Feb. 1, 2026, could be the turning point for Colorado’s tech economy.

That’s when SB205, a bill Gov. Jared Polis signed into law last May, goes into effect. The Consumer Protections for Artificial Intelligence legislation aims to proactively prevent consumer harm by regulating the use of “high-risk” artificial intelligence in “consequential decisions.”

Those decisions include anything from school admissions to job applications to bank loans and insurance claims where AI systems help decide outcomes. The language of the law includes both the developers of the software and deployers of it, such as schools, city governments or businesses with over 50 employees.

Leaders within the tech industry and outside of it, including some of the state’s leading educational institutions, hope the day never comes. They argue the language is too broad and could prove costly for any business that hires.

“It makes us look like we don’t get it,” said Bryan Leach, CEO of the Denver-based couponing app Ibotta. “We don’t get the importance of AI to unlocking job creation in the future. We think of AI as a job threat instead of a job creator.”

Clock ticking to change it

But with mere weeks left in the 2025 legislative session, time is running out for an amended proposal to hit the statehouse, let alone the governor’s desk.

“Here we are now with four weeks left in the session still waiting for Sen. (Robert) Rodriguez to introduce a bill,” said Chris Erickson, co-founder and managing partner at local VC firm Range Ventures.

The group is among a coalition of Colorado tech leaders advocating for several amendments to the law. A new version is expected to hit the floor within the next two weeks.

“It’s an opportunity for us to get it right,” Leach said of the chance for a change. “We’re not opposed to regulating, in some sensible ways, forms of discrimination. It’s just got to be done thoughtfully.”

Ibotta’s $660 million IPO last April was the largest in Colorado tech history, but Leach said the law going into effect as is could cause him to rethink the company’s Denver-first hiring policy.

About half of the company’s 800 employees work out of the region, Leach said. Ibotta is also expanding its office presence with a move to LoDo sometime later this year.

He thinks people moving to Colorado for a tech job might be taken aback by the state’s approach.

“When they relocate to Colorado, they’re considering the whole ecosystem,” he said. “And the concern is that we could have to pause or reevaluate our entire hiring philosophy when it comes to technology professionals.”

Since the bill also regulates businesses that use AI software to make “consequential decisions” such as hiring, tech companies like Ibotta might also change their process for nontech job openings.

Leach said businesses using applicant tracking software, which Ibotta does not use, to parse through applications could open the door to costly proactive disclosures of algorithms used in that process.

Unsuccessful applicants could also appeal the decision if they think it had something to do with the AI system used. Leach said this could significantly slow down hiring.

“Let’s not focus on deployers. Let’s focus on developers,” he said. “Because developers have control over what’s actually in the algorithm, and a 50-person grocery store that’s just trying to get by (and hire people) doesn’t have control.”

How we got here

Erickson said the bill was passed hastily from the beginning, so much so that Polis, Attorney General Phil Weiser, whose office would handle the antidiscrimination disclosures, and Senate Majority Leader Rodriguez, one of the bill’s main sponsors, signed a letter vowing changes to the law’s language.

“In the time since SB24-205 was signed into law, many of our home-grown businesses have highlighted the risk that an overly broad definition of AI, coupled with proactive disclosure requirements, could inadvertently impose prohibitively high costs on them, resulting in barriers to growth and product development, job losses, and a diminished capacity to raise capital,” the trio wrote.

They outlined several changes in their note, such as focusing on developers rather than deployers, honing the definition of the AI systems, and changing the disclosure process to be more traditional and reactive rather than proactive.

In a state that’s among the leaders in attracting venture capital dollars, Erickson said these changes are necessary.

“There’s things in the law where you actually proactively have to disclose ahead of time and ahead of anyone complaining to the attorney general, like here’s all the things I’ve done to make sure that my systems are in compliance,” Erickson said. “That doesn’t exist in any other law, right? The traditional mechanism is, ‘OK. We’ve got a complaint, and now we need to see what you’ve done.’”

Erickson said he isn’t exactly sure what the amended version will entail, but if left in its original version, the law is more encompassing than just an AI bill.

“You’re asking a lot of nontech companies to do a lot of tech compliance things. … The burden on deployers is actually really quite high,” Erickson said. “This is not a tech bill at all when you think about how broadly it’s going to impact employers.”

Virginia, California, Connecticut and Texas all had similar bills vetoed, killed or significantly altered. If the Colorado law stands, it will be the first in the nation to regulate AI at the state level — something both Erickson and Leach said doesn’t make sense for one that makes up 2% of the country’s population.

“Every other state is courting talent. … And so there will be a loss of talent and then when we go to recruit, we’ll have a harder time,” Leach said.

Erickson said the goal is to delay implementation until 2027 if legislators can’t find consensus in the remaining weeks of this year’s session. Waiting for any federal oversight on AI is an added benefit of postponing as well, he said.

Several K-12 and higher education institutions have also signed letters to the legislature advocating for the same pause.

“This law creates unintended problems that could be costly to colleges and universities simply if we use software in everyday tasks. This diverts limited resources from our core functions,” a group including the University of Colorado Boulder, Colorado State University and Colorado School of Mines wrote.

“The law could limit the ability of our students to embrace new technology in the classroom and then launch their careers in Colorado. It also could stifle research and innovation, putting our faculty, students and graduates at a disadvantage compared to their peers in other states. We don’t want Colorado’s best and brightest students to be compelled to leave the state to pursue jobs in the tech center.”