We Graded All 50 States on Investor Access. Only Six Passed.

The SEC may add new credentials that qualify someone as an accredited investor. Our new 50-state map shows which states will keep up, and which ones will leave the offerings they control behind.

By Mark Hiraide, Senior Legal Director & Policy Counsel at Investor Choice Advocates Network (ICAN), and a corporate/securities law partner with Mitchell Silberberg & Knupp LLP.

The SEC is weighing more credentials that would qualify someone as an accredited investor. But in a number of states, even the credentials the SEC added back in 2020 never reached the local offerings those states control.

For the past several months, ICAN has been analyzing the securities laws of all fifty states, statute by statute and rule by rule. We wanted to answer one question: how hard is it for an ordinary person of modest means to invest in a private business in their own state?

Today we're releasing the answer as an interactive map. Only six states earned a passing grade.

Find your state →

The map gives you the national picture at a glance, with every state colored by how it treats an everyday investor. Scroll down, and you'll find each state in detail: its grade, the reasoning and criteria behind it, the specific fix, and a link to the governing law.

When the state decides on access

This map is part of ICAN's broader work on accredited investor reform. We've spent years challenging the federal wealth test at the SEC and in federal court. This state-level analysis is another facet of the fight.

The SEC writes the rules for offerings that cross state lines. When a local business raises money from people in its own state and relies on a state exemption rather than on a federal exemption, that state's securities laws decide who gets to invest. SEC Rule 506 of Regulation D is the federal exemption most private offerings use, and since 1996 states have had no say over who can invest in those deals. However, a business may elect to use in-state or other state-level exemptions instead, where each state sets the terms under state securities laws. These are known as "blue-sky" laws, and they are older than the federal securities laws. 

In many cases, certain state rules provide a meaningful alternative to the federal exemption. The rules that decide whether you can invest in the business down the street are often written in your statehouse, not in Washington.

The map has been in the works for months, but after what the SEC announced on September 30, its timing matters more than ever.

The SEC may add more ways to qualify. That's long overdue.

On September 30, the SEC asked for public comment on new ways to qualify as an accredited investor that turn on what a person knows rather than what they own. The list includes a CPA license, a CFA charter, a CFP certification, several securities licenses, and a new exam that FINRA would develop and any adult could take. None of it is final, but the direction is long overdue.

Long overdue isn't just our take on the situation—it's been over 40 years since Congress told the SEC to define an accredited investor based on factors such as financial sophistication, knowledge, and experience. The SEC instead added an income test Congress never authorized, and it has now been widely criticized even by commissioners themselves.

ICAN has urged change since we petitioned the SEC in 2022 to judge investors on knowledge and sophistication instead of wealth. The agency listed our petition among the reform proposals it received, and we've kept pressing ever since. Many voices got us here, and we're glad to have been one of them. But a few new doors in the wall are not the same as taking the wall down, and our work continues until the arbitrary wealth barrier is gone.

But here's the thing: in some states, this expansion may not even matter for the local offerings those states control.

Some states stopped the clock

Kansas passed the first blue-sky law in 1911, more than two decades before Congress acted. The name comes from the early push to stop promoters from selling investments backed by nothing but blue sky. Every state still has one, and each sets its own rules for who can invest in what.

When Congress put most private offerings under federal Rule 506 in 1996, it left the states in charge of offerings inside their own borders. That's why a federal change only reaches as far as each state lets it. That isn't a loophole. It's a lever, and a state that pulls it can open doors Washington hasn't.

Not every state treats the federal definition as a living standard. Some adopt it as it read on a fixed date. Others cross-reference Rule 501 without saying whether future SEC amendments come with it — and a bare reference like that may freeze the definition as of whenever the state last acted, rather than updating on its own. Kansas, home of that first blue-sky law, pins the largest angel investor tax credit in the country to the 2004 version of the federal definition; other states carry the same static design in the rules that govern their local offerings.

Where a state’s definition doesn’t look forward, the SEC’s 2020 changes—the ones that let people qualify on a professional credential instead of wealth—may never reach the offerings that state controls. Every category the SEC adds from here can widen the gap. Someone could be accredited by the federal standard and still be shut out of a deal down the street.

States that track the federal definition “as amended”—such as Illinois, Mississippi, and South Carolina—pick up new categories the day the SEC acts. Their legislatures don’t have to do anything. For a state whose definition is frozen, whether by a date or by a reference that doesn’t look forward, the fix is usually a single sentence: adopt the federal definition “as amended.”

Six states already got it right, and the rest have a roadmap

The map isn't only a list of problems. It's also a list of what's already working—and a roadmap for change.

California, Texas, Kentucky, Indiana, Washington, and South Dakota go further than federal law. They let everyday people into local offerings through a genuine relationship with the business or a finding that the investment suits them. 

Twenty-nine states track federal law and stop there. That isn't a failing grade. It's where most of the winnable work is: nothing needs to be undone in those states, just something added. For every state, the map lays out a menu of reforms, with real models to borrow from.

We'll keep pushing in Washington and in federal court. But states don't have to wait for Washington, and the map shows each one exactly where to start.

What you can do

• Find your state and see how it scored.
• Share the map with your state legislators. Most fixes are a sentence long, and lawmakers need to hear about them from constituents.
• Share this post with anyone who has ever been told they weren't wealthy enough to invest in a business they believed in.

Author Bio: Mark Hiraide is Senior Legal Director and Policy Counsel at the Investor Choice Advocates Network, a nonprofit public interest law firm serving as a voice for smaller investors and entrepreneurs. ICAN's full analysis of the Clarity Act is available at icanlaw.org.