When confronted with the immense pressure on our economy and health system during the COVID-19 pandemic, the state of Montana temporarily waived over 130 regulations to boost health care system capacity and provide more flexibility in the private sector. Regulations waived included restrictions on access to telehealth, pharmacy technicians and even curbside alcohol pickup.
These short-term solutions during a period of crisis ended up having long-term benefits as lawmakers were able to identify and permanently repeal many old regulations that weren’t necessary to keep around anymore. In fact, Republican and Democrat legislators were unanimous in passing Rep. Rhonda Knudsen’s HB 43 last year, permanently repealing telehealth regulations waived in the pandemic.
The success of the flexible regulatory approach taken by Montana’s government during the pandemic should be a model for what we can do next to unleash economic growth. Montana should join our neighbor states by creating a regulatory sandbox to fast-track innovative businesses with good ideas by waiving red tape standing in their way.
Montana has tens of thousands of regulations on the books, many enacted decades ago before anyone was even thinking about iPhones or the blockchain. These types of outdated regulations can crush entrepreneurs trying to launch innovative new products or services that don’t fit into the established regulatory framework. Tech start-ups can wither and die when they wait years to get special permission to begin operating.
That’s where a regulatory sandbox comes in. Like the temporary waiver of regulations during the pandemic, a regulatory sandbox would create a mechanism to identify the unneeded regulations standing in the way and fast-track innovative businesses to the market.
Regulatory sandbox programs work like this: entrepreneurs apply to enter the sandbox and, if accepted, specific regulations are waived for a set period of time, say two or three years. Businesses in the sandbox program are free to test their innovative ideas in the market while still undergoing oversight to protect consumer health and safety.
Just like during the pandemic, a regulatory sandbox would give policymakers time to safely test and learn the effects of waiving certain regulations before deciding whether they should be reformed or repealed. This would be a perfect complement to the top to bottom review of regulations being done under Gov. Greg Gianforte’s Red Tape Relief Initiative.
Coupled with Gianforte’s commitment to keeping taxes on business low, the flexibility provided by a regulatory sandbox would act like a big Montana magnet for entrepreneurs fleeing places like California that are hostile to business.
Utah’s regulatory sandbox for legal services has proven enormously successful in attracting businesses that would otherwise be prohibited by current regulations. Utah’s sandbox is narrowing the access-to-justice gap by authorizing companies like Rasa, an app service helping to expunge the records of Utahns at a fraction of the cost of traditional legal services.
Cryptocurrency companies like River Financial are flocking to Hawaii where the state’s regulatory sandbox for financial technology has allowed flexibility on burdensome cash reserve requirements. Online banking companies like BrightFi are relocating to Arizona to participate in the state’s financial services sandbox.
Eleven states so far have adopted some form of regulatory sandboxes, including our neighbors Wyoming and South Dakota. Montana can maintain our regional economic edge by creating our own regulatory sandbox.
I believe Montana should be more than a destination state for remote workers and tourists. With a regulatory sandbox in place to fast-track innovation, our state could become a destination for business nationwide.
This article originally appeared in Lee Newspapers