This story was produced as part of the Colorado Capitol News Alliance. It first appeared at .
A bill to change Colorado鈥檚 controversial, first-in-the-nation artificial intelligence law was tabled Monday after the tech industry, consumer advocates and lawmakers couldn鈥檛 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, 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 and asked for revisions, was introduced 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鈥檚 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.
鈥淚 was disappointed we couldn鈥檛 get to a place that we could proceed with a bill that addressed a lot of concerns鈥� of the business community, said Rodriguez. 鈥淧eople are more distrusting of AI every year. And the crux of this bill was about showing trust and transparency. And an industry that鈥檚 never been regulated has fought this. 鈥� And while I鈥檝e 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.鈥�
With Colorado鈥檚 2025 legislative session ending Wednesday, there isn鈥檛 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 Jan. 14.
It鈥檚 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鈥檇 served on an interim legislative task force to work with consumer advocates and lawmakers to find common ground. Little was found.
鈥淲e 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鈥檚 competitiveness but even more so from a technical and implementation perspective,鈥� she said. 鈥淲e would ask that you please extend this out to the end of next year.鈥�
The death of the bill appeared to catch the governor off guard.
鈥淚 don鈥檛 have an update on it yet,鈥� 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 asking the legislature to reconsider.
The Democrats asked that the legislature "take action now" and delay implementing the AI law until January 2027.
鈥淲ith just hours remaining in the 2025 legislative session, it is clear that more time is needed,鈥� the group wrote. 鈥淭his pause will allow consumer advocates, Colorado鈥檚 business community, and other states to collaborate on a balanced, future-ready framework 鈥� one that protects privacy and fairness without stifling innovation or driving business away from our state.鈥�
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.
A special session, however, may be in the works.
Colorado became the first state with an artificial intelligence law, even though similar bills were introduced last year in other states.
last year after Gov. Ned Lamont, a Democrat, said he鈥檇 veto it. A made it all the way to Democratic Gov. Gavin Newsom before it last fall. In March, Virginia鈥檚 governor, Glenn Youngkin, a Republican, his state鈥檚 , which was also .
Too close to the deadline
The two core sides of the AI law, or , interpreted the impact of the legislation quite differently even as many were put on the task force to hash out their differences.
鈥淲e 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,鈥� said Kjersten Forseth, a lobbyist for the Colorado AFL-CIO, during Monday鈥檚 committee hearing. 鈥淲orkers and consumers are subject to AI now and they don鈥檛 know when it鈥檚 being used and how it鈥檚 being used because the companies will not tell us.鈥�
The law requires companies that develop 鈥� or just use 鈥� 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 Colorado Attorney General鈥檚 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 allow 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鈥檛 provide ample time for companies to digest it. Seth Sternberg, CEO of technology firm Honor and a member of the legislative AI task force, called Senate Bill 318 鈥渁 last-minute, poorly executed patch to 205, which damages all Colorado businesses and will reduce employment opportunities in Colorado.鈥�
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 . If the bill passed, banks would have to send customer notifications each time a transaction was denied due to fraud.
鈥淲hile 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,鈥� Waller said during the hearing. 鈥淭hose changes mean every transaction denied or approved on a credit card, debit card and checking account is now subject to the bill.鈥�
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.
鈥淚s this bill an improvement in the direction we鈥檙e going?鈥� Rodriguez asked Saunders with CTA.
鈥淲e asked our board of directors that,鈥� Saunders replied. 鈥淲e don鈥檛 take that lightly to be in an opposed position. If they believed that it was better, it would have been in an amend position.鈥�
Colorado Sun staff writer Jesse Paul contributed to this report.