Attempt to tweak Colorado’s controversial, first-in-the-nation artificial intelligence law is killed

A bill to change Colorado’s controversial, first-in-the-nation artificial intelligence law was tabled Monday after the tech industry, consumer advocates and lawmakers couldn’t reach consensus on the tweaks. 

Technology companies asked for the changes to the law, passed last year and which goes into effect on Feb. 1, 2026, citing the undue burdens they feel it puts on small businesses to disclose when AI systems are being used for consequential decisions, like employment, loans and housing. They called it a disclosure law, not a consumer-protection law. 

After Gov. Jared Polis begrudgingly signed the law last June and asked for revisions, Senate Bill 318 was introduced last week to try to address the complaints lodged by the tech community. That was to no avail, apparently.  

Senate Bill 318 was rejected on a 5-2 vote Monday before the Senate Business, Labor and Technology Committee. 

Senate Majority leader Robert Rodriguez, a Denver Democrat and the lead sponsor of both pieces of legislation, attempted to delay the AI law’s implementation by two months next year to provide more time for the changes to be worked out. But after hearing continued objections from the tech community Monday, he asked that the bill be shelved during the committee hearing. 

“I was disappointed we couldn’t get to a place that we could proceed with a bill that addressed a lot of concerns” of the business community, said Rodriguez “People are more distrusting of AI every year. And the crux of this bill was about showing trust and transparency. And an industry that’s never been regulated has fought this. … And while I’ve made a good faith effort for balance and for consumers and businesses, which is a hard line to draw, both sides were not happy with the bill.”

With Colorado’s 2025 legislative session ending Wednesday, there isn’t time for another measure to be drafted, introduced and debated this year. The failure of Senate Bill 318 leaves lawmakers little time next year to try to tweak the AI law before it takes effect. The 2026 legislative session begins on Jan. 14. 

It’s possible, if not likely, that the law will take effect as-is. 

During the committee hearing, Brittany Morris Saunders, president of the Colorado Technology Association, pleaded for the effective date of the AI law to be pushed back. She’d served on an interim legislative task force to work with consumer advocates and lawmakers to find common ground. Little was found.

“We remain the only state in the country with this type of legislation, with this type of law. We have other states that have tried to follow suit and they have been postponed indefinitely or their governor has vetoed them. This is a big concern to us in Colorado’s competitiveness but even more so from a technical and implementation perspective,” she said. “We would ask that you please extend this out to the end of next year.”

The death of the bill appeared to catch the governor off guard.

“I don’t have an update on it yet,” Polis told The Colorado Sun after signing a pair of bills into law on Monday afternoon.

Later in the day Monday, Polis sent lawmakers a letter also signed by Attorney General Phil Weiser, Denver Mayor Mike Johnston, U.S. Sen. Michael Bennet and U.S. Reps. Joe Neguse and Brittany Pettersen imploring the legislature to reconsider.

The Democrats asked that the legislature “take action now” and delay implementing the AI law until January 2027.

“With just hours remaining in the 2025 legislative session, it is clear that more time is needed,” the group wrote. “This pause will allow consumer advocates, Colorado’s business community, and other states to collaborate on a balanced, future-ready framework — one that protects privacy and fairness without stifling innovation or driving business away from our state.”

There wasn’t enough time left, however, for the legislature to revive Senate Bill 318, amend and pass it before the General Assembly adjourns Wednesday. The bill would have needed to get two votes in the Senate on Monday for that to be possible and the chamber had already moved on to other priorities.

The House, where a fresh could ostensibly could have been introduced Monday, had wrapped up its work for the day at about 5 p.m.

A special session, however, may be in the works.

Colorado became the first state with such a bill last year, even though similar bills were introduced in other states. But Connecticut’s bill, which Rodriguez took inspiration from, stalled and Colorado became the first state with an artificial intelligence law, even though similar bills were introduced last year in other states. 

Connecticut’s bill, which Rodriguez took inspiration from, stalled last year after Gov. Ned Lamont, a Democrat, said he’d veto it. A similar bill from California made it all the way to Democratic Gov. Gavin Newsom before he vetoed it last fall. In March, Virginia’s governor, Glenn Youngkin, a Republican, vetoed his state’s AI bill, which was also similar to Colorado’s.

The two core sides of the AI law, or Senate Bill 205, interpreted the impact of the legislation quite differently even as many were put on the task force to hash out their differences.  

“We gave industry 90% of what they wanted but it was still not good enough because the tech industry could not agree amongst themselves as to how it should be regulated,” said Kjersten Forseth, a lobbyist for the Colorado AFL-CIO, during Monday’s committee hearing. “Workers and consumers are subject to AI now and they don’t know when it’s being used and how it’s being used because the companies will not tell us.”

The law requires companies that develop or just use AI to make critical decisions that could harm consumers to disclose that information. It also allows consumers to ask why and potentially appeal. But detailed rules still need to be spelled out, which would be handled by the Attorney General’s Office. 

Senate Bill 318 would have delayed much of the resource-intensive parts of the law for about a year, until 2027. It would also delay implementation further depending on the size of the company and allowing companies with fewer than 100 workers to remain exempt. The current law exempts businesses with fewer than 50 workers.

The latest bill, introduced one week ago, just didn’t provide ample time for companies to digest it. Seth Sternberg, CEO of technology firm Honor and member of the legislative AI task force, called 318 “a last minute, poorly executed patch to 205, which damages all Colorado businesses and will reduce employment opportunities in Colorado,” he said in a text.

Other business groups acknowledged that they do believe in responsible AI guardrails but the deadline was too soon. And there were still too many unanswered questions for some companies that could lead to unintended consequences. 

Jenifer Waller, president of the Colorado Bankers Association, said that computer systems are used to protect consumers against fraud. Last year, she said, there was $275 million in credit card fraud. If the bill passed, banks would have to send customer notifications each time a transaction was denied due to fraud. 

“While the bill gives an exemption for antifraud systems, it comes with a qualifier that it cannot be used for a consequential decision (which was) changed to include denial of a good or service,” Waller said during the hearing. “Those changes mean every transaction denied or approved on a credit card, debit card and checking account is now subject to the bill.”

When Rodriguez introduced the bill in committee Monday, he planned to amend it to make the law go into effect April 14, instead of February. But opposition from the technology association appeared to change his mind, which led to his decision to kill the bill.

“Is this bill an improvement in the direction we’re going?” Rodriguez asked Saunders with CTA.

“We asked our board or directors that,” Saunders replied. “We don’t take that lightly to be in an opposed position. If they believed that it was better, it would have been in an amend position.”

This is a developing story that will be updated.

Colorado Sun staff writer Jesse Paul contributed to this report.