Louisiana Needs to Think Outside the Box
Louisiana’s economy lagged behind the rest of the country long before the COVID-19 pandemic. Many states across the nation are on the path to recovery while Louisiana is still missing tens of thousands of jobs. As we look to the future of Louisiana, we need to rethink what it means to do business in our state. If we want to bring jobs back to our state and increase opportunity for Louisianans, we must think outside of the box. Louisiana must become a beacon of innovation, and one way to embrace these companies is to put in place regulatory sandboxes.
Sandboxes are an alternative way to regulate businesses that don’t fit squarely within current laws. New products or business models that have become possible through advancing technology were often not considered when the regulations of old were put in place. Rather than having to hire a lawyer or wait for a state to finally update its regulatory structure before they can begin to operate, a sandbox would allow the innovative business to begin bringing its product to consumers for a limited time. During this time, the business works with the regulator so they can operate a full business upon completion of the sandbox program.
Sandboxes are relatively new to the United States with the first one starting in Arizona in 2018. But since that time more than sixty-five companies have joined a sandbox in states like Hawaii, Utah, and West Virginia. Many applicants are cutting-edge businesses such as those dealing with cryptocurrency, innovative financial products, and legal services. Without sandboxes, many of these businesses would have never been able to get off the ground simply because their business model didn’t fit into the current regulatory structure of a state.
If Louisiana wants to be able to attract businesses from out of state or empower entrepreneurs who are running into legal issues here at home, a sandbox is just the tool to do it.
Across the country, financial technology sandboxes are the most common and have more than two dozen different businesses participating. Many of these products are built around financial inclusion, providing services that were previously unprofitable to offer. These types of businesses would not only create jobs in Louisiana but would offer products that make Louisianans’ lives better.
For too long, our state has fallen off the tracks of innovation and forced jobs and opportunities to leave the Pelican State, taking our friends and family with them. To change course and forge a future where our kids and grandkids can stay here, it’s time for Louisiana to think out of the box and embrace innovative new businesses and the jobs they bring with them.
You can learn more about sandboxes in our upcoming paper. See what companies have joined financial technology sandboxes in the graphic below (CFPB stands for Consumer Financial Protection Bureau).