The coronavirus pandemic had a significant impact on the state’s economy. Many businesses closed their doors, countless people lost their jobs, and travel — both domestically and internationally — came to a near screeching halt.
As the state looks to recover from the pandemic, it needs to do everything in its power to position businesses to get back on their feet and be successful moving forward. Regulatory reform can offer a promising avenue to explore, as regulations impose numerous costs to both businesses and consumers alike. On average, small businesses spend over $83,000 in the first year just to become compliant with all federal, state, and local regulations. Small businesses continue to spend around $12,000 a year on average to comply with all regulations.
The reality is there are likely thousands of regulations across a variety of industries that are equally as burdensome to business, and which are stilfing (if not prohibiting) innovation that could help the economy recover more quickly.
Utah took steps forward to ensure it does its part in reducing the regulatory burden it’s placing on its businesses. Representative Cory Maloy proposed and the Utah Legislature passed House Bill 217, creating the first “all-inclusive” regulatory sandbox in the nation to facilitate dynamic regulatory reform in Utah.
A regulatory sandbox is a set of rules that allow businesses, usually within a specific industry, to test themselves in the market for a set period of time without being subject to any particular set of regulations. This is especially helpful to new businesses with innovative products, services, and/or business models that don’t neatly fit into a single industry. It is important to note that the program is not the “Wild West” where anything goes, as some critics have suggested. Consumer protection is a big focus of the sandbox, coupled with transparency and reporting from businesses.
This has been a flagship policy priority for Libertas over the last two years. Utah had three regulatory sandbox programs prior to this. A financial technology sandbox, an insurance sandbox, and a legal services sandbox. Rather than picking winners and losers on an industry-by-industry basis, this latest sandbox opens up the opportunity to innovate in any industry.
The pandemic shed a brighter light on the purely bureaucratic challenges entrepreneurs face. For many years, those seeking to start a business have faced red tape that has only gotten more tangled while new regulations pass and old ones remain. The sandbox offers an opportunity to reduce the barriers to entry for businesses and entrepreneurs, spurring innovation in the process without compromising the health, safety, and financial well-being of consumers.
The bill received unanimous votes in both the House and the Senate, collecting over 40 co-sponsors along the way. This program sets Utah apart as one of the most business-friendly states in the country.
Have questions about the regulatory sandbox? Be sure to check out our dedicated page.