Colorado Gov. Jared Polis on Thursday vowed to revise a new law on artificial intelligence amid worries by businesses that, contrary to its goals, the legislation would stifle innovation without resolving the problems it sought to remedy.

In a letter to businesses, Polis, along with Attorney General Phil Weiser and Senate Majority Leader Robert Rodriguez, acknowledged the points raised against the legislation and conceded that a “state by state patchwork of regulation” on AI poses “challenges to the cultivation of a strong technology sector.”

The latter point refers to the oft-repeated argument that a federal framework should govern issues, such as AI, that cross state lines and implicate the country’s ability to compete internationally.  

Some 200 business leaders, including some of Colorado’s most prominent executives, have written the governor about their “collective concern” regarding the new law, Colorado Politics has learned.    

At its core, Senate Bill 205 establishes regulations governing the development and use of artificial intelligence in Colorado and focuses on combatting “algorithmic discrimination.”

The measure was among several bills at the state Capitol dealing with AI technology, whose explosion in the last few years have caused both excitement — for those who view it as offering tangible solutions to society’s problems — and worry for those who fear it might be deployed for nefarious purposes.

In their letter to “innovators, consumers, and all those interested in the AI space,” Polis, Weiser and Rodriguez promised to collaborate with industry leaders and others “on changes to this policy to ensure the final regulatory framework will protect consumers and support Colorado’s leadership in the AI sector.”

They said state and legislative leaders will engage in a process to revise the new law and “minimize unintended consequences associated with its implementation.”

The changes outlined in the new law, which Rodriguez authored, are set to take effect in February 2026.

Supporters earlier said the legislation would enhance consumer protections against discrimination by artificial intelligence systems, while critics worried about its potential effects on innovation and the ability of small, startup businesses to compete against tech giants. They also argued the legislation won’t actually resolve the problems it purportedly would tackle.

SB 205 defines “algorithmic discrimination” to mean any condition in which AI increases the risk of “unlawful differential treatment” that then “disfavors” an individual or group of people on the basis of age, color, disability, ethnicity,  genetic information, race, religion, veteran status, English proficiency and other classes protected by state laws.

The new law, which Polis signed in May, also requires developers to exercise “reasonable care” to prevent discrimination when using “high-risk” artificial intelligence systems, defined as systems involved in making “substantial or consequential” decisions.

Other provisions of the bill include requiring developers to implement a risk management policy, complete an impact assessment for high-risk systems, and notify consumers if artificial intelligence is being used to make a consequential decision regarding a consumer.

“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,” Polis, Weiser and Rodriguez wrote. 

Those efforts, they said, will supplement the work of the task force established by the new law.

They added the work would focus on several areas: Finetuning the definition of AI systems to the “most high-risk systems”; focusing regulation on developers, rather than on smaller companies that deploy AI within third-party software; shifting from “proactive disclosure” to the “traditional enforcement regime” managed by the Attorney General; making clear the “consumer right of appeal” refers to people’s ability to appeal to the Colorado Attorney General and also clarifying that consumers have the right to bring matters of alleged discrimination to the attention of the Colorado Civil Rights Commission; and, considering other measures to make Colorado the “most welcoming environment for technological innovation while preventing discrimination.”

“We are confident that this collaboration will support a thriving technology sector in Colorado that puts consumers and innovation first, letting the world know that Colorado is open for business,” Polis and the others said. “We look forward to getting to work.”

Several organizations representing the technology industry had urged Polis to veto the bill, arguing it would harm small businesses developing artificial intelligence technology.

And, in a letter to the governor, the U.S. Chamber of Commerce said no comprehensive analysis had been conducted prior to the bill’s passage to identify “regulatory gaps.” 

“We believe Colorado should undertake a detailed and rigorous review of the implications of proposed Artificial Intelligence (AI) regulations on Colorado businesses and consumers before legislation is enacted,” the letter group said. 

During the discussion on the bill at the state Capitol, Rodriguez said bias exists within AI systems in housing, bank loans and job applications. He said he has been collaborating with Connecticut state Sen. James Moroney, who is running a similar measure in his state.

Rodriguez said that, despite calls from tech giants, such as Mark Zuckerberg and Elon Musk, for federal AI regulations, Congress has not acted, prompting him to introduce the bill at the state level.

“At the base of this bill and policy is accountability, assessments, and disclosures that people need to know when they’re interacting with artificial intelligence,” he previously said. “We’re in a groundbreaking place on this policy, similar to we were with data privacy, but every year we delay it, the more engrained it becomes and the harder it is to unravel.”

Also earlier, Eli Wood, the founder of software company Black Flag Design, expressed worries the legislation would inadvertently disadvantage small startups, such as his company, that heavily depend on open-source AI systems.

Such systems serve as publicly available blueprints, enabling developers to access and customize them to craft artificial intelligence solutions, he said, adding that major corporations, such as OpenAI, the creator of ChatGPT, often contribute to these open-source systems.

Wood said the bill could penalize small businesses for “algorithmic” bias identified in their system, even if the bias originated from the open-source system rather than the one developed by the small business itself. Because of this, Wood argued that generative AI models created by major corporations should be the bill’s target — not small startups.

“At first glance, it seems like it’s a sensible solution to control impacts of this technology before it negatively impacts society,” Wood said, “but I believe it will severely curtail the ability of small organizations like ours and negatively impact democratizing the technology for societal good.”

Responding to the governor’s new letter, Doug Johnson of the Consumer Technology Association called passing and enacting SB 205 “unfortunate and detrimental to innovation, startups, and good policy concerning AI.”

“The Consumer Technology Association looks forward to an opportunity to collaborate with policymakers on repealing SB 205,” Johnson said. “It is crucial for U.S. AI technology leadership and competitiveness to have rules and guidelines established at the national level and with a relatively lighter regulatory treatment of this emerging technology than we have seen proposed in several jurisdictions.”

He added that existing laws on civil rights, consumer protection, and non-discrimination are already in place at the federal and state levels.

“Moreover,” he said, “federal agencies responsible for these matters have affirmed their enforcement authorities already apply to automated systems.”