This is a TERRIBLE IDEA!..... the manufacturer will close all authorized service in that state. Require shipping the device out of state for repair. They could go as far as requiring shipping out of the US for repair.
What BS. There will always be a proportion of the population who will be prepared to pay more for an authorised dealer repair. I have a top-of-the range Pentax camera needing repair. In the UK there is no restriction on anyone repairing a camera but I still took it to a Pentax authorised repairer. But I repair my own cars and computers.
There are some good reasons why an authorised repairer should cost more than an unauthorised one, such as having attended the manufacturer's training course. There are also some no-good reasons : I approaced an "authorised repairer" for my phone (listed as such on the phone maker's website) and it transpired that they were not even aware that they were one. I guess some previous manager had paid the maker for the right to say they were one, and there was nothing more to it than that.
I bought something. It stopped working. It had to be shipped to China for warranty repair. It wasn't expensive and I threw it out. Lesson learned.
WTF has that got to do with this discussion?