Why "The Nutmeg State"?

From Out of the East: Spices and the Medieval Imagination by Paul Freedman:

Legend has it that sharp Connecticut traders perfected the manufacture of imitation wooden nutmegs that were added to real ones, the fakery covered by the cunning artifice of their making and the powerful aroma of real nutmegs. The popularizer of this story was Thomas Chandler Halliburton (1796-1865), a Canadian judge from Nova Scotia, who wrote folkloric stories about Sam Slick, a Yankee peddler who sold nutmegs liberally laced with wooden fakes. The tale was so appealing that the state adopted the unusual sobriquet "the Nutmeg State," which says something about the admiration of business success over mere ethics (p. 124)...