Minimal test case to show aws-cli cloudformation package regression.

child.yaml

---
Resources:
  GrandChild:
    Type: AWS::CloudFormation::Stack
    Properties:
      TemplateURL: grandchild.pyaml

grandchild.yaml

---
Resources:
  Bucket:
    Type: AWS::S3::Bucket
    Properties:
      BucketName: grandchild-stack-bucket

Makefile

S3_BUCKET := cf-templates-1wwumiwcx5krz-ap-southeast-2
S3_PREFIX := 8b87ca7b-869e-4401-baa0-ad0522e32f21
AWSCLI := .venv/bin/aws

all: parent.pyaml

parent.pyaml: child.pyaml

child.pyaml: grandchild.pyaml

grandchild.pyaml:

%.pyaml: %.yaml .venv
	$(AWSCLI) cloudformation package \
		--template-file $< \
		--s3-bucket $(S3_BUCKET) \
		--s3-prefix $(S3_PREFIX) \
		--output-template-file $@

.venv:
	@python3 -mvenv .venv
	@.venv/bin/pip --quiet install --upgrade pip
ifneq ($(VERSION),)
	@.venv/bin/pip --quiet install awscli==$(VERSION)
else
	@.venv/bin/pip --quiet install awscli
endif
	@$(AWSCLI) --version
	@echo

.PHONY: clean
clean:
	@find * -type f -name '*.pyaml' -delete
	@rm -rf .venv

parent.yaml

---
Resources:
  Child:
    Type: AWS::CloudFormation::Stack
    Properties:
      TemplateURL: child.pyaml