2024 in Review: How Small Businesses Influenced State Policies

In 2024, small business leaders nationwide stepped up and took action to make their voices heard on several issues that would impact their businesses. From Maine to California, more than 50 small businesses engaged directly with dozens of lawmakers to discuss the impact of tech policies on their ability to grow, compete, and succeed. Additionally, over 340 small businesses amplified their voices by sending letters and emails to their legislators, expressing concerns over issues like data privacy and digital advertising to ensure their voices were heard in consequential policy discussions. 

As we look back on the year, it’s clear that small businesses played a pivotal role in shaping tech policy. Here’s a look at some of the major policy challenges they faced this year and a preview of what could lie ahead in 2025.

Small Businesses Continue Fighting Extreme State-Level Data-Collection Laws

For years, small businesses have called for a single, comprehensive national data privacy law. To date, 20 states have enacted their own privacy laws, forcing small businesses to navigate an increasingly complex patchwork of regulations. Compliance is costly and time-consuming, pulling owners away from core business activities. A single federal standard would simplify compliance and protect both businesses and consumers. However, the American Privacy Rights Act (APRA), introduced earlier this year, fails to fully supersede state laws and would leave small businesses in an even more challenging position. 

Without an effective federal standard, states continue to introduce their own data privacy laws. Though well-intentioned, many of these laws would harm small businesses.

Small business perspectives were instrumental in challenging harmful state-level data privacy bills:

• Maine: Legislative Document (LD) 1977 and House Paper (HP) 1270 proposed extensive regulations on data collection and use. The bills required businesses with more than 50,000 consumer interactions to conduct “data protection assessments,” which would have forced small businesses to hire expensive legal advisors and consultants to navigate compliance. Over 15 businesses signed a letter urging Maine legislators to amend the bill and not “overregulate digital advertising tools that small businesses need to get ahead.” Michael Gaffney, who owns Seawicks Candles in Richmond, Maine, met with his state legislators to express his concerns with the bill. The bill failed, thanks to the efforts of Maine small business owners like Michael.
• New York: The New York Privacy Act (SB S365A & AB A7423A) would restrict how consumer data could be used in digital advertising, making digital ads more expensive and less effective. Dawn Kelly, owner of The Nourish Spot in Queens, said in an op-ed that “overregulating data means preventing businesses like mine from advertising to the right customers, which will increase costs and hurt our growth.” Over 60 small businesses signed letters urging New York legislators to amend the bill. Their advocacy contributed to the legislation failing this year.
• Vermont: The Vermont Data Privacy Act (H.121) introduced a “private right of action,” allowing businesses to be sued for alleged privacy violations, even when no harm occurred. This provision would expose small businesses to baseless lawsuits, pushing many to pay costly settlements to avoid even more costly legal fees. Additionally, the Act’s restrictions on data collection would make it harder for businesses to advertise effectively. Over 40 small businesses signed a letter opposing the bill, and their voices were heard. Governor Scott vetoed the bill, noting that the private right of action would make Vermont “a national outlier, and more hostile than any other state to many businesses and nonprofits.” While the Vermont Senate upheld his veto in this session, the bill may return in 2025.
• Maryland: Senate Bill 541 and House Bill 567 introduced “data minimization” rules, limiting how businesses could collect and use customer data. Such rules make it harder for businesses to communicate with customers and decide things like where to open new locations. Similar to Maine’s proposals, these bills also required small businesses to conduct costly data projection assessments and restricted businesses’ marketing partners from collecting critical traffic data to measure ads’ effectiveness. According to Sterling McKinley, a Maryland-based digital marketing specialist, “changing how Maryland business owners find and attract new customers will cause serious harm, especially in communities that face economic challenges where folks operate on tiny advertising budgets.” Despite 20 small business leaders voicing their opposition, both bills passed. The Maryland Online Data Privacy Act (MODPA) will take effect in October 2025.
•  Similar to Maine’s proposals, these bills required small businesses with at least 35,000 customer interactions to conduct costly data protection assessments. Despite 20 small business leaders voicing their opposition, both bills passed. The Maryland Online Data Privacy Act (MODPA) will take effect in October 2025.

Through continued advocacy at the federal and state levels, small businesses will continue fighting for a federal privacy law that streamlines compliance, keeps consumers’ data safe, and protects small businesses from overregulation. 

Stopping Digital Ad Taxes Before They Hurt Small Businesses

Nearly 7 in 10 small businesses use digital ads to find new customers, grow, and compete with larger companies. Proposals to tax digital ads would drive up costs, disproportionately impacting small businesses. 

As Alfred Mai, founder of ASM Games, put it, “Digital ads are absolutely essential to small businesses’ growth and success. If we run fewer digital ads, we’ll attract fewer customers. If we buy the same number of digital ads, we’ll have to pass the increased costs along to customers.”

In June, the California State Senate passed Senate Bill 1327, proposing a 7.25% digital ad tax. Although the bill’s author claimed it targeted big tech companies, it was clear that small businesses would bear the brunt of the increased costs. In August, over 200 small business owners rallied against the bill, and their advocacy efforts successfully put the bill on hold for this year.

Nebraska faced a similar challenge with a proposed 7.5% tax on digital ads. Nearly 40 small businesses signed a letter voicing their opposition. Their actions contributed to Nebraska’s legislature passing a significantly pared-down version of the bill.

Despite the digital ad victories small businesses achieved this year, future attempts to impose a digital ads tax—both in Nebraska and California—remain a possibility.

Looking Ahead to 2025

The wins earned by small businesses in Vermont, Maine, New York, California, and Nebraska highlight the incredible impact of their advocacy in shaping policy. However, as we look ahead to 2025, it’s clear the legislative battles of 2024 are far from over. Many data privacy and digital ad tax bills that didn’t pass this year could easily resurface in the 2025 legislative session.It’s crucial for small business leaders to stay vigilant and engaged. As lawmakers debate the future of tech policy, 3C remains committed to supporting small businesses by providing the resources they need to share their concerns and perspectives in policy discussions. We look forward to another year of small businesses leading the fight for laws that foster innovation, growth, and success nationwide.