A Regulatory Sandbox can Accelerate Innovation – GSI

From James Boyle, GSI Staff

There is no question New Jersey’s economy is still in the midst of recovering from COVID-19  but for entrepreneurs, “time’s a wastin’.”

New Jersey needs a plan to make our business climate friendlier and it starts with encouraging entrepreneurship that drives the formation of small businesses.

One idea for encouraging entrepreneurship that states like Arizona, Florida and most recently Utah have adopted is to create a “regulatory sandbox.” It is not a new idea, but one New Jersey’s attorney general, along with several other state AGs, dismissed back in 2019 when we  could have been more encouraging to FinTech start-ups in our state. A regulatory sandbox allows a company to offer its new product or service under a temporary suspension of a particular regulation that might otherwise slow down or disallow its introduction to the market.

New Jersey’s 7 consecutive years as the “worst business climate” in the US has tarnished our brand. If that is not enough, more bad news arrived for those seeking to start new businesses in our state. A recently released Cato Institute report ranked New Jersey 49th, or second worst in the country, for imposing regulatory barriers on entrepreneurs. This is no surprise to our state’s business leaders since inconsistent and imposing business regulations were cited as problematic during GSI’s business climate forum just last March.

But it’s not too late to show we are listening.

 In early April,  A-5446 allocated $15 million in federal aid to small businesses in the state. It has the potential to help current businesses in the short run but what happens when the federal aid spigot is turned off?

New Jersey needs to enact policies that encourage innovative, entrepreneurial thinking if we are committed to the future of small businesses. Removing obstacles, albeit temporarily, shows we are listening to these innovators.  That’s what will make our state more attractive and more competitive with the other states who are already tearing down these barriers to innovation.