SNDL Inc. Condensed Consolidated Interim Financial Statements For the three months ended

Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

(Unaudited expressed in thousands of Canadian dollars)

Condensed Consolidated Interim Statement of Financial Position

(Unaudited - expressed in thousands of Canadian dollars)

Commitments (note 27)

Subsequent events (notes 4, 15 and 28)

See accompanying notes to the condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Loss and Comprehensive Loss

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

See accompanying notes to the condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Changes in Shareholders' Equity

(Unaudited - expressed in thousands of Canadian dollars)

See accompanying notes to the condensed consolidated interim financial statements.

Condensed Consolidated Interim Statement of Cash Flows

(Unaudited - expressed in thousands of Canadian dollars)

See accompanying notes to the condensed consolidated interim financial statements.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

1.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. The Company also owns approximately 63% of Nova Cannabis Inc. ( Nova ) (TSX: NOVC), whose principal activities are the retail sale of cannabis.

SNDL and its subsidiaries currently operate solely in Canada, with the exception of Green Roads, Inc. ( Green Roads ), a subsidiary acquired in the Valens Transaction (defined below) who sold CBD products in the United States and is classified as held for sale (note 9) and discontinued operations (note 4). Through its joint venture, SunStream Bancorp Inc. ( SunStream ) (note 15), 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 common shares trade on the Nasdaq Capital Market ( Nasdaq ) under the ticker symbol SNDL .

2.Basis of presentation

Statement of compliance

The 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, 2022. These financial statements should be read in conjunction with the annual consolidated financial statements for the Company for the year ended December 31, 2022.

These financial statements were approved and authorized for issue by the Board of Directors ( Board ) on May 12, 2023.

3.Business acquisitions

On August 22, 2022, the Company and The Valens Company Inc. ( Valens ) announced that they had entered into an arrangement agreement (the Valens Arrangement Agreement ) pursuant to which the Company would acquire, subject to Valens' shareholder approval and customary closing conditions, all of the issued and outstanding common shares of Valens, other than those owned by SNDL and its subsidiaries, by way of a statutory plan of arrangement (the Valens Transaction ). Concurrently with the execution of the Valens Arrangement Agreement, the Company assumed Valens' non-revolving term loan facility from its then-existing lender, and amended and restated the related credit agreement to provide for a $60.0 million non-revolving term loan facility with a maturity date of December 15, 2023 and an interest rate of 10% per annum (the Valens Facility ). As Valens is now a wholly-owned subsidiary of the

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

Company, the Valens Facility became inter-company debt following the closing of the Valens Transaction. The Valens Transaction closed on January 17, 2023.

The Valens Transaction consideration was comprised of (i) the assumption of Valens' $60 million non-revolving term loan facility from its then existing lender, as described above, and (ii) an aggregate 27.6 million SNDL common shares valued at $84.0 million based on the fair value of each common share of the Company on the closing date (0.3334 of a SNDL common share for each Valens common share).

Valens is a manufacturer of cannabis products providing proprietary cannabis processing services, in addition to product development, manufacturing, and commercialization of cannabis consumer packaged goods. Valens products are formulated for the medical, health and wellness, and recreational consumer segments. Additionally, Valens manufactured, distributed, and sold a wide range of CBD products in the United States through its subsidiary Green Roads, prior to the Valens Transaction. Green Roads filed for bankruptcy in the United States on March 6, 2023. The Company has provided a superpriority secured debtor-in-possession line of credit to Green Roads in the amount of USD $1.75 million.

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:

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

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

Valens subsidiary Green Roads has been classified as held for sale (note 9) and discontinued operations (note 4).

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

The financial statements incorporate the operations of Valens commencing January 18, 2023. During the period January 18, 2023 to March 31, 2023 the Company recorded revenues of $16.9 million and net loss of $9.0 million from the Valens operations. Had the Valens Transaction closed on January 1, 2023, management estimates that for the period January 1, 2023, to January 17, 2023, revenue would have increased by $4.2 million and net loss would have increased by $2.3 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, 2023.

The Company incurred costs related to the Valens Transaction of $1.7 million which have been included in transaction costs.

On February 7, 2023, the Company announced that, in the context of the Superette Group's (as defined below) proceedings under the Companies' Creditors Arrangement Act ( CCAA ), it had successfully closed the Superette Transaction (as defined below) contemplated by the agreement of purchase and sale dated August 29, 2022 (as amended and restated on December 12, 2022) (the APS ) and the approval and vesting order issued by the Ontario Superior Court of Justice (Commercial List) on December 20, 2022.

The Superette Group sells cannabis and non-cannabis branded merchandise and has furthered its market exposure and brand awareness through private-label cannabis offerings. Pursuant to the APS, certain of the Superette entities, including Superette Inc. and Superette Ontario Inc. ( Superette Ontario ) (collectively, the Superette Group ), have sold to SNDL their right, title and interest in (i) five Superette retail locations within Toronto and Ottawa; (ii) the intellectual property rights related to the Superette brand (the Superette IP ); and (iii) the shares of Superette Ontario (collectively, the Superette Transaction ).

The Superette acquisition consideration was comprised of the extinguishment of the Company's promissory note.

The fair value of consideration paid was as follows:

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

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

The financial statements incorporate the operations of Superette commencing February 8, 2023. During the period February 8, 2023 to March 31, 2023 the Company recorded revenues of $0.6 million and net loss of $0.2 million from the Superette operations. Had the Superette Transaction closed on January 1, 2023, management estimates that for the period January 1, 2023, to February 7, 2023, revenue would have increased by $0.5 million and net loss would have increased by $0.1 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, 2023.

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

The Company incurred costs related to the Superette Transaction of $0.2 million which have been included in transaction costs.

4.Discontinued operations

The Green Roads operations are comprised of manufacturing, distributing and selling a wide range of CBD products in the United States. The Green Roads operations have been classified as held for sale and discontinued operations as the carrying amount of the disposal group is expected to be recovered through a sale transaction rather than through continued use.

Green Roads filed for bankruptcy on March 6, 2023. Subject to the bid procedures, a successful bid of USD$3.1 million was accepted and the sale was approved at a court hearing on May 10, 2023.

The consolidated statement of loss and comprehensive loss and consolidated statement of cash flows has been presented to show the discontinued operations separately from continuing operations. The consolidated statement of financial position presents the Green Roads disposal group as an asset held for sale (note 9).

Results of discontinued operations

5.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 .

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

(1)Cannabis retail includes the operations of Superette from February 8, 2023 to March 31, 2023.

(2)Cannabis operations includes the operations of Valens for the period January 18, 2023 to March 31, 2023.

(3)Total assets include cash and cash equivalents.

(1)Liquor retail includes one day of operations of Alcanna retail stores and cannabis retail includes one day of operations of Nova retail stores.

(2)Total assets include cash and cash equivalents.

Geographical disclosure

As at March 31, 2023, the Company had non-current assets related to investment credit operations in the United States of $535.9 million (December 31, 2022 $519.3 million). For the three months ended March 31, 2023, share of profit of equity-accounted investees related to operations in the United States was a gain of $9.5 million (three months ended March 31, 2022 gain of $4.1 million). All other non-current assets relate to operations in Canada and revenues from external customers relate to operations in Canada.

6.Marketable securities

During the three months ended March 31, 2023, non-cash proceeds valued at $6.6 million were received for the settlement of Valens common shares in connection with the Valens Transaction (note 3(a) and note 18(b)) and a gain

Notes to the Condensed Consolidated Interim Financial Statements

For the three months ended March 31, 2023

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

on settlement of $0.7 million was recognized. In addition, proceeds of $26 were received for the dispositions of marketable securities and a loss on disposition of $0.1 million was recognized.

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:

Biological assets are valued in accordance with IAS 41 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.