Thank you so much!!! Wish this was documented somewhere, this is the correct answer. Note: When you are use using coredata however it is slightly different for the mac, follow https://developer.apple.com/documentation/bundleresources/entitlements/com_apple_security_application-groups

This doesn't seem to be working in macOS Monterey 12.0.1 (21A559), Xcode 13 13.1 (13A1030d) even after quitting and relaunching Xcode

Thank you so much!!! I will try on the next Xcode beta once available.