SNDL Sees Gains From Vice Segments, Will Ring-Fence Skymint and Parallel
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Approval of such a plan has proven to be an uphill battle.

Canadian cannabis and liquor retailer SNDL Inc. (NASDAQ: SNDL) reported earnings that signaled more upward growth through the second quarter ending June 30, with the company hinting at plans to create a new entity that would absorb Skymint and Parallel.

Net revenue for the second quarter reached a record $244.5 million, marking a 9.3% increase from $223.7 million the prior year. The company’s gross margin rose to $51.9 million, reflecting a 21% year-over-year rise attributed to operational enhancements and improved pricing strategies.

Net loss came out to $33.2 million, a substantial improvement from the $74 million loss in the same period last year. The improvement was largely due to the integration of the Valens Company and equity investment losses. Additionally, adjusted EBITDA showed a positive swing with $2.2 million, a stark contrast to a loss of $25.9 million in the same period the previous year.

SNDL’s CEO, Zach George, waxed on the company’s evolution, going from under $10 million of net revenue in Q2 2021 to an expected $1 billion in annual revenue for 2023. He credited the growth to the company’s dedicated team and emphasized their ambition to achieve profitability by 2024.

“We now have the requisite scale and platform optionality to create sustainable shareholder value,” he said in a statement. “We expect our Canadian retail network to continue to grow at a modest pace while our internal focus on optimization is in the early stages of producing tangible results.”

Liquor Sales Dominate

In the liquor retail segment, SNDL operates under the banners “Wine and Beyond”, “Liquor Depot”, and “Ace Liquor”. It reported a 2.1% rise in net revenue, achieving $151.7 million. The growth was driven by same-store sales, and the company plans to launch an e-commerce platform in the third quarter.

The cannabis retail segment, in partnership with Nova, saw a 13.2% year-over-year increase, with second-quarter revenues hitting $71.9 million. The deal with Nova is expected to close by August 25.

The cannabis operations segment reported an 81% growth in net revenue, amounting to $20.9 million. SNDL said that the positive shift in gross margin shows the company’s focus on premium product distribution and streamlining operations.

The company’s investments, predominantly through its SunStream Bancorp Inc. joint venture, were valued at $569 million. However, the quarter reported a net loss of $1.5 million, mainly driven by battered stock holdings. The company continues to value SunStream at full rate despite the fact that two holdings include Skymint which is in receivership and Parallel which defaulted on its debt.

Green Market Report wrote in June that a source at SNDL said the company has taken impairments of $90 million, but no such accounting appeared in the latest report.

The company’s liquidity remains healthy, with $182.6 million of unrestricted cash as of August 11, and approximately 260 million shares outstanding. SNDL said it has been aggressive with its share repurchase program.

SNDL anticipates further growth updates in the third quarter of 2023, especially concerning its SunStream portfolio and strategic partnerships.

Another ring-fenced listing attempt

SNDL said that SunStream is working toward creating a new entity, SunStream USA, to tap into the U.S. cannabis market and ensure compliance with stock exchange regulations. The reorganization involves transferring some interests from the recently embattled Skymint and Parallel into the new ring-fenced entity.

“The SunStream USA structure is expected to allow SNDL to participate in SunStream assets while complying with all U.S. federal and state laws,” the company said.

For investors, the key takeaway is that SNDL will acquire a unique kind of non-voting share in SunStream USA — likely inspired by Canopy Growth’s failing hopes of being able to touch its pending U.S. investments while maintaining its spot on major exchanges. The share may later convert into a regular one if certain conditions are fulfilled.

The strategy is pending review from Nasdaq, where SNDL is listed. The Nasdaq has previously voiced its opposition to such a structure despite the TMX Group, which operates the Toronto Stock Exchange, taking a more cozy stance to the idea. The company said it expects to disclose more about the Skymint and Parallel reorganization initiatives by the third quarter of 2023.

Adam Jackson

Adam Jackson writes about the cannabis industry for the Green Market Report. He previously covered the Missouri Statehouse for the Columbia Missourian and has written for the Missouri Independent. He most recently covered retail, restaurants and other consumer companies for Bloomberg Business News. You can find him on Twitter at @adam_sjackson and email him at

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