Colorado Leads The Way With New AI Regulation Law, Sparking Praise And Concerns

The State of Colorado has become the first state to enact a law that will offer protections from “high-risk” artificial intelligence applications. Although the bill has been hailed by consumer protection agencies as necessary and a landmark in protection, businesses and some politicians are concerned that the bill is too broad and creates a compliance burden for employees who use AI tools.  

As reported by the Colorado Sun, Colorado’s Senate Bill 206 was signed into law on May 17 by Colorado Gov. Jared Polis. Despite signing the bill into law, Polis described his reservations about the bill in a letter to legislators. “This bill is among the first in the country to attempt to regulate the burgeoning artificial industry on such a scale,” Polis, a Democrat, wrote. “I appreciate the sponsors’ interest in preventing discrimination and prioritizing consumer protection as Colorado leads in this space.”

Polis continued, “I am concerned about the impact this law may have on an industry that is fueling critical technological advancements across our state for consumers and enterprises alike. Government regulation that is applied at the state level in a patchwork across the country can have the effect to tamper innovation and defer competition in an open market.”

The bill is not set to take effect until Feb 1, 2026, which leaves ample time for the bill to either become a stronger, more directed version of the bill that currently exists, or it could turn in the opposite direction and become a weaker, more watered down version that offers little protection to employees from predatory AI programs. 

The Colorado Technology Association, (CTA) which represents over 300 technology companies across the state, spoke out against the bill, warning in its own letter that the lawmakers rushed to make the law without considering the technology industry. 

“Many of these requirements are vague and very broad, and no one seems to have a good understanding of what their application will look like in practice,” the letter claimed.

The Rocky Mountain AI Interest Group is also against the bill, as founder Dan Murray told the Sun via email, “RMAIIG members are still against the law and we’re disappointed it was passed and signed.” Murray continued, “We are hopeful, however, that legislators will robustly engage with Colorado’s vibrant AI/tech/startup community over the next 1-2 years to ensure the bill won’t dampen the important tech economy in our state.”

Consumer advocates, like Matt Scherer, senior policy counsel for the Center for Democracy & Technology, are against the bill for a different reason: they don’t believe it goes far enough to protect consumers from companies who want to operate in a less than savory manner.

“There are definitely still parts that I don’t like, including what I consider very weak enforcement provisions, a small business exemption that I think is way too broad, and a trade secret exemption that still leaves quite a bit of room for companies to make mischief,” Scherer told the Sun. “That said, I understand why the bill landed where it did on each of those things, and I think that this bill is as good as I could hope for given that it basically has its origins in model legislation written by an HR tech company.”

Workday, an HR technology company, which focuses on employment, indicated via an email from Chandler Morse, the company’s head of public policy, to Gov. Polis that they are satisfied with the bill’s passage and agreed with his assertion that the bill needs to be more focused before it is implemented. 

“While we agree with the Governor about there being room for improvement before the law is implemented,” Morse wrote, “Senate Bill 205 represents a critical first step with which we hope other states will align for a much-needed common approach to AI regulation.” 

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