Colorado has been at the forefront of artificial intelligence (AI) regulation, making headlines in 2024 as the first state to pass a comprehensive law aimed at curbing bias and discrimination in AI systems. The law, which touches sectors like employment, healthcare, education, and government, was designed to set guardrails for how AI is used—especially where the risk of unfair outcomes is high.
But as with any pioneering legislation, the details matter. Over the past year, lawmakers, business leaders, and technology advocates worked tirelessly to refine the law, hoping to address concerns about its scope and impact. The result was Senate Bill 318, a proposed fix that aimed to clarify definitions, focus regulation on high-risk AI developers, and ease compliance burdens for smaller businesses. However, in a dramatic turn during the 2025 legislative session, the bill was postponed indefinitely, leaving the original law intact and the compliance deadline set for February 1, 2026.
Why Did the Fix Fail?
Despite months of collaboration, consensus proved elusive. Stakeholders raised red flags about the law’s broad definition of AI, the potential for high compliance costs, and the risk of stifling innovation—especially for home-grown businesses and startups. Venture capitalists, educators, and tech advocates voiced concerns that the law’s requirements could create barriers to growth, job creation, and investment.
Governor Jared Polis, while supportive of the law’s intent, echoed these worries. He urged lawmakers to keep working on improvements, warning that state-level regulation could "tamper with innovation and deter competition." A joint letter from the governor, Attorney General Phil Weiser, and Senate Majority Leader Robert Rodriguez promised ongoing efforts to clarify the law and minimize unintended consequences, including the formation of a task force to recommend future changes.
What Does This Mean for Businesses and Institutions?
With the failure of SB 318, the original 2024 law remains in effect. This means that:
- All covered organizations must comply by February 1, 2026.
- The law applies to a wide range of sectors, including employers, healthcare providers, schools, and government agencies.
- Key requirements include transparency about AI use, safeguards against bias, and mechanisms for consumer appeals.
Actionable Tips for Navigating Compliance
- Audit Your AI Systems: Review where and how AI is used in your organization, especially in high-risk areas like hiring, healthcare decisions, or educational assessments.
- Consult Legal and Technical Experts: The law’s requirements are complex. Seek guidance from professionals who understand both the legal and technical sides of AI.
- Stay Informed: Watch for updates from the state, as lawmakers and the task force may issue clarifications or additional guidance before the 2026 deadline.
- Engage with Industry Groups: Join conversations with peers and advocacy groups to share best practices and stay ahead of compliance challenges.
Looking Ahead: The Road to 2026
While the legislative fix has stalled, the conversation is far from over. Lawmakers have pledged to keep working with stakeholders to refine the law and ensure it supports both innovation and fairness. For now, businesses and institutions must prepare for compliance under the current rules, even as the landscape may continue to evolve.
Key Takeaways:
- Colorado’s AI law is the first of its kind in the U.S., targeting bias and discrimination in key sectors.
- Efforts to refine the law failed in 2025, so the original compliance deadline of February 1, 2026, stands.
- Businesses should audit their AI use, seek expert advice, and stay engaged with ongoing policy discussions.
- The state is committed to clarifying the law and minimizing unintended consequences, but no changes are guaranteed before 2026.
- Proactive preparation is the best way to ensure compliance and avoid disruption as the deadline approaches.