Engage Colorado — Call on Governor Polis to Veto SB26-134

Newsletter — Issue 8 — May 11, 2026

This newsletter has been published by Engage Colorado.

Governor Polis: Veto the Payment Card Network Fees Bill | SB26-134

Last week, the Colorado General Assembly sent SB26-134 — Payment Card Network Fees to Governor Polis for his signature or veto. The bill passed the Senate 18–17, with five Democrats joining all 12 Republicans in opposition — the narrowest possible margin in a 35-member chamber. It then cleared the House 44–20. This is not a bill with broad bipartisan backing or even unified Democratic support. It survived contested votes in both chambers, including active opposition from members of the Governor's own party.

The Governor has the constitutional authority to veto. He should use it.

A veto would be good for Colorado. It would address each of the concerns the Open Letter, Ensuring Colorado's Innovation Future — signed by Governor Polis and now backed by more than 400 Colorado founders, investors, operators, and civic leaders — named directly:

Every Coloradan benefits when Colorado retains and attracts the businesses whose tax base and economic opportunity fund our schools, public services, jobs, and long-term prosperity.

What the Payment Card Network Fees Bill (SB26-134) does.

The bill prohibits credit card and debit card networks from charging interchange fees on the sales tax portion of a transaction. In plain terms, it tells Visa, Mastercard, and the banks that issue the cards Coloradans use every day that Colorado law overrides how the national electronic payments system has functioned for decades.

Departure states are passing this law. Destination states are not.

Illinois enacted the first such law in June 2024. Colorado is poised to be the second if SB26-134 is signed. Delaware and Rhode Island have similar bills advancing. All four are states losing companies.

Texas — the largest destination state for Colorado-departing companies — has no comparable legislation. Neither do Arizona or North Carolina, the next-largest destinations. Wyoming and Utah, two states that have built distinct competing fintech ecosystems — Wyoming through the Special Purpose Depository Institution charter, Utah through its industrial bank framework — have nothing pending either. None of the states actively gaining Colorado companies is passing this kind of law.

This is precisely the "losing ground to competing states" dynamic the Open Letter asked our political leaders to address. The states losing companies are passing this law. The states gaining companies are not. SB26-134 is a concrete, named, dated test of whether Colorado intends to follow the destination states or join the departure states.

The signal to founders and investors.

Founders choosing where to incorporate, where to hire, and where to build the next generation of payments and financial-technology companies factor regulatory environment into the decision. SB26-134 sends them a clear signal: Colorado is willing to legislate against the economic model that underpins modern fintech.

For an industry the state has spent a decade trying to attract — and that the Open Letter explicitly names as part of Colorado's innovation future — signing this bill works against Colorado's own stated goals.

The Colorado Business Roundtable framed the consequence for Colorado's capital base directly in its formal opposition memo:

The Open Letter asked our political leaders to recalibrate public rhetoric in a manner that demonstrates authentic partnership with — and sustained commitment to — innovators, builders, and growth-oriented businesses. Signing SB26-134 would communicate the opposite.

SB26-134 will be challenged in federal court.

If the Governor signs SB26-134, Colorado would follow Illinois as the first two states to enact swipe-fee legislation. Following in Illinois' footsteps is not wise.

Illinois is a case study for what happens when a state's regulatory climate erodes. The Tax Foundation's State Business Tax Climate Index ranks Illinois 37th of 50 — its worst ranking in over a decade. Illinois suffered the nation's 3rd-worst loss of businesses in 2021, with thousands of businesses leaving the state over the past decade. The corporate headquarters departures include the following: Boeing left Chicago for Virginia after 20 years; Caterpillar moved to Texas after nearly 100 years in Illinois; Ken Griffin's Citadel relocated to Miami after 30 years in Chicago; Tyson Foods consolidated to Arkansas; TTX moved to North Carolina.

The Illinois template — the only state in the country to have enacted this kind of law — is currently being dismantled by federal regulators and federal courts.

SB26-134's $60 billion asset threshold means it applies only to large national banks — precisely the institutions the OCC has just declared are not subject to this category of state regulation. Signing SB26-134 would commit Colorado to a federal litigation posture, expending state resources to defend a statute whose model has just been vacated in the Seventh Circuit.

Gov. Polis: Learn from the Colorado AI Act Mistake and Veto SB26-134.

Does all of this sound familiar? Colorado has just lived through this exact cycle when the legislature passed the Colorado AI Act in 2024. Governor Polis had the constitutional authority to veto. He chose not to use it. The bill became law.

Colorado's tech and business community mobilized in response. While the legislature fought against repeal, xAI filed a federal lawsuit against the state seeking to enjoin enforcement of the AI Act, and the U.S. Department of Justice intervened on the plaintiffs' side — both of which heightened the negative national press on Colorado. Two years later — just last week — the legislature course-corrected, passing SB26-189 by overwhelming bipartisan margins (House 57–6) to repeal and replace SB24-205. But by the time the fix came, the reputation damage was already done.

Palantir Technologies — Colorado's largest publicly traded company — moved its headquarters from Denver to Miami in February 2026. In its SEC-filed risk disclosure to shareholders, Palantir specifically cited Colorado's AI policy, comparing the state's oversight regime to the European Union's AI Act and warning shareholders that "compliance with such obligations may be difficult, onerous, and costly, and could adversely affect our business, reputation, financial condition, results of operations, and growth prospects."

The course correction did not bring Palantir back. It did not undo the message Colorado sent to founders, investors, and operators considering where to build. It did not erase the years of national press characterizing Colorado as a state hostile to innovation.

SB26-134 is the chance to break this cycle — to course-correct before the damage is done. A veto by the Governor spares Colorado the brand damage, capital flight, and reputation repair that followed SB24-205.

Gov. Polis: Follow through on the Honest Assessment by vetoing SB26-134.

When Governor Polis personally signed the Open Letter, he committed to all nine of its Action Items. Vetoing SB26-134 is consistent with at least five of the Open Letter's nine Action Items and will demonstrate his commitment to Ensuring Colorado's Innovation Future.

Veto SB26-134.

The case for a veto is overwhelming. A veto preserves the regulatory predictability Colorado businesses need. It positions Colorado alongside the destination states actively gaining companies — Texas, Wyoming, Utah, Arizona, North Carolina. It welcomes the fintech and payments-innovation sector Colorado has spent a decade attracting. And it breaks the cycle that cost Colorado Palantir two years ago — course-correcting before the damage, not after.

A veto is the most concrete demonstration that Colorado's leadership is committed to Ensuring Colorado's Innovation Future.

— Dan Caruso

Managing Director of Caruso Ventures, Host of The Bear Roars Podcast, and Board Chair of Boulder Roots Music Fest