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SNDL Inc. Bolsters Canadian Cannabis Retail Landscape with Strategic Nova Cannabis Inc. Collaboration

CALGARY, AB, April 1, 2024 /PRNewswire/ - SNDL Inc. (Nasdaq: SNDL) ("SNDL") and Nova Cannabis Inc. (TSX: NOVC) ("Nova") have made a profound announcement today regarding a strategic business agreement wherein SNDL will transfer the right to own or administer four Dutch Love cannabis retail locations to Nova (the "Assignment"). This move underscores SNDL's commitment to enhancing Nova's retail prominence and ensuring the durability of its financial structure.

Zach George, the CEO of SNDL, articulated the company's dedication to fortify Nova's retail position and its capital structure's permanence, emphasizing the extension of the credit facility as a testament to this pledge. The transition of four strategically situated cannabis retail shops to Nova's ownership or management presents an exciting chance for Nova to inaugurate its first 'Value Buds' brand stores in British Columbia—a move that not only demonstrates the advantages of SNDL's mergers and acquisitions strategy but also solidifies their partnership.

Under the terms of the Assignment, Nova is set to issue shares to SNDL valued at $8.179 million, based on the 20-day volume-weighted average price (VWAP) of Nova shares as of March 28, 2024. Completion of the Assignment is hinged on several customary closing conditions, which include the approval of the Toronto Stock Exchange (TSX) for the Nova shares destined for SNDL, alongside court approval and other regulatory consents. The closing is projected to occur by the end of April 2024.

The incorporation of the Dutch Love Stores will escalate Nova's total store tally to an impressive 100, while SNDL's direct and indirect presence across all retail banners will reach an unprecedented total of 190 cannabis storefronts.

Furthermore, SNDL has extended the maturity of Nova's $15 million revolving credit facility (the "Revolving Credit Facility") by an additional two years, stretching up to March 31, 2026. Additionally, the terms of the Revolving Credit Facility have been amended to relinquish SNDL's right to require repayment before the maturity date, given that certain conditions are met.

Anne Fitzgerald, Nova's lead independent director, has expressed that the recent announcements serve to cement SNDL's ongoing support for Nova's growth trajectory. Both parties are committed to continually exploring collaborative pathways to enhance Nova's growth and provide strategic options through their partnership.

Expert Legal Advisory Backing the Strategic Moves

To navigate the intricacies of this strategic shift, SNDL has engaged McCarthy Tétrault LLP as its legal counsel. In parallel, Nova has secured the expertise of Bennett Jones LLP to guide its legal considerations. This professional legal support underlines the complexity and importance of the transaction taking place between the two major players in the cannabis industry.

About SNDL Inc.

SNDL stands out as a prominent figure in Canada's private sector as the largest liquor and cannabis retailer, with a broad portfolio of retail banners including Ace Liquor, Wine and Beyond, Liquor Depot, and Value Buds, to name a few. In addition to retail, SNDL is known for its licensed cannabis production capabilities and ranks as one of the significant vertically integrated cannabis enterprises in Canada.

The company's prowess in low-cost biomass sourcing, premium indoor cultivation, product innovation, cost-effective manufacturing facilities, and an extensive cannabis brand portfolio, featuring names like Top Leaf, Contraband, and Citizen Stash, propels SNDL to the forefront of the cannabis sector.

SNDL's investment trajectory is focused on strategic capital deployment within the North American cannabis industry, through direct and indirect investments and partnerships.

For a more detailed look at SNDL and its operations, interested parties are invited to visit SNDL's website.

About Nova Cannabis Inc.

Nova Cannabis Inc. has quickly risen to become one of Canada's leading and swiftly expanding cannabis retailers. Its mission is clear: disrupt the cannabis retail sector by delivering a comprehensive selection of high-quality cannabis products at unbeatable everyday prices.

Nova holds ownership and operational stakes in 96 locations across key regions such as Alberta, Ontario, and Saskatchewan, predominantly under the "Value Buds" brand. These stores have been strategically placed to cater to a broad customer base and embody Nova's commitment to accessibility and affordability in the cannabis retail space.

Additional details on Nova Cannabis Inc. can be accessed via SEDAR Plus and Nova's own website.

Forward-Looking Information: A Cautionary Note

This news release contains forward-looking statements relating to future events. These are identified by words such as "will," "expect," "project," and "anticipate," and include expectations for the approval of the TSX transaction, predicted closing date of the Assignment, and potential number of stores owned and/or operated by Nova and SNDL post-Assignment.

While SNDL and Nova believe the underlying assumptions are reasonable, there is no guarantee that these forward-looking statements will materialize, nor can the resultant benefits for Nova and SNDL be precisely forecasted. Numerous factors and risks—such as economic conditions, industry developments, and operational hurdles—could lead to materially different outcomes than anticipated.

SOURCE SNDL Inc.

The news relayed today highlights SNDL's strategic maneuvers to fortify its partnership with Nova through the Assignment of retail locations and revision of credit facilities. It mirrors a growing trend within the Canadian private sector to consolidate and expand cannabis retail outlets. This move is indicative of a maturing market, with major players like SNDL and Nova adjusting their business models to postulate a more robust retail framework resilient enough to withstand the fluctuations of the industry.

Nova stands to benefit from increased brand presence in British Columbia, potentially inciting a significant uptick in market reach and consumer base. Moreover, the act of solidifying credit facilities between the organizations could signal increased confidence in sustainability and strategic cohesiveness. The business community will keenly observe the outcomes of such extensive collaborations in the retail cannabis landscape.

Potential Impacts on the Cannabis Retail Market

These strategic initiatives could potentially influence the broader cannabis retail market in multiple ways:

• Market Consolidation: Transfer of ownership and rebranding of stores might lead to a more consolidated market, potentially offering customers a mesh of quality and affordability.
• Competitive Edge: Nova's increased store count may amplify its competitive edge in the cannabis retail sector, potentially inviting new consumer demographics.
• Legal and Regulatory Framework: With the imminent approval from the Toronto Stock Exchange and the observance of regulatory protocols, the move sets a precedent for corporate compliance and governance in the industry.

Conclusion and Perspectives

As the April 2024 closing date approaches, stakeholders are buoyed by the optimism reflected in the forward-looking statements provided by the companies involved. The successful closure of this Assignment will mark a significant milestone for SNDL and Nova, shaping the future of the retail cannabis market not just in British Columbia but across Canada. The agility with which these companies are operating is emblematic of an industry that is rapidly evolving and adapting to consumer needs and market dynamics.

As the landscape of cannabis retail continues to unfold, the strategic alignments such as that between SNDL and Nova will undoubtedly play a pivotal role in charting the course of this burgeoning market. Whether this particular transaction will lead to the long-term growth and stability anticipated by SNDL and Nova remains to be seen, but it certainly signals a bold step towards an integrated and collaborative approach to cannabis retail in Canada.

While the cannabis market faces its fair share of uncertainties, proactive and strategic cooperation like the SNDL and Nova partnership brings a level of dynamism and potential for advancements that could well resonate across the industry.

For more information, please contact:

SNDL Inc.
www.sndl.com

Nova Cannabis Inc.
www.novacannabis.ca

This document contains URLs taking the reader directly to external websites for additional information on SNDL Inc. and Nova Cannabis Inc.

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In closing, this news release is designated as a key announcement for the stakeholders of SNDL Inc. and Nova Cannabis Inc., setting the stage for a significant expansion in cannabis retail operations in Canada. With the anticipation of regulatory approvals and the consummation of the Assignment by the end of April 2024, the retail cannabis sector eyes a transformed and potentially more vibrant marketplace.

These developments reflect the progressive nature of strategic business collaborations and showcase the potential for companies to leverage their strengths for mutual benefit, ultimately catering to an evolving consumer base looking for quality, accessibility, and affordability.

This news release is an essential communication from SNDL Inc. regarding the prospectus supplement dated July 22, 2022, and its short-form base shelf prospectus dated June 27, 2022, providing stakeholders with a broad perspective on the company's strategic decisions, market outlook, and future directions.

The finalization of this strategic venture between SNDL and Nova heralds a new chapter in the cannabis retail sector, underscoring the essence of dynamic partnerships in the pursuit of market enhancement and industry growth.

All information has been presented with the intent of providing a comprehensive understanding of the subject matter at hand. The collaboration between SNDL Inc. and Nova Cannabis Inc. represents a keen strategic initiative in the cannabis industry, offering growth, diversity, and potential market dominance in the Canadian retail landscape.