States aren't allowed to regulate inter-state commerce, as much as they'd like to think otherwise.
Worst case, you might have to say "Sorry, we can't accept customers from California, because those customers might be breaking the law in their own state", and you only need to do that if the law penalizes customers and not just the businesses serving those customers.
Now, if you do business within a state with no such laws and another state claims regulatory authority over your business, or if some federal regulation attempts to enforce this ridiculosity, then by all means I'd suggest fighting that tooth and nail. A business should only have to deal with one vertical tower of authorities above them, not all the ones sideways of them too.
That's the situation we were in. Initially the California DFI said we couldn't do business in Massachusetts where there are no laws, or in Alabama and Idaho, where we have licenses, without taking the risk that I might land up in jail for violating California law. Hence the fighting.
That seems consistent with California having their own crazy laws about this, though; you are subject to California jurisdiction as a California company. It's insane, and someone ought to fight it, but why do you want to spend your time fighting it rather than working on your business?
I'm suggesting that you could go somewhere that doesn't have their own crazy laws about this, and only bother fighting it if some other state tries to claim jurisdiction over you.
Well, if you agree he's right, why not write emails to the bureaucrats persecuting him rather than argue in a comments thread with him?
Looks like the head capo is Jacob Appelsmith:
jacob.appelsmith@abc.ca.gov [be polite!]
Emails from the general public to regulators that cc reporters (especially reporters who have quoted Mr. Appelsmith before) actually carry a lot of weight.
This is because American regulators intimidate the businesses they are regulating into silence. They have complete power over whether or not your products are approved, and criticizing them will piss them off and ensure that they sit on your application (at a minimum) or start finding various kinds of violations that they can cite you for.
That is, unless Mr. Appelsmith feels that the public and/or the press can (a) identify him by name and (b) do not support his actions. This is one of the vanishingly few scenarios in which a civil servant can actually lose their job, so they really hop to it[1].
During the whole process while you are waiting for approval you have zero revenue, and so it looks to all the world like you are just a loser and a whiner. In the biotech space this is why a lot of companies nowadays debut in Europe, so that they can say with some justification "well, we have a legit product but the FDA is holding it up". And because the threat of zero revenue for an arbitrarily long period of time means you might not make payroll, it's very unusual for someone to fight the power like Mr. Greenspan is doing. And he really could only do it as a one man software company without any employees that he needs to feed.
In a less sympathetic sector like oil or pharmaceuticals, or even just a slightly larger company of 100 employees, he loses the sympathy associated with a one man operation. At that point the regulators just go to the press and get them to write a story on what a terrible company this is for practicing without a license. Thereby justifying further regulation.
Basically, someone needs to stand up for what is right rather than just retreating. Mr. Greenspan is a pain in the ass in the same way the Don't Touch My Junk guy was. Everyone else tolerates these sorts of step by step encroachments on liberty till there is none left.
[1] Though afterwards they will hate FaceCash for all eternity and look to trip it up whenever possible, but Mr. Greenspan has no other cards to play at this point.
If anyone does choose to write to him, and I encourage everyone to do so, please be polite even if you are firm.
I have talked to just about all of the people on that list with an e-mail address ending in .gov. So they should be familiar with the issues, and they will probably be surprised to hear that the public cares.
If you could build a one-state only payment system and convince Best Buy to adopt it, that would be a valid argument I suppose. The reality is that Best Buy has one nationwide point of sale system. Same with Staples. Same with K-Mart. Same with every large retailer. You add a tender type button in one state and it shows up in 50 states. That's a problem when pressing the button in 46 states is a federal crime.
Moving to Massachusetts now would be great until either A) The Money Services Round Table lobbied the Massachusetts legislature for a repeat of the "successful" regulations implemented in California, or B) we wanted to expand to large businesses to compete with Google Wallet and Visa. So it would be of limited benefit for a short while to move.
If you were simply an activist, I'd applaud your tenacity to battle the state. But you're a CEO. You let go staff that were (I assume) critical to your operations. Unless those employees are just sitting by the phone waiting for you to re-hire them, you've probably lost hard gained domain expertise.
And while I admire your goal to hit it out of the park with national retailers, from your "Where can I use FaceCash?" page (http://www.facecash.com/where.html), it looks like you were trying to grow the business with small local companies anyhow. If you moved the business to another state, you could at least get on with growing your business organically.
