Colorado races to replace controversial AI law before 2026 deadline

Colorado lawmakers are racing to repeal and replace the state’s controversial artificial intelligence regulation law before it takes effect in February 2026. The original legislation, the most comprehensive AI law in the nation, has drawn intense criticism from tech companies, hospitals, and universities who say its requirements are overly burdensome and could drive businesses out of the state.

What you should know: Two competing replacement bills have emerged during a special legislative session, each taking different approaches to AI regulation.

• Democratic Sen. Robert Rodriguez, who authored the original law, has introduced a bill that broadly defines AI and requires companies to disclose which characteristics algorithms use to make decisions.
• Democratic Rep. William Lindstedt’s alternative bill uses the federal definition of AI and focuses on transparency requirements without mandating disclosure of algorithmic decision-making processes.

Why the original law failed: The sweeping regulation proved too complex for organizations that use AI but don’t develop it.

• “When you’re the first one through the glass, you’re gonna get a little messed up,” Rodriguez acknowledged about his pioneering legislation.
• The law required users like hospitals and universities to disclose possible biases and mitigation strategies for AI systems they didn’t create.
• Tech companies threatened to pull out of Colorado due to compliance concerns.

The key differences: The two replacement bills reflect competing philosophies on AI oversight and business impact.

• Rodriguez’s bill maintains broader AI definitions and requires companies to explain algorithmic decisions, with provisions for data correction if inaccurate.
• Lindstedt’s approach emphasizes existing consumer protection and anti-discrimination laws while requiring transparency about AI use without algorithmic explanations.
• Fiscal analysts estimate Rodriguez’s bill would cost the state nearly $7 million annually to implement, leading him to exempt public entities from some disclosure requirements.

What they’re saying: Both lawmakers emphasize the importance of balancing innovation with safety.

• “If we’re a leader in innovation and technology, what’s wrong with being a leader in safe innovation and technology,” Rodriguez said. “I don’t understand why the two can’t go together.”
• Lindstedt noted the economic stakes: “Fourteen percent of new job growth is related to AI right now. We have to get this right.”

Industry response: Tech companies have shown clear preferences between the two approaches.

• Technology firms largely support Lindstedt’s bill for its more manageable compliance requirements.
• Companies continue to view Rodriguez’s proposal as “unworkable” despite his amendments to reduce public sector burdens.

What’s next: Both bills have passed their initial committee reviews, with lawmakers working against a tight timeline to finalize new legislation before the original law’s February 2026 effective date.