ActiveRecord::AdapterNotSpecified: 'development' database is not configured. Available: [] - ruby-on-rails

Question

I am trying to set up my development environment in rails with docker compose. Getting an error saying
ActiveRecord::AdapterNotSpecified: 'development' database is not configured. Available: []
Dockerfile:
# syntax=docker/dockerfile:1
FROM ruby:2.5.8
RUN apt-get update -qq && apt-get install -y nodejs postgresql-client
RUN apt-get install cron -y
RUN apt-get install vim -y
RUN export EDITOR="/usr/bin/vim"
RUN addgroup deploy && adduser --system deploy && adduser deploy deploy
USER deploy
WORKDIR /ewagers
RUN (crontab -l 2>/dev/null || true; echo "*/5 * * * * /config/schedule.rb -with args") | crontab -
COPY Gemfile .
COPY Gemfile.lock .
RUN gem install bundler -v 2.2.27
RUN bundle install
COPY . .
USER root
COPY docker-entrypoint.sh /usr/bin/
RUN chmod +x /usr/bin/docker-entrypoint.sh
COPY wait-for-it.sh /usr/bin/
RUN chmod +x /usr/bin/wait-for-it.sh
RUN chown -R deploy *
RUN chmod 644 app
RUN chmod u+x app
RUN whenever --update-crontab ewagers --set environment=production
COPY config/database.example.yml ./config/database.yml
RUN mkdir data
ARG RAILS_MASTER_KEY
RUN printenv
EXPOSE 3000
# Configure the main process to run when running the image
CMD ["rails", "server", "-b", "0.0.0.0"]
database.example.yml:
# database.yml
default: &default
adapter: postgresql
encoding: unicode
host: db
username: postgres
password: ewagers
pool: 5
development:
<<: *default
database: postgres
docker compose:
version: "3.9"
services:
app:
build: .
command: docker-entrypoint.sh
ports:
- 4000:3000
environment:
DB_URL: postgres://db/ewagers_dev # db is host, ewagers_dev is db name
RAILS_ENV: development
volumes:
- .:/ewagers # mapping our current directory to ewagers directory in the container
# - ewagers-sync:/ewagers:nocopy
image: ksun/ewagers:latest
depends_on:
- db
db:
image: postgres:12
volumes:
- ewagers_postgres_volume:/var/lib/postgresql/data # default storage location for postgres
environment:
POSTGRES_PASSWORD: ewagers
ports:
- 5432:5432 # default postgres port
volumes: # we specify a volume so postgres does not write data to temporary db of its container
ewagers_postgres_volume:
I have double-checked indentations and spacing, done a docker build to make sure the database.example.yml is being copied to database.yml. However it seems it can't even find my development configuration in database.yml.
What's interesting is if I have what's in my database.example.yml and create a database.yml file locally with the same contents, it will work. But it should work without that, since I am copying database.example.yml to databse.yml in the dockerfile.