Vscode-remote-release: Missing env variables - "The X variable is not set."

[Tony-Sol]

• VSCode Version: 1.50.1
• Local OS Version: macOS Catalina 10.15.7 (19H2)
• Remote OS Version: -
• Remote Extension/Connection Type: Docker

Steps to Reproduce:

1. catalog structure:

.devcontainer
├── .env
├── devcontainer.env
├── devcontainer.json
├── docker
│   └── images
│       ├── mysql
│       │   ├── Dockerfile
│       │   ├── conf.d
│       │   │   └── dev.cnf
│       │   ├── entrypoint.sh
│       │   └── init
│       │       └── demo.sql
│       └── python
│           ├── .gitkeep
│           └── Dockerfile
└── docker-compose.yml

1. .env file is equal devcontainer.env:

DOCKER_CACHE_PATH=../cache/docker

1. devcontainer.json:

"dockerComposeFile": "docker-compose.yml",
"service": "python",
"workspaceFolder": "/home/appuser",
"initializeCommand": "export $(cat ./.devcontainer/devcontainer.env | xargs) && printenv",
"postCreateCommand": "pipenv install --dev && echo 'eval \"$(env _PIPENV_COMPLETE=source-bash pipenv)\"' >> ~/.bashrc",
"remoteUser": "appuser",

1. use env variable in docker-compose.yml file like:

services:
  mysql:
    build:
      context: ./docker/images/mysql
    ports:
      - 3306:3306
    volumes:
      - ${DOCKER_CACHE_PATH}/db:/var/lib/mysql

1. "Reopen in container" execution log has:

[2020-11-02T22:47:20.493Z] [PID 62411] DOCKER_CACHE_PATH=../cache/docker
[2020-11-02T22:47:20.495Z] [PID 62411] [594 ms] Start: Run: docker-compose version --short
[2020-11-02T22:47:20.858Z] [PID 62411] [957 ms] Start: Run: docker ps -q -a --filter label=com.docker.compose.project=playgroundpython_devcontainer --filter label=com.docker.compose.service=python
[2020-11-02T22:47:20.979Z] [PID 62411] [1078 ms] Start: Run: docker-compose -f /Users/tonysoloveyv/Projects/playground.python/.devcontainer/docker-compose.yml config --services
[2020-11-02T22:47:21.356Z] [PID 62411] [1455 ms] mysql
[2020-11-02T22:47:21.357Z] [PID 62411] [1456 ms] The DOCKER_CACHE_PATH variable is not set. Defaulting to a blank string.

What am I doing wrong?

Does this issue occur when you try this locally?: Yes
Does this issue occur when you try this locally and all extensions are disabled?: Yes

[chrmarti]

Try moving .env to your project folder (one folder up). We use that as the working directory for docker-compose and that's where it looks for a .env file.