SNDL Announces Completion of Parallel Asset Acquisition and Positions for Nasdaq-Consolidated U.S. Medical Cannabis Operations

SNDL Inc. (NASDAQ: SNDL, CSE: SNDL) (“SNDL” or the “Company”) today announced the completion of the acquisition of certain assets of Surterra Holdings, Inc. and certain of its affiliates (collectively, “Parallel”), a U.S. vertically integrated cannabis operator with state-licensed operations in Florida, Texas and Massachusetts (the “Parallel Transaction”).

The Parallel Transaction was completed pursuant to a strict foreclosure agreement, by and among SH Parent, Inc., Surterra Holdings, Inc., certain of their subsidiaries and CDXX TransCo, LLC (“TransactionCo”), together with a related contribution and exchange agreement among TransactionCo and participating Parallel creditors.

Through the Parallel Transaction, TransactionCo completed a consensual secured creditor foreclosure of specified equity interests and assets associated with Parallel’s operations in Florida, Texas and Massachusetts.

The Parallel Transaction substantially reduces Parallel’s legacy debt burden and provides SNDL, through its Sunstream Bancorp Inc. (“Sunstream”) joint venture, with indirect majority economic exposure equivalent to ownership of 66.7% of TransactionCo’s equity and 69.4% of its debt.

The Company expects to be able to convert this indirect exposure in TransactionCo and its subsidiaries into direct, consolidated holdings in the coming months, subject to applicable legal, regulatory, accounting and Nasdaq requirements, resulting in SNDL becoming one of the first Nasdaq-listed companies to have direct, consolidated exposure to U.S. medical cannabis operations.

Consistent with recent public uplisting precedents, SNDL expects any adult-use or recreational exposure, including in Massachusetts, to remain deconsolidated unless and until Nasdaq, applicable law, contractual arrangements, and accounting standards permit a different treatment.

“Closing the Parallel Transaction marks the successful completion of a complex, multi-year restructuring of one of Sunstream’s largest legacy credit investments and represents a defining milestone in our strategy to become a leading vertically integrated North American cannabis company,” said Zach George, Chief Executive Officer of SNDL.

"SNDL now supports a 249-store cannabis retail network, the largest in the world by store count. We believe that the operating discipline, retail expertise and lessons learned from Canada’s intensely competitive cannabis market - including navigating regulatory complexity and excessive tax rates - will serve us well as we expand in key U.S. medical cannabis markets such as Florida, Massachusetts, and Texas. Coupled with our strong balance sheet and access to capital, SNDL is uniquely positioned to pursue disciplined growth and strategic consolidation to create long-term value for shareholders.”

The operating assets acquired from Parallel include 56 retail locations and 3 cultivation and manufacturing facilities across Florida, Texas and Massachusetts. With annualized revenue of approximately US$150 million and a profitable foundation, the assets acquired from Parallel represent an attractive expansion platform following consolidation, with additional opportunities to accelerate growth and further enhance profitability.

The existing footprint includes: Florida: 43 dispensaries operating under the Surterra Wellness brand from a single cultivation and production facility comprising approximately 175,000 square feet. Texas: 10 retail or pickup locations operating under the Goodblend brand from a single cultivation and production facility. Goodblend is one of only three act...