The most common and most likely answer to this crossword clue is the 8 letter word MICHIGAN
I've seen this crossword clue in The Daily Telegraph
M
I
C
H
I
G
A
N
More clues leading to the result MICHIGAN
- Name torn from Chinese book chap pens — one of fifty
- State aiming to build around church
- State employee comprehends nameless Chinese symbols
- I’m aching running round lake
- Fellow hugging one companion, soldier going round American state
- Superior neighbour in the US
- State aiming for change to embrace China
- Russian fighter, a neutral German I imprisoned for state
- Aiming for reform outside church state
- “Terminal” essentially denotes state of Newmarket in Kentucky for instance
Buddy explains!

The straight part
We know that "American state" is the straight/definition part of the clue. The straight part is often a synonym or definition, in this case american state = michigan.The cryptic/wordplay part
In cryptic crossword there's often an wordplay/cryptic part as well.This part involves a more complex hint, such as an anagram, homophone, hidden word, etc.
Sadly, We don't have an explanation for this specific crossword clue yet.