DENVER, Colo. — The global artificial intelligence (AI) race is heating up. To win, the Trump administration says the U.S. needs to remove red tape and regulations, threatening to withhold federal funding from states that don't comply.
This week, the White House unveiled its AI Action Plan, which calls regulations “onerous” and “burdensome” while calling the technology “far too important to smother in bureaucracy at this early stage, whether at the state or Federal level.”
The plan goes on to say the federal government “should not allow AI-related Federal funding to be directed toward states with burdensome AI regulations that waste these funds, but should also not interfere with states’ rights to pass prudent laws that are not unduly restrictive to innovation.”
The first part of that guidance seems to target Colorado. Last year, the state passed a law set to introduce new AI regulations.
“In my mind, Colorado is by far the most restrictive state as far as AI regulation,” said Tyler Thompson, a Denver attorney and partner at law firm Reed Smith who specializes in technology and AI. “We have the Colorado AI Act, the first comprehensive AI law in the nation… I think we're the number one candidate for a state that could get hurt by this, by not getting that funding.”
Thompson advises companies on how to comply with the Colorado AI Act (Senate Bill 24-205), which is set to take effect Feb. 1, 2026.
The law aims to protect people from bias when interacting with “high-risk” AI systems, making important decisions, like whether someone gets a job, a loan, or housing. It will also require companies and organizations to notify consumers when they’re interacting with an AI system.
“[AI] is kind of nascent,” Thompson said. “It's growing. There's a lot left to be explored, and I think [companies] would say that it's much too early to regulate it.”
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Thompson told Scripps News Denver some companies are struggling to adhere to the rules because of the complexity of AI.
“This is not a simple one or two paragraph disclosure, or if they're doing like a risk assessment, this isn't like a one-page risk assessment,” he explained. “These are very involved, detailed processes, and you need somebody who's a true expert in AI. And unfortunately, the expertise in AI is pretty much the most expensive expertise on the planet right now.”
“That can be difficult for even companies that want to do the right thing, want to comply with the law… want to be transparent about their use of AI,” Thompson added. “It can be very expensive, difficult and time-consuming for companies to do that right now.”
Thompson said that’s already forcing some of his clients to consider excluding Colorado from their AI services.
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State lawmakers say they are feeling pressured to change or delay the law to keep federal funding.
State Rep. Brianna Titone, who sponsored the Colorado AI Act, said the lack of federal regulations has the AI industry “in a free-for-all right now.”
“We want the AI to do fair things, just like we put a lot of these laws on the books to do when it comes to housing and employment and a vast range of things where we have civil rights laws and rules in place,” she told Denver7 Thursday. “[The federal government’s] saying, ‘Go ahead and discriminate and do whatever you want and don't worry about how the AI is making the decisions.”
Titone also sponsored a reform bill this year, which she said would have addressed most of the tech industry’s concerns and made it easier for businesses to comply with the new rules. That measure, however, failed to pass.
“[The tech companies] changed their mind completely and said, ‘We just need more time,’” she said. “The goal of kicking a can down the road this far is to just give time in order to try to kill the thing altogether.
“And if we go back to the ground level, it's going to make it harder for any other state to succeed too, so we feel a lot of responsibility to try to get this to a better place, and a better position where we can implement the law and actually start to get some of these AI systems back on a trail that has guide-rails on it to protect people.”
Titone worries about companies prioritizing profits over concerns about AI, such as bias, privacy, and deepfakes.
“This is the moment where we can either go on the path of slowing things down and having some control, or we just let the thing go and we see what happens,” she said.
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Titone expects Gov. Jared Polis to call a special legislative session, as early as next month, to address budget issues as well as the state’s AI law.
Scripps News Denver reached out to the Governor’s Office Thursday to ask if a special session would be called, and if the AI bill would be addressed. A spokesperson did not directly answer, but provided the following statement:
“President Trump’s new deficit spending, bureaucracy-building law, which was voted for by all four of Colorado’s Republican delegation members, will kick people off their health care, threaten food access for children and families, and hurt jobs across the state. Our office continues to evaluate the impacts of this new law to determine next steps, including a potential special session. We are continuing to review the Trump Administration's AI Action Plan. Regardless of the President’s executive actions, the Governor remains committed to working with the General Assembly to improve SB24-205 and address any significant negative impacts.”
Joined by Attorney General Phil Weiser, Polis expressed in a 2024 letter that the new AI law will need to change.
Written before President Trump won the November election, the letter says, “A state-by-state patchwork of regulation poses significant challenges to the cultivation of a strong technology sector. It is our intention that Colorado’s action in this space signals to federal policymakers the interest among states in establishing a national regulatory framework for AI, rather than an intent to create one of 50 distinct regulatory frameworks. Similarly, we believe that harmony across any regulatory framework adopted by states would limit the burden associated with a multi-state compliance scheme that deters investment and hamstrings small technology firms.”
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Erosion concerns along a busy Colorado highway
A News5 viewer reached out concerned about erosion along Highway 24.
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