It's so sad you guys aren't doing h1b. Is there a state/federal regulation that makes you require permanent residency or company's policy?

Probably this:

"To conform to U.S. Government space technology export regulations, applicant must be a U.S. citizen, lawful permanent resident of the U.S., protected individual as defined by 8 U.S.C. 1324b(a)(3), or eligible to obtain the required authorizations from the U.S. Department of State."

do you allow for remote/telecommute?