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Newsletter — Issue 40 — Friday, August 14, 2026
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This newsletter has been published by Engage Colorado.
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The Drivers Series — Category 4 · Factor 4b
Colorado's Worst Single-Factor Score — And the Course Correction Now Underway
This Engage Colorado Newsletter reflects the personal opinions of Dan Caruso, written with the support of the Caruso Ventures team. The Ensuring Colorado's Innovation Future Coalition did not review and has not endorsed this Engage Colorado Newsletter.
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Category 4b of The Honest Assessment — Technology Regulation — is where Colorado scores its worst single-factor mark in the entire twelve-factor framework. It is also the one factor where Colorado's trajectory is meaningfully better than its current position — because the Colorado legislature and Governor Polis have taken the first real step to course-correct.
Both facts matter. This issue lays out the damage that was done, the correction now underway, and what still has to change for the correction to fully take hold.
As with the broader Innovation Vision and The Honest Assessment, I led the preparation of this section and it reflects only my views.
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The Scoring
Factor 4b · Technology Regulation · scores are out of 5 · current → trajectory
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Destination Geographies
Pro-technology posture, minimal state-level friction, deference to federal standards.
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4.0 → 4.0
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Departure Geographies
Active regulation, adversarial posture toward major technology companies, first-mover on AI restrictions.
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1.5 → 1.5
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Colorado
The worst single-factor mark Colorado receives anywhere in the framework — though the trajectory finally points upward.
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1.0 → ▲ 1.5
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Colorado's 1.0 current is worse than the Departure Geographies (1.5) — Colorado is not merely trailing the Destinations here; it went further than even the Departure states did. The 1.5 trajectory reflects the passage of SB26-189 in May 2026, which meaningfully scaled back the original AI Act.
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The Damage
The anchor is SB24-205, Colorado's Artificial Intelligence Act, passed in 2024. It was the first comprehensive state-level AI regulation in the United States — imposing algorithmic accountability requirements on developers and deployers of AI systems making “consequential decisions” in employment, housing, healthcare, financial services, and government services.
For the world's most sophisticated technology companies, the message was unmistakable: Colorado was volunteering to go first on legislation the Destination Geographies would not touch, and the federal government had not yet acted on.
The consequences were immediate.
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• Palantir Technologies moved its headquarters from Denver to Miami — 724 jobs and roughly $106 million in annual GDP — citing SB24-205 in its 10-K as “onerous and costly.”
• xAI filed a federal lawsuit challenging the constitutionality of the Colorado AI Act.
• The Common Sense Institute projected the law's total economic cost at up to 30,359 tech-sector jobs and $5.5 billion in Colorado GDP by 2030 — with an additional 40,000 jobs and $4 billion in GDP in downstream compliance costs across six regulated industries.
• Healthcare alone faced a projected 13,300 jobs and $18 billion in cumulative GDP loss through 2036.
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These are not projections of ordinary regulatory friction. They are projections of a state actively regulating away the industry — artificial intelligence — that will define global economic leadership over the next twenty years.
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The Course Correction
On May 14, 2026, Governor Polis signed SB26-189 — the first real, structural walk-back of the original AI Act.
SB26-189 did three important things:
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1. Removed several of the most burdensome provisions of the original law — the requirements that had drawn the sharpest opposition from technology developers and deployers.
2. Refocused the remaining framework on disclosure, transparency, and targeted consumer protections in connection with automated decision-making — a lighter-touch approach closer to federal direction.
3. Delayed the effective date from June 30, 2026 to January 1, 2027, giving companies operating in Colorado more runway and signaling that Colorado is willing to reconsider its first-mover posture.
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This is a real step in the right direction — and it is why Colorado's trajectory on Factor 4b (1.5) now sits above its current position (1.0). It is the clearest evidence in the entire twelve-factor framework that Colorado's political leadership is capable of course-correcting when the stakes are made clear.
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What Still Has to Change
The signal Colorado sent in 2024 has not been un-sent. Founders and investors do not price the current law — they price the pattern.
For Colorado to fully close the gap on Factor 4b, several things need to hold:
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• No new first-in-the-nation technology restrictions. The willingness to be first-mover on AI, algorithmic accountability, or platform regulation is what created the reputational damage. Colorado's political leadership must publicly commit to a different posture going forward.
• Alignment with, not divergence from, federal technology policy. Where the federal administration is moving to pre-empt state-level AI laws, Colorado's leadership should embrace federal preemption rather than resist it. Governor Polis has publicly said as much. His Senate and Attorney General colleagues have not.
• Active, visible engagement with the technology industry. The Destination Geographies do not merely refrain from adversarial regulation. They actively court technology companies — through their Governors, their economic development offices, and their coordinated brand strategies. Colorado's new Governor's Competitiveness Council is a start; more is required.
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What This Means for Colorado — On Technology Regulation
The 4b course correction is genuinely encouraging. But Colorado is starting from behind — at 1.0 current on the worst factor in the framework — and the gap to the Destination Geographies (4.0) is the widest gap Colorado faces on any single dimension.
Rebuilding trust with the technology community requires deliberate, sustained, and public leadership. Colorado's Governor, Senators, Attorney General, and the presumptive next governor and attorney general all have a role to play. They must be visible advocates for Colorado as an AI-friendly, technology-friendly, innovation-friendly state — and they must resist the political incentives to legislate against the industries Colorado once led.
Colorado political leaders are doing the opposite of this today. But if they want Colorado to once again be a mecca for tech and innovation, they will need to evolve their mindsets. And if they do, it will be to the benefit of every Coloradan.
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What Comes Next
The next issue in this series covers 4c — Public Safety and Visible Urban Order — the final factor in Category 4, and the last piece of the diagnostic arc before the series pivots to solutions.
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If We Work Together, We Can Reverse This Trend
But first, we have to diagnose the source of the problem — which is why this information is being shared.
If Colorado takes the appropriate steps, Colorado can be the most attractive innovation ecosystem in the world — and every Coloradan will share in the economic and cultural prosperity that results from being the world's leading geography for innovation. This is the Innovation Vision for Colorado.
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