Canada’s Cannabis Retail Giant SNDL Exits Domestic Flower, Bets Bigger on One U.S. State

By Nicolás Rodríguez, Managing Editor

SNDL Inc. (NASDAQ: SNDL) is considering a share buyback of up to C$50 million after shareholders rejected a proposed reverse stock split, as the cannabis company reported preliminary record quarterly free cash flow and increased its investment in the US’s medical cannabis market.

The proposed share consolidation received 54.1% support at the company’s October 15 annual and special shareholder meeting, falling short of the required two-thirds majority.

Following the vote, SNDL’s board directed management to explore a substantial issuer bid of up to C$50 million, at a maximum price of C$1.92 (US$1.35) per share. That price represents a 17.4% premium to SNDL’s October 14 Nasdaq closing price.

The proposed tender offer has not been launched and remains subject to regulatory approvals. Any formal offer would follow the release of third-quarter earnings.

Record Cash Flow, But With a One-Time Contribution

SNDL expects to report approximately C$20 million in free cash flow for the third quarter of 2026, potentially the highest quarterly total in its history.

However, approximately C$10.6 million of that amount came from the initial unwinding of a captive insurance arrangement, net of related premium payments. The remainder reflects working capital initiatives and cash generation across the business.

The preliminary figures are unaudited, and SNDL’s definition of free cash flow is a non-IFRS measure that may not be directly comparable with other companies.

During the third quarter, SNDL repurchased approximately 5.4 million shares. Over the 12 months ended September 30, it bought back approximately 21.8 million shares for C$43.4 million.

The company had approximately 243.8 million shares outstanding as of October 14.

“We respect the outcome of the vote and have listened carefully to our shareholders,” CEO Zach George said.

George said shareholder feedback emphasized accelerated capital returns, while management continues to prioritize balance sheet strength and selective investments.

SNDL also intends to renew its existing share repurchase program after its November 20 expiration, subject to approvals. The potential substantial issuer bid and the regular repurchase program would not operate simultaneously.

SNDL Raises Parallel Stake to 92%, Invests in Florida

Alongside its capital return plans, SNDL is increasing its exposure to the U.S. cannabis market.

The company raised its indirect economic interest in Parallel, the vertically integrated U.S. medical cannabis operator, from approximately 67% to 92% following a rights offering.

The transaction provides Parallel with additional liquidity and expands SNDL’s exposure to its operations.

Through SunStream, SNDL is also funding the acquisition and development of a cultivation and processing facility in Gainesville, Florida. The facility is intended to support cultivation, manufacturing and finished-product supply for Parallel’s Florida retail network.

SNDL is evaluating potential future integration of Parallel’s medical cannabis operations, although any such move would depend on legal, regulatory, accounting, and Nasdaq requirements.

Canadian Restructuring and Ontario Regulatory Settlement

In Canada, SNDL is exiting the unprofitable domestic dried flower category and shifting its focus toward higher-value cannabis products.

Management warned that the restructuring could result in one-time, primarily noncash charges in upcoming financial results.

Separately, SNDL reached an agreement in principle with the Alcohol and Gaming Commission of Ontario to resolve outstanding regulatory matters, including a C$200,000 fine. The agreement remains subject to definitive documentation.

The contemplated changes include third-party financing and a modified franchise structure that would remove associated retail revenue from SNDL’s consolidated financial statements while preserving its underlying net economics.

Together, the measures reflect a capital allocation strategy centered on reducing the share count, restructuring underperforming operations and expanding investment in U.S. medical cannabis assets.

SNDL is scheduled to report its complete third-quarter financial results on October 27, before the market opens, followed by a conference call at 10 a.m. ET.

The earnings release will provide a clearer view of recurring cash generation, restructuring costs, and the financial implications of the company’s investment strategy.

As cannabis companies reassess capital allocation, profitability, and expansion strategies, executives and investors will gather at IgniteIt’s Capital & Policy Summit in Washington, D.C., on November 18 to discuss the financial and regulatory interests shaping the industry.