Tennessee's 2025: Record Investment Meets Regulatory Challenges

When states create environments where businesses can thrive without excessive red tape, investment follows. Tennessee's 2025 proved this principle with the single largest private corporate investment in state history, but the year also revealed how well-intentioned regulations can create compliance burdens that stifle growth. As the Volunteer State closes out the year, it's worth examining what lawmakers got right, where they stumbled, and what these decisions mean for Tennessee's economic future.

The Wins: Tennessee's Pro-Business Momentum

Tennessee demonstrated in 2025 why it continues to rank among the most business-friendly states in America. From protecting retailers against organized crime to slashing regulatory red tape, state leaders took concrete steps to make Tennessee more competitive and attracted historic investment as a result.

Taking on Organized Retail Crime

In 2025, Tennessee strengthened its organized retail crime law through HB 207/SB 240, which took effect July 1st. The updated statute provides retailers with enhanced enforcement tools to combat sophisticated theft networks that devastate inventory and profitability.

The economic impact is substantial. Tennessee retailers lose an estimated $500 million annually to organized theft, reducing profitability and costing the state $117 million yearly in lost tax revenue.

This isn't just about stopping shoplifters—it's about recognizing that organized retail crime is a sophisticated criminal enterprise that directly harms business profitability and drives up consumer prices. The enhanced enforcement tools level the playing field for legitimate retailers competing against criminal networks that exploit legal loopholes. Tennessee's action demonstrates legislative commitment to protecting businesses and maintaining stable retail operations statewide.

The "Less is More Act" – Cutting Red Tape

The Less is More Act took effect July 1, 2025, to reduce licensing barriers. This legislation directly reduces unnecessary regulatory compliance costs for businesses seeking to operate in Tennessee.

Key provisions include eliminating licensure barriers that add compliance costs without clear public benefit, streamlining board appointment procedures to reduce bureaucratic delays, and authorizing regulatory boards to conduct meetings electronically, cutting administrative costs and improving accessibility.

This is the kind of policy that makes a real difference for businesses of all shapes and sizes. Reducing regulatory complexity enables businesses to focus capital on growth and expansion rather than wasting resources on compliance infrastructure. It positions Tennessee as more business-friendly than neighboring states burdened by heavier regulations.

This is deregulation well done: thoughtful, targeted, and designed to foster economic dynamism without sacrificing legitimate public interests.

Korea Zinc's Historic $6.6 Billion Investment

The crown jewel of Tennessee's 2025 economic wins came when South Korean metal manufacturer Korea Zinc announced it would invest more than $6.6 billion in new production facilities in Clarksville and Gordonsville—marking the single largest private corporate investment in Tennessee history.

The announcement represents Korea Zinc's first U.S. locations and reflects the company's strategic commitment to expanding domestic manufacturing capacity for critical minerals essential to national defense and advanced technology.

The project's scope is breathtaking. The project will create a total of 740 new jobs in the coming years. A new facility in Clarksville will house Korea Zinc's U.S. headquarters as well as advanced manufacturing operations. In Gordonsville, Korea Zinc plans to reopen a former mine that has been inactive since 2023, bringing back lost jobs and critical mineral production to the community. Korea Zinc's refining operations will produce essential metals including zinc, lead, copper, precious metals like gold and silver, and strategic metals such as gallium and germanium.

Korea Zinc's record investment demonstrates Tennessee's competitive advantages in workforce quality, infrastructure reliability, and collaborative business partnerships at state and local levels. The project generates substantial economic multiplier effects through job creation, supply chain development, and local community investment in education and environmental stewardship.

This is what winning looks like. When states compete for investment with smart policies and strong fundamentals, businesses respond with historic commitments that benefit communities for generations.

The Setbacks: When Regulation Outpaces Reason

Despite these impressive wins, Tennessee's 2025 wasn't without missteps. Two policy developments – a sweeping data privacy law and the dismantling of business support programs – demonstrate how regulation can create unintended consequences that undermine the very goals policymakers seek to achieve.

The Tennessee Information Protection Act: Compliance Complexity

Tennessee's Information Protection Act (TIPA), which took effect July 1, 2025, establishes comprehensive data privacy requirements for businesses handling Tennessee residents' personal information.

The problem isn't that data privacy matters—it does. The problem is how TIPA creates compliance uncertainty and operational burdens that fall disproportionately on smaller businesses trying to serve Tennessee customers.

Companies processing Tennessee residents' data must now conduct comprehensive data protection assessments, implement new consent systems, and maintain compliance documentation, all of which increase operational costs. For companies of all sizes, this can become a significant barrier.

Tennessee would have been better served by harmonizing with existing federal frameworks or working with other states to create uniform standards, rather than adding yet another patchwork requirement to the growing thicket of state data privacy laws.

Dismantling Business Support Programs

Perhaps the most controversial policy move in Tennessee's 2025 came with the Dismantling DEI Departments Act, which took effect July 1st. The law bans government programs offering preference based on race, sex, or ethnicity. Memphis and Shelby County were forced to dismantle long-standing initiatives that had directly supported women- and minority-owned businesses in securing government contracts.

The documented impacts are troubling - 

Loss of Institutional Support: Women- and minority-owned businesses lost access to established support systems for contract procurement, resource navigation, and capacity building.

Reduced Contractor Diversity: Government agencies report limited data on contract spending with minority-owned businesses, suggesting a measurable reduction in contractor diversity post-implementation.

Persistent Economic Barriers: According to 2025 Wells Fargo research, Black women own approximately 14% of women-owned businesses nationally and contribute over $118 billion annually, yet growth continues to slow due to systemic barriers including capital access and contracting opportunity limitations.

Rather than eliminating supportive infrastructure entirely, evidence-based policymaking would have reformed programs to maintain support mechanisms while ensuring fair, merit-based processes. The law disproportionately affects entrepreneurs in underserved communities who lack existing capital and established business networks.

This isn't about quotas or preferences; it's about recognizing that markets don't always self-correct for historical barriers, and that well-designed programs can expand opportunity without sacrificing merit or fairness.

What Tennessee's 2025 Teaches Us

Tennessee's 2025 offers a clear lesson: pro-business policies attract investment, but regulatory overreach creates friction that can undermine growth.

As Tennessee heads into 2026, state leaders should double down on what's working: reducing red tape, protecting businesses from crime, and creating conditions where capital and innovation can flourish. And they should think carefully about how regulation—even well-intentioned regulation—can create unintended consequences that undermine the very goals they seek to achieve.

Because at the end of the day, what's good for business is good for Tennessee. The policies that foster investment, protect opportunity, and trust markets to deliver results are the ones that will continue to make the Volunteer State a magnet for growth.