Colorado SB 205 Explained: What Small Businesses Need to Know
Colorado SB 205 took effect February 2026 and is the most comprehensive state-level AI law in the US. If your business serves Colorado residents and uses AI for consequential decisions, this applies to you.
Who it affects
Any business deploying high-risk AI systems affecting Colorado residents — regardless of where your business is based. High-risk means AI used in employment, lending, housing, education, or insurance decisions.
What you must do
Conduct impact assessments for high-risk AI systems. Notify consumers when AI makes or substantially assists with consequential decisions. Implement a risk management policy. Document your AI governance practices.
Penalties
Enforcement is through the Colorado Attorney General. Penalties include injunctive relief and civil penalties. There is no private right of action, but the AG can investigate complaints.