If there's any kind of fire in that booth, and the system goes off, that powder will be everywhere. It doesn't hurt anything, but it definitely puts the fire out. You'll spend maybe half a day cleaning that powder off of everything, and then you'll get back to business. Without it, the business will be destroyed. Worse, you may not be able to rebuild.
Every state is different.
For instance, there are special types of caps that we must put on the ducting in the states of Texas and Florida, but nowhere else. Generally, paint usage is limited by a local regulatory agency, thereby limiting the amount of volatile organic chemicals and hazardous air pollutants emitted from spray booths. Overspray is collected by the spray-booth filters. These must be changed regularly, and used filters must be disposed of as hazardous waste. If makeup air is a concern, systems can be added to collect and filter the air from a spray booth.