In a special session, the Colorado State legislature is attempting a last-ditch effort to change the first-of-its-kind Consumer Protections for Artificial Intelligence (CPAI) Act passed last year. For the sake of the industry and consumers, reform—or delay—must happen before the law takes effect on February 1, 2026.
As the American Consumer Institute argued in May, a special session to fix the impending law is a big step in the right direction, and the state’s lawmakers are right to pursue reform. Thankfully, Colorado Governor Jared Polis agreed, calling a special session and adding the AI law to the agenda. But with conflicting visions of how to fix the law likely to dominate CPAI discussions, lawmakers must be prepared to extend the law’s effective date and revisit the issue in the 2026 full session.
Urgent action is needed. Colorado’s current AI law is set to harm both the artificial intelligence industry and consumers when it takes effect in February. It will impose heavy amounts of paperwork for AI developers and businesses alike at every stage of development and deployment in fields including education, government services, employment, healthcare, finance, housing, or legal services. In each case, AI can deliver significant improvements in efficiency and accessibility, benefiting consumers statewide. The requirements imposed would erect considerable barriers to pro-consumer deployment.
While the law includes carveouts for small businesses, every developer or deployer with 50 employees or more is exposed to the full weight of the law. That threatens up-and-comers with the same crushing paperwork requirements—and penalties—that resource-rich incumbents can more easily manage. That’s the anti-innovative, competition-smothering reality Coloradans will face under the law. That this law was a mistake is evident in the fact that Governor Polis came out in support of a federal pause on enforcing all state-level, AI-specific legislation.
As the state assembly kicks off its special session, proposed solutions range from doubling down to outright repeal. The CPAI Act’s author, Senate Majority Leader Robert Rodriguez, is floating the Colorado Artificial Intelligence Sunshine Act, which creates 17 exclusions to a key definition, “algorithmic discrimination.” But on the whole, the definitions themselves are expansionary, vague, and would result in an overly broad legal scope. This much fine-tuning also suggests the original application was too hasty and lacked understanding in the first place. Additionally, the Sunshine Act would hold developers and deployers equally liable for laws broken while using AI, and strip them of an affirmative defense. That’s more liability and fewer protections for developers—a startling break from the pro-innovation letter Senator Rodriguez signed with Governor Polis and Attorney General Phil Weiser last June. Going down this policy path would be a mistake.
At the other extreme, Senator Mark Baisley suggests total repeal while adding “simple language to existing non-discriminatory language in state statute, that says you can’t use technology to discriminate against people,” rightly noting that AI-specific legislation is unnecessary when considering tech-agnostic consumer protections already on the books. A lack of AI-specific regulations does not equate to lawlessness. Before introducing and deliberating on novel bills, policymakers should double-check existing laws to see what already applies to AI and if new guidelines are necessary.
With conflicting visions of where to take their law, it’s possible that policymakers will not be able to reach a consensus. Especially when the special session is not solely focused on their AI crisis, but on larger budgetary issues. At their first opportunity, policymakers should amend the law to delay the February 1st deadline. Kicking the can down the road is never ideal, but it is far better than doing nothing and risking the CPAI’s chilling effects to take hold in early 2026.
In rushing to be the first to broadly regulate AI and set the stage for other states to follow, Colorado forced an error that it is finding hard to unwind. While its lawmakers scramble to correct their work, other states would be wise to learn from this fiasco.
Nate Karren is a policy analyst with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, follow us on X @ConsumerPal.