New law set to go into effect in 2026, takes similar approach as EU AI Act
Colorado was the first state across the comprehensive AI law finish line, as its governor in May signed into law the Colorado AI Act. Baker Donelson’s Vivien F. Peaden explores details of the new law and what companies need to know.
Colorado has stepped boldly into the difficult area of regulating artificial intelligence (AI) with the enactment of the Colorado AI Act on May 17. Formally Senate Bill 205, the groundbreaking law has similarities to the EU AI Act, including taking a risk-based approach and establishing rules around AI impact assessment.
The law, which takes effect in 2026, will require developers and users of “high-risk AI systems” to adopt compliance measures and protect consumers from the perils of AI bias. Noncompliance with the Colorado AI Act (CAIA) could lead to hefty civil penalties for engaging in deceptive trade practices.
The enactment of an AI law in the Centennial State is the culmination of a nationwide trend in 2024 to regulate the use of AI, with three Cs leading the charge: California, Connecticut and Colorado. While California is making slow progress with its proposed regulations of automated decision-making technology (ADMT), Connecticut’s ambitious AI law (SB 2) was derailed by a veto threat from Gov. Ned Lamont.
In the end, Colorado’s SB-205 became the lone horse crossing the finish line. Two other states, Utah and Tennessee, also passed state AI-related laws this year, focusing specifically on regulating generative AI and deepfakes. That makes the Colorado AI Act the first comprehensive U.S. state law with rules and guardrails for AI development, use and bias mitigation.
AI systems regulated under Colorado’s law
The CAIA largely adopts the broad definition of “artificial intelligence system” nearly verbatim from the EU AI Act, which was in March 2024, (see this alert on EU AI Act). As illustrated below, the CAIA takes a technology-neutral stance and purposefully sets a broad definition so that it does not become obsolete as AI rapidly advances:
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Rocky Mountain High on AI: Colorado Emerges as the First Mover on State AI Law
