Minnesotans beware, new business rules will be costly

Compared to the rest of the country, Minnesota does not rank favorably on business regulation. A lot of studies that quantify regulation usually rank us below average.

The 2015 Small Business Index, for example, ranked Minnesota as the number 32 least burdensome state for small businesses in 2011. But even more recently,

A 2019 Small Business Policy Index from the Small Business and Entrepreneurship Council ranked Minnesota 45th among the states for how friendly its policy environment is to small businesses.

In its 2021 “Freedom in the 50 states” report, the Cato Institute ranked Minnesota number 39 on economic freedom, and number 34 on regulatory freedom. On numerous other studies looking at economic freedom, like the Economic Freedom of North America, Minnesota has consistently ranked among the least free states in the country — regulation being a major contributor to that.


Minnesota’s major economic hub –– Minneapolis –– has also consistently ranked low on the Doing Business in North America Index. This is a study that ranks cities in six categories on the ease of starting and operating a small or medium-sized business; (1) starting a business, (2) employing workers (3) getting electricity (4) registering property (5) paying taxes, and (6) resolving insolvency. In 2018, Minnesota ranked 40th among major US cities.

Yet, instead of loosening some of these rules to make it easier for businesses to operate in the state, like American Experiment has called for, the legislature has chosen to saddle businesses with even more new rules.

As of Saturday, July 1, numerous new rules that were passed in the just ended legislative session are in effect. Virtually, all businesses will be affected with laws, among other things, banning exclusive digital right to repair, restricting co-pays for prescription drugs, banning the registration of some pesticide products, banning lenders from collecting some types of loans, banning “excessive” price increases of generic or off-patent drugs, banning non-compete clauses.

Other (select) laws to take effect later include: rules and taxes associated with the state’s Family and Medical leave program which take effect January 2026, a rule banning the sale of producs with added forever chemicals, new safety rules for workers in oil refineries, laws prohibiting property insurance companies from refusing to issue or renew a contract due to the type of pet that the homeowner has, rules prohibiting pay day lenders from charging more than 50 percent interest on loans that they make.


Effective May 25, 2023, retailers cannot charge “unconscionably excessive prices” when the governor declares an emergency in the aftermath of a disaster. Some of the essential goods or services to be protected include food, water, fuel, shelter, transportation, health care services, and medical supplies. A price more than 25% above a seller’s average price during the 60-day period before an executive order declared emergency would be deemed an “unconscionably excessive price.” Violators could be fined up to $1,000 per sale or transaction, with a maximum penalty of $25,000 per day.

Regulations are costly

All these new rules, whether they achieve their intended goal or not, present an added cost to business operations. Businesses have to invest time and money into understanding and complying with new and existing regulations. This is time and money that they can invest into growing their businesses and creating jobs. And small businesses, which tend to operate on razor thin profit margins, are especially hurt with new rules, as they face a higher cost of compliance compared to big and well established businesses.

Minnesotans should be concerned that instead of creating a more conducive environment for business creation and growth, our legislators have gone the opposite direction, raising taxes and increasing the red tape that Minnesotans have to work through just to operate a business in the state.

Even worse, these new rules are coming at a time when the Biden Administration is also expanding the federal regulatory system. New research estimates that since President Joe Biden took office, new rules that his administration has created have already cost each American household $10,000.

With the hammer of the federal government already cracking down on businesses and Americans, the Minnesota legislature has not done Minnesotans any favors by increasing state red tape. Complying with with rules is costly. And it is Minnesotans who will pay the price.