Nike has pulled a new Fourth of July shoe featuring Betsy Ross' flag for the 13 American colonies reportedly after Colin Kaepernick expressed concerns, sparking outrage among some conservatives and prompting the Arizona governor to announce his state will pull millions of dollars in financial incentives to the company.

The shoe design drew concern from Kaepernick because the former NFL star said the early flag has connections to slavery, people familiar with the matter told The Wall Street Journal.

In recent years, the Betsy Ross flag has been appropriated by the white nationalist group Identity Evropa and the Ku Klux Klan, who use it to represent a time when slavery was legal in the United States.

"Nike has chosen not to release the Air Max 1 Quick Strike Fourth of July as it featured an old version of the American flag,” Nike said in a statement to CNBC.

The company added in a later statement that the decision to pull the shoe was "based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday."

According to the Journal, the shoes had already been shipped to retailers, and Nike asked for them to be returned. A spokesperson for Kaepernick declined to comment to NBC News.

Nike’s decision drew complaints from some conservatives, most notably the Republican governor of Arizona, Doug Ducey.

On Twitter early Tuesday morning, Ducey announced he had ordered the Arizona Commerce Authority, a public-private economic development agency, to withdraw incentives the state offered Nike to build a plant in Goodyear, Arizona.

“Today was supposed to be a good day in Arizona, with the announcement of a major Nike investment in Goodyear, AZ.” Ducey wrote. “Words cannot express my disappointment...Nike has made its decision, and now we’re making ours.”

The deal was only announced Monday and according to city records would have brought more than 500 full-time jobs to the Phoenix suburb of 82,000 people and produced over $450 million in economic activity during its first five years of operation.

“Arizona’s economy is doing just fine without Nike,” Ducey said, adding that he “won’t suck up” to the company.

The Arizona Commerce Authority told NBC News it agrees with and supports Ducey's decision. NBC News reached out to Nike and the city of Goodyear for comment but did not immediately hear back.

Sen. Ted Cruz, R-Texas, also weighed in on the controversy, scolding the company on Twitter.

“It’s a good thing Nike only wants to sell sneakers to people who hate the American flag,” Cruz said.

Nike’s partnership with Kaepernick last year drew similar conservative outrage. Social media users posted pictures and videos of themselves burning their Nikes, upset that the shoe company partnered with the former NFL player who has used his platform to draw attention to issues of police brutality and racial injustice.