Arkansas' 2025: Tech and Economic Growth Clash with Ideological Overreach

Arkansas' 2025 reveals a more complex picture for its business environment. Governor Sarah Huckabee Sanders' administration has delivered impressive pro-business victories: streamlined energy permitting, modernized economic development incentives, and strategic attraction of major tech and manufacturing investments. 

Yet even as these wins accumulate, Arkansas lawmakers have pursued ideologically-driven policies that undermine the pro-business environment they've worked to build. As Arkansas closes 2025, it's clear that genuine economic progress is threatened to be undone by policies that could reverse years of gains if unchecked.

The Wins: Arkansas' Transformation Into a Tech, Manufacturing Hub

Arkansas has spent years building the fundamentals of a competitive business environment—streamlined permitting, reasonable tax policy, and strategic workforce development. In 2025, the payoff arrived in the form of historic investment announcements that validate the state's economic development strategy.

Google's $4 Billion West Memphis Data Center: A Landmark Achievement

In October 2025, Google announced a transformational $4 billion investment to build its first Arkansas data center in West Memphis, marking one of the largest single investments in state history and positioning Arkansas as a critical player in the global AI revolution.

The project scope reveals the strategic significance:

First Arkansas Data Center: Google's inaugural Arkansas facility demonstrates the state's emergence as a competitive location for technology infrastructure beyond traditional tech hubs.

AI and Cloud Infrastructure: The data center will power Google's search capabilities and AI innovation, connecting Arkansas directly to cutting-edge technology development.

Energy Impact Fund: Google committed $25 million to scale energy affordability initiatives in Crittenden County, including home weatherization, energy efficiency technology, and workforce development.

This investment didn't happen by accident. It's the direct result of Governor Sanders' streamlined energy permitting through the Generating Arkansas Jobs Act, which reduced project approval timelines from 12-18 months to just six months. Fast permitting enables companies to make rapid deployment decisions rather than waiting years for regulatory approval.

More broadly, Google's investment demonstrates how pro-business energy policies position Arkansas to compete for energy-intensive industries including manufacturing, advanced materials, and technology sectors that require reliable, scalable power capacity. Landing a Fortune 10 technology company creates a "proof of concept" that Arkansas can support sophisticated technology operations, making it easier to recruit additional tech companies considering Southern expansion.

Green Bay Packaging's $1 Billion Morrilton Expansion: Long-Term Commitment

In June 2025, Green Bay Packaging announced a historic $1 billion investment to expand its existing kraft linerboard mill in Morrilton, representing the largest capital investment project in Central Arkansas history. The multi-year expansion could more than double the mill's current production capacity and will create 35 new jobs while supporting Green Bay's existing 620-employee workforce in Conway County.

Green Bay's investment teaches us that existing businesses expanding demonstrates Arkansas retention success. Companies expand where they experience success. Green Bay's 50-year Arkansas presence and billion-dollar reinvestment prove that Arkansas provides long-term business stability, reliable workforce, and a supportive business climate that encourages capital-intensive upgrades rather than relocation.

Arkansas' lower operating costs, including competitive electricity rates, reasonable property taxes, and lower labor costs compared to coastal states, free up capital that manufacturers like Green Bay can reinvest in productivity-enhancing technology rather than overhead expenses. Manufacturing creates quality middle-class careers: Green Bay's 620 existing employees in Conway County earn manufacturing wages that support families and local businesses, and this expansion ensures these quality jobs remain in rural Arkansas for another generation.

Weyerhaeuser's $500 Million TimberStrand Facility: Advanced Manufacturing in Rural Arkansas

Weyerhaeuser Company broke ground in June 2025 on a state-of-the-art $500 million facility in Arkansas. The facility will produce laminated strand lumber for residential and multi-family wood frame construction and is expected to create 200 jobs when fully operational in 2027.

This investment continues a decades-long partnership between Weyerhaeuser and Arkansas, where the company operates multiple locations across the state. Critically, the new facility will produce engineered wood products using advanced lamination technology, positioning Arkansas in value-added timber manufacturing rather than just raw timber processing.

The facility brings 200 high-quality manufacturing jobs to Southeast Arkansas, a region that benefits significantly from major industrial investment and diversified economic development. 

Weyerhaeuser's willingness to make this investment reflects confidence in Arkansas' political stability, regulatory predictability, and business-friendly governance. State and local officials worked collaboratively with Weyerhaeuser to ensure site readiness, permitting efficiency, and workforce development support, the kind of hands-on economic development assistance that differentiates Arkansas from competitors.

The IMPACT Legislative Package: Comprehensive Economic Modernization

The Arkansas General Assembly passed the most comprehensive economic development legislation in two decades during the 2025 session. The IMPACT package (Improving Markets, Promoting Arkansas Commerce and Trade) includes nine major bills creating modernized incentives, streamlined processes, and competitive tools to attract investment and foster a better business environment.

Key legislation includes:

Modernization and Automation Incentive (Act 882): Tax credits up to 5% of eligible project costs for companies investing $25 million or more to modernize and automate Arkansas operations.

Data Center Incentive (Act 548): Amended sales and use tax exemptions for qualified data centers, lowering investment threshold to $100 million, adding multi-site large data centers with $2 billion qualifying investment, and expanding equipment eligibility.

Lithium Industry Incentive (Act 1012): Sales tax exemption for lithium resource development firms investing at least $100 million, plus five-year severance tax exemption for lithium extracted from brine in South Arkansas.

Corporate Headquarters Relocation Incentive (Act 881): Tax credit up to 10% of eligible project costs for companies relocating corporate headquarters to Arkansas.

Industrial Development Authorities (Act 576): Enables creation of public benefit corporations to secure economic development projects and develop industry in designated areas.

The Setbacks: When Ideology Overrides Economic Sense

Despite these impressive business wins, Arkansas lawmakers have pursued several policies that contradict the state's pro-business positioning and signal regulatory unpredictability to potential investors.

Act 624: The PBM Pharmacy Ownership Ban and Its Consequences

Arkansas enacted Act 624 in April 2025, prohibiting pharmacy benefit managers (PBMs) from owning or operating pharmacies in the state, effective January 1, 2026. This unprecedented law forces vertically integrated healthcare companies like CVS, UnitedHealth, and Cigna to divest their Arkansas pharmacies or cease PBM operations in the state.

The law is aggressive:

Ownership Prohibition: PBMs, including subsidiaries and entities managed by PBMs, cannot acquire or hold retail pharmacy permits in Arkansas, including mail-order pharmacies.

Forced Divestiture: The Arkansas Board of Pharmacy must revoke or not renew pharmacy licenses for facilities directly or indirectly owned by PBMs beginning January 1, 2026.

Patient Notification Requirements: Pharmacies violating the law must notify all patients and prescribers within the past 365 days that they are going out of business.

The legal reality has been harsh. CVS, Cigna's Express Scripts, UnitedHealth's Optum Rx, and the Pharmaceutical Care Management Association filed federal lawsuits challenging the law as unconstitutional. In July 2025, a federal judge granted a preliminary injunction halting the law, ruling it appears to violate the Commerce Clause and may be preempted by federal law.

Here's what this means: Arkansas created regulatory uncertainty that discourages investment. When Arkansas enacts first-in-the-nation regulations forcing business model restructuring, it signals to companies nationwide that Arkansas imposes unpredictable regulatory risks that other states don't—making Arkansas less attractive for companies evaluating multi-state expansion.

The practical consequences are real. CVS warned it may close 23 Arkansas pharmacies, and UnitedHealth may close 11 locations, eliminating hundreds of Arkansas jobs. These job losses directly contradict Arkansas' economic development mission and hurt families and communities.

The court injunction demonstrates policy overreach. When a federal judge grants a preliminary injunction because a law "appears to overtly discriminate against out-of-state companies," it signals that Arkansas policymakers pursued ideological goals without adequate legal analysis, wasting state resources defending indefensible legislation.

Mandated Healthcare Provider Reimbursement Rates: A Close Call

Arkansas legislators introduced HB 1930 and SB 626 during the 2025 session, which would have mandated minimum reimbursement rates for healthcare providers. The legislation was defeated following opposition from business groups who warned it could increase private employer health insurance premiums by up to 30%.

Arkansas employers competing against companies in states without reimbursement mandates would face higher labor costs, reducing competitiveness and profit margins. Market-based solutions work better than price controls. Rather than mandating rates, Arkansas should promote competition, transparency, and alternative insurance models that give businesses more choices and control over healthcare spending.

Fortunately, the legislation was defeated. Employee recruitment becomes harder with worse benefits; if premium increases force businesses to reduce health benefits, they lose a critical tool for attracting and retaining quality employees.

What Arkansas' 2025 Teaches Us

Arkansas' 2025 is a story of genuine pro-business policy achievement shadowed by ideologically-driven regulations that contradict the state's economic development mission. Governor Sanders has delivered impressive wins: the IMPACT legislative package modernized incentives for emerging industries, streamlined energy permitting has attracted Google's historic $4 billion data center investment, and strategic workforce partnerships have enabled Green Bay Packaging and Weyerhaeuser to announce major expansions.

But Act 624's PBM pharmacy ownership ban reveals a troubling pattern. When states pursue first-in-the-nation regulations that force business restructuring, they signal to the business community: Arkansas will regulate based on ideology rather than economic analysis. A federal judge's preliminary injunction blocking the law because it "appears to overtly discriminate against out-of-state companies" confirms this concern.

The lesson is critical: pro-business policy requires consistency across all sectors. You can't cut energy permitting timelines and attract Google while simultaneously pursuing policies that hurt healthcare companies and eliminate jobs. Investors evaluate entire business environments and unpredictability in one sector undermines confidence in others.

If Arkansas wants to maximize the opportunity of its newest business investments, state leaders need to recommit to consistent, predictable pro-business governance. That means no more first-in-the-nation regulations that contradict principles of federalism and interstate commerce. It means defending business partnerships rather than second-guessing them. And it means recognizing that a healthy economy requires business success, not business restriction.