Colorado delays AI law implementation amid backlash

Dive Brief:

• Colorado is delaying — by about five months — implementation of its comprehensive artificial intelligence law, which was enacted last year and originally set to go into effect on Feb. 1, 2026.
• Colorado Gov. Jared Polis, a Democrat, signed a flurry of bills on Aug. 28 including one that changed the effective date of the controversial Colorado Artificial Intelligence Act to June 30 of next year. Passage of the bill came after state lawmakers failed to reach agreement on changes to the law during a special legislative session.
• “This delay gives Colorado lawmakers another chance to amend the law in the 2026 regular legislative session, which starts in early January,” attorneys at global law firm Reed Smith said in a blog post. “Whether the legislature will be able to reach a consensus on amendments in 2026 remains to be seen, as stakeholders intended to amend CAIA in the 2025 regular legislative session in time for its original effective date.”

Dive Insight:

The move comes amid a growing national debate over AI laws that are piling up at the state level, creating a complex patchwork of requirements for businesses.

“CAIA has been the subject of fierce debate since its passage, with four different amendments proposed just during this summer's special legislative session,” according to the blog post, which was penned by Abigail Walker, a Reed Smith associate, and Tyler Thompson, a partner at the firm. “In addition to local disagreement about how CAIA would impact businesses, Colorado lawmakers have also been feeling pressure at the federal level.”

The Trump administration is threatening to withhold federal AI funding from states with burdensome rules on the technology.

An AI action plan unveiled by the White House last month calls on the Office of Management and Budget to work with federal agencies that have AI-related discretionary funding programs to ensure they consider a state’s AI regulatory climate when making funding decisions.

Meanwhile, President Donald Trump has gone further than his own plan, calling for a federal AI standard that “supersedes all states.” 

Last month, the U.S. Chamber of Commerce released survey findings showing that nearly two-thirds (65%) of small businesses were worried about compliance and litigation costs that could result from being subject to different state laws on privacy, AI and technology, an increase of 14 percentage points compared with a 2024 poll.

Colorado AI’s statute stands out for its breadth and comprehensiveness, analysts say. The law requires businesses to adopt risk management programs for high-risk AI systems, including impact assessments, oversight processes and mitigation strategies.

A central goal is to mitigate the risk of algorithmic discrimination caused by the use of AI resulting in “unlawful differential treatment” of individuals or groups based on a protected class such as age, race or religion.

According to Reed Smith’s blog post, the law’s biggest impact will be on human resources departments that have integrated AI tools into hiring processes, “a practice that has permeated all industries.”

“With the delayed effective date, businesses have more time to develop a compliance strategy, and may see some relief in the form of an amendment if lawmakers and stakeholders can reach a consensus in 2026,” the attorneys wrote.