit from the "unprofitable domestic dried flower category" and its increased focus on higher-value products. SNDL's profitability was impacted by a $52 million non-cash goodwill impairment reflecting current business trends, as well as $6 million in other impacts, mostly driven by inventory adjustments related to the exit from the dried flower category and Jeeter cost variances. SNDL officially signed a license and manufacturing agreement with US pre-roll brand Jeeter in September 2025, which launched in April 2026. During the third quarter, the company also says it took actions to reduce manufacturing costs and other operating expenses, particularly at its Kelowna manufacturing facility, including a reduction of more than 30% of the workforce at the site. "Our third quarter results demonstrate improvement in SNDL's underlying financial performance, including positive adjusted operating income and record quarterly free cash flow generation," said Zach George, SNDL's CEO. "Cannabis Retail delivered record quarterly revenue and gross margin, Liquor Retail also reached a new record quarterly gross margin, and our Investments segment benefited from improved results from equity-accounted investees." "Cannabis Operations remained below expectations and recorded a non-cash impairment," he continued. "While the quarter was impacted by inventory issues arising from the first half, StratCann Services Inc. is taking decisive action to simplify the portfolio, reduce costs and concentrate resources on product categories where SNDL's manufacturing capabilities, distribution reach and retail insights can support sustainable returns. The benefits of the actions taken during the quarter are expected to begin contributing to results in the fourth quarter. In addition to these immediate actions, the Company is initiating a strategic review of the Cannabis Operations segment to assess opportunities to improve its financial performance. The review will consider a range of strategic and operational alternatives, from potential asset divestitures to larger productivity initiatives. SNDL is one of Canada's largest private-sector cannabis retailers, operating 193 locations as of October 26, 2026, under two retail banners: Value Buds (133) and Spiritleaf (60, including four corporate stores and 56 franchise stores). The company uses data and insights from its large volume of monthly transactions to leverage technology and analytics to inform and improve its retail strategy. Before releasing its Q3 results, SNDL announced it had reached an in-principle agreement with the Alcohol and Gaming Commission of Ontario (AGCO) to resolve outstanding regulatory matters. This is subject to completing documentation and paying a $200,000 fine. The company says the contemplated resolution is "expected to provide a path toward normalized operations and renewed growth, supported by a transition to third-party financing and a modified franchise structure." The company now notes that, subject to completing definitive documentation and paying the $200,000 monetary penalty, it expects the AGCO to allow the Value Buds franchise network to resume growth in Ontario after a pause of more than a year during the regulatory review. The contemplated structure is expected to deconsolidate the Ontario retail operations from SNDL's financial statements. However, the company says it expects the overall commercial arrangements to substantially preserve SNDL's net economics associated with these franchise locations, without retaining control over the retail operations in the province. "We are encouraged by the progress made toward resolving the regulatory matters involving the Alcohol and Gaming Commission of Ontario (AGCO), which we expect will provide greater clarity for the Ontario franchise retail operations and future development opportunities, as further detailed later in this document and in the Q3 2026 Earnings Call presentation," said George.

SNDL Q3 earnings call highlights. October 27, 2026 Key points. * SNDL returned to positive adjusted operating income of CAD 5.2 million in Q3 2026 and generated record free cash flow of CAD 20 million, although revenue fell 2.5% to CAD 238 million. * The company reported a CAD 48.3 million operating loss, driven primarily by a CAD 52 million non-cash goodwill impairment tied to Cannabis Operations. That segment's revenue dropped 27.7% and posted a CAD 11.4 million adjusted operating loss, prompting a strategic review, cost cuts and potential asset divestitures. * SNDL repurchased CAD 10 million of shares during the quarter and plans to pursue a potential issuer bid of up to CAD 50 million. It also increased its indirect ownership of U.S. cannabis operator Parallel to approximately 92% and is evaluating paths toward direct ownership and consolidation. * Get every upgrade, downgrade, and earnings report on SNDL as it happens. Lock in MarketBeat All Access for $149 a year through October 30. SNDL NASDAQ: SNDL reported record quarterly free cash flow and a return to positive adjusted operating income in the third quarter of 2026, while recording a substantial goodwill impairment and continuing to address underperformance in its Cannabis Operations segment. The company generated free cash flow of CAD 20 million during the quarter ended Sept. 30, up 19.5% from CAD 16.7 million a year earlier. Chief Financial Officer Alberto Paredero-Quiros said the result included a CAD 10.6 million benefit from the initial unwinding of SNDL's captive insurance arrangement. The company expects a second and final CAD 8 million cash inflow from that process in the fourth quarter. Adjusted operating income was CAD 5.2 million, compared with an adjusted operating loss of CAD 9.5 million in the prior-year quarter. The improvement reflected lower corporate expenses and stronger investment results, which more than offset weaker performance in Cannabis Operations and Liquor Retail. However, SNDL reported an operating loss of CAD 48.3 million, primarily due to a CAD 52 million non-cash goodwill impairment associated with Cannabis Operations. Revenue and margins. Third-quarter net revenue totaled CAD 238 million, down CAD 6.2 million, or 2.5%, from the previous year. Gross profit declined 9.8% to CAD 57.9 million, while consolidated gross margin fell two percentage points to 24.3%. Management said record gross margins in the company's Cannabis Retail and Liquor Retail businesses were outweighed by weak results in Cannabis Operations. * Liquor Retail: Net revenue fell 3.3% to CAD 134.8 million as same-store sales declined 6% amid softer market demand. Three Wine and Beyond store openings over the past 12 months and private-label sales growth partially offset the decline. Gross margin increased 70 basis points to a record 27.0%, supported by pricing, product mix management and procurement productivity. * Cannabis Retail: Net revenue rose 0.7% to a quarterly record CAD 85.6 million. New store openings and Value Buds conversions more than offset a 3.8% same-store-sales decline attributed to market contraction in Alberta and Ontario. Gross margin rose 60 basis points to a record 27.0%, aided by promotional and product-mix efficiencies and increased data revenue. * Cannabis Operations: Net revenue declined 27.7% to CAD 27 million, largely because the company exited the unprofitable domestic dried-flower category. The segment posted negative gross profit of CAD 1.6 million and an adjusted operating loss of CAD 11.4 million, compared with a CAD 10.2 million loss a year earlier. Cannabis Operations review and cost actions. Chief Executive Officer Zach George said SNDL is simplifying its Cannabis Operations portfolio, reducing costs and concentrating resources on higher-value product categories. The company has initiated a strategic review of the segment that could include asset divestitures and additional productivity measures. Discover more MarketBeat All Access MarketBeat Research Tools Paredero-Quiros said the company reduced its workforce by more than 30% at its Kelowna facility and expects the financial benefits of those actions to begin contributing in the fourth quarter. During the question-and-answer session, George said SNDL exited domestic dried flower because its indoor production model was not well positioned to compete with lower-cost producers operating large hybrid greenhouse facilities. He said the company intends to focus on branded-product distribution, edibles, beverages and licensing relationships, and does not expect the flower exit to affect sales in other categories. The company also said it expects to receive EU GMP certification for its Atholville facility shortly after successfully passing an audit. George said the certification could eliminate the need to rely on third-party processors, which can cost between CAD 0.20 and CAD 0.45 per gram, while facility upgrades are expected to improve quality and yields for international markets. Capital returns and U.S. investments. SNDL repurchased 5.4 million common shares for CAD 10 million during the quarter, excluding commissions, at a weighted-average price of CAD 1.31 per share. Including purchases through an October measurement date, the company said it had repurchased 34 million shares since the fourth quarter of 2024 for CAD 73.5 million, reducing shares outstanding by about 8%. The company also announced its intention to pursue a potential substantial issuer bid of up to CAD 50 million, subject to approvals and documentation, at a price per share not exceeding CAD 1.35. In the U.S., SNDL increased its indirect equity ownership in Parallel from about 67% to approximately 92% through participation in Parallel's rights offering following its July restructuring. SNDL also funded SunStream investments supporting a new cultivation facility in Gainesville, Florida, and said SunStream increased its ownership of Parallel takeback debt from 39.4% to 69.4% after acquiring additional debt at 75% of face value. George said Parallel operates 56 retail locations and three manufacturing and cultivation sites across Florida, Texas and Massachusetts, with approximately 800 employees and about CAD 150 million in net revenue. SNDL is evaluating paths toward direct ownership and financial consolidation of Parallel's medical cannabis business. Ontario franchise matter. SNDL said it is progressing toward a resolution of longstanding regulatory matters involving the Alcohol and Gaming Commission of Ontario. Subject to definitive documentation and a CAD 200,000 monetary penalty, the arrangement is expected to normalize franchise operations and include approximately CAD 30 million of third-party secured financing to repay existing SNDL debt. Under the contemplated arrangement, Ontario franchise operations would shift to a modified franchise structure in which SNDL provides administrative services only. The operations would then be deconsolidated from SNDL's financial statements, reducing reported net revenue by approximately CAD 105 million based on trailing 12-month figures, while reducing operating income by approximately CAD 2 million. About SNDL (NASDAQ:SNDL). SNDL Inc is a Canada-based cannabis and liquor company headquartered in Calgary, Alberta. Formerly known as Sundial Growers Inc, the company began as a licensed cannabis producer and has expanded into cannabis cultivation, processing, branded product sales and retail operations. SNDL offers cannabis products through brands that have included Sundial, Top Leaf, Palmetto and Value Buds. Its cannabis business serves the Canadian adult-use and medical markets through provincial distribution systems and company-operated or affiliated retail locations. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. Before you consider SNDL, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and SNDL wasn't on the list. 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