Colorado AI Law's Uncertain Future

Colorado AI Law Faces Uncertainty Amid Federal Moratorium

Colorado’s groundbreaking AI law, designed to regulate artificial intelligence and protect consumers, is now in jeopardy as the U.S. Congress considers a 10-year federal moratorium on state-level AI regulations. This potential ban has cast doubt on the future of Senate Bill 24-205, which was passed in 2024 to ensure transparency and accountability in AI systems.

The federal moratorium, proposed as part of the Republican budget bill, would effectively halt state efforts to regulate AI for a decade. This move has sparked debate over whether states should have the authority to implement their own AI regulations or if a unified federal approach is necessary.

The Impact of Senate Bill 24-205

Senate Bill 24-205, sponsored by State Rep. Brianna Titone, aims to safeguard consumers by requiring companies to disclose when AI systems are being used in decision-making processes, such as job applications, loan approvals, and college admissions. The law also allows consumers to challenge AI systems they believe are biased, ensuring greater transparency and fairness.

However, the tech industry has raised concerns about the law’s implementation, arguing that companies may struggle to comply with the regulations by the scheduled February 2026 deadline. The Colorado Technology Association, led by President and CEO Brittany Morris Saunders, has called for a delay until at least 2027 to address these issues.

Tech Industry Pushback

The tech industry’s pushback against Senate Bill 24-205 has been significant. According to Morris Saunders, the association believes the law could put Colorado jobs and economic growth at risk, as the tech sector contributes over $100 billion annually to the state’s economy and employs 10% of its workforce.

Dr. Kelly Kinnebrew, a prominent AI developer, also expressed reservations about the bill during her testimony last year. She favored the proposed changes in SB25-318, which aimed to support startups, though the bill ultimately failed to pass.

Potential Changes and Governor Polis’s Stance

Despite the setback, changes to Colorado’s AI law could still occur if Governor Jared Polis calls a special session later this year. Polis has acknowledged the need for adjustments to ensure successful implementation, stating that sufficient time must be given for companies to comply.

However, if Congress passes the federal moratorium, such changes may become irrelevant. The moratorium’s fate remains uncertain, as it must comply with the Byrd Rule, which prohibits non-budgetary proposals in reconciliation bills. The Senate parliamentarian will determine whether the AI provisions violate this rule.

The Future of AI Regulation in Colorado

As the debate continues, the future of AI regulation in Colorado hangs in the balance. While the federal moratorium could halt state-level efforts, local advocates argue that consumer protection remains a critical priority. Titone and other lawmakers have emphasized the importance of ensuring that AI systems are fair and transparent, regardless of federal intervention.

The outcome of this legislative battle will not only shape Colorado’s approach to AI but also set a precedent for how other states navigate the complexities of regulating emerging technologies.