Hello,
Quick answer, update to the latest SDK version and this issue will be fixed.
Why did this happen and why updating to the latest version is necessary?
The q2-sdk library has a few dependencies one of them being Jinja2. Jinja2 has a dependency to markupsafe that is not version locked. Thus when markupsafe updated with a backwards incompatible change this broke on new installs of the q2-sdk. In any version of the SDK newer than 2.120.0 the issue will be fixed.
This did not break any existing sdk extensions running in production because we install all the dependencies and sub dependencies on build.
-Trey