On May 27, 2024, Colorado became the unfortunate pioneer in a troubling new frontier of government overreach. The Centennial State passed SB24-205, the nation’s first comprehensive artificial intelligence regulation—a sweeping piece of legislation that threatens to strangle innovation in the cradle while solving precisely zero real problems.
The law targets what lawmakers have termed “algorithmic discrimination,” a conveniently elastic concept that allows regulators to second-guess any AI system used in consequential decision-making. Whether it’s healthcare providers using AI to identify at-risk patients, employers screening job applications more efficiently, or lenders assessing creditworthiness with sophisticated algorithms, Colorado’s new regulatory regime subjects all of these innovations to burdensome impact assessments and byzantine transparency requirements.
This represents government regulation at its most pernicious—vague enough to ensnare virtually any business using modern technology, yet specific enough to create compliance nightmares for companies trying to serve consumers better. The practical effect will be to drive AI innovation out of Colorado and into states with more sensible regulatory environments.
Even Governor Jared Polis, who ultimately signed this regulatory monstrosity into law, couldn’t hide his reservations about what he was unleashing on the nation. In an extraordinary moment of candor, Polis warned that the very legislation he was endorsing could “create a complex compliance regime for all developers and deployers of AI.” The governor further acknowledged his concerns that Colorado was effectively firing the starting gun for a “state level…patch work across the country [that] can have the effect to tamper innovation and deter competition in an open market.” Polis subsequently convened a special session, demanding lawmakers rework the flawed AI legislation they had rushed through in the first place.
As Colorado grapples with buyer’s remorse over its misguided attempt to establish a national template for AI regulation, the state’s painful experience should serve as a cautionary tale for other lawmakers—including those in Tallahassee and beyond—who might be tempted to follow this regulatory folly.
Sometimes being first isn’t a badge of honor; it’s simply being first to make a costly mistake.
Which raises the inevitable question: If Colorado’s heavy-handed approach is clearly wrongheaded, what’s the right way forward?
If comprehensive AI regulation is a dead end, how should sensible legislators approach this transformative technology without strangling innovation in red tape? The answer lies not in grandiose new regulatory schemes, but in the principle of using existing tools before creating a new bureaucratic machinery designed to penalize innovators and entrepreneurs.
Nearly every state already maintains robust anti-discrimination statutes that address the very harms AI alarmists claim to fear. Rather than layering on additional regulatory complexity, lawmakers should first exhaust these proven legal frameworks. A simple clarification from the state Attorney General’s office that existing anti-discrimination laws apply to algorithmic decisions, or a modest amendment explicitly covering AI applications, would accomplish the same protective goals without the innovation-killing overhead of Colorado’s approach.
This represents governance at its best: targeted, proportionate, and respectful of the free market’s capacity to drive progress while existing legal guardrails prevent genuine abuse.
But even if lawmakers ignore the principled case for restraint, they should at least consider the bottom line: the staggering economic costs. Implementation of SB24-205 alone carries an estimated $5 million annual price tag for taxpayers—and that’s merely the government’s administrative burden. The true economic carnage lies in the compliance costs imposed on businesses, which inevitably translate into fewer new hires, reduced technology investments, and stunted growth prospects.
The stakes couldn’t be higher. The James Madison Institute calculated that imposing similar burdensome AI regulations would drain Florida’s economy of $38 billion. That’s not regulatory prudence, that’s economic sabotage disguised as consumer protection.
States contemplating Colorado’s approach should ask themselves: Is virtue signaling about algorithmic fairness worth bankrupting the innovation economy that drives American prosperity? The answer should be obvious. Colorado’s failed regulatory experiment offers a clear lesson: When government rushes to regulate emerging technologies it doesn’t understand, the result is predictably disastrous. Other states, including here in Florida, would be wise to learn from Colorado’s costly mistake rather than repeat it.
