Colorado AI Act Compliance 2026

Effective: February 1, 2026 • SB 24-205 • Preventing algorithmic discrimination

A quick guide to AI governance, regulatory risk management, and navigating the laws, rules, and regulations of high-risk AI in Colorado.

What Is CAIA?

The Colorado Artificial Intelligence Act establishes key laws, rules, and regulations for any organization that develops or deploys “high-risk” AI systems that make or significantly influence decisions in areas like hiring, lending, healthcare, housing, and more. Under CAIA, these entities must exercise reasonable care to prevent unlawful bias against protected classes (such as age, race, disability, sex, etc.), integrating robust AI governance and regulatory risk management practices at every stage.

Who’s Covered by CAIA?

• Developers of high-risk AI systems sold or licensed for use in Colorado
• Deployers (end-users) of those systems, when serving Colorado residents
• Exemptions: Small businesses (fewer than 50 employees, no in-house training data, published impact assessment), HIPAA-covered entities, and federally approved systems.

Core Obligations

For Developers

1. Document & Govern
   • Define each system’s purpose, intended use cases, and data sources.
   • Record known limitations and bias-mitigation steps as part of an overall AI governance framework.
2. Publish a Use Case Inventory
   • Maintain a public page listing every high-risk AI system you offer, along with your regulatory risk management controls to address discrimination.
3. Discrimination Notifications
   • Notify the Colorado Attorney General and all known deployers within 90 days of discovering or receiving credible evidence that your AI system has caused or is likely to cause unlawful bias.

For Deployers

1. Pre-Decision Disclosure
   • Inform consumers, before any consequential decision, that an AI system will substantially influence their outcome. Include system purpose, decision nature, your contact info, opt-out rights, and relevant laws, rules, and regulations.
2. Explain Adverse Decisions
   • Provide a clear explanation for any negative outcome: why and how the AI system was involved, what data it used, and include an appeals process with options for human review and data correction.
3. Maintain a Risk-Management Program
   • Align with a recognized framework (e.g., NIST AI RMF) to demonstrate proactive regulatory risk management.
   • Conduct and document impact assessments at least annually. Keep records that establish a presumption of reasonable care, which can be challenged in enforcement actions.
4. Incident Reporting
   • Notify the Colorado Attorney General within 90 days of learning that your deployed AI system has caused or is likely to cause discrimination.

General Disclosure Requirement

Regardless of risk level, clearly inform users they’re interacting with an AI system—part of sound AI governance and in line with state laws, rules, and regulations—unless it’s already obvious.

Quick CAIA Compliance Checklist

1. Map & Document
   • Define each AI system’s purpose, data sources, limitations, and bias-mitigation controls as part of your regulatory risk management strategy.
2. Publish Inventory
   • Create and maintain a public page listing high-risk AI systems and your AI governance measures.
3. Set Up Notifications
   • Implement pre-decision disclosures and post-decision appeals workflows.
4. Adopt a Framework
   • Align with NIST AI RMF (or equivalent) and schedule annual impact-assessment reviews.
5. Prepare AG Templates
   • Draft notification templates for reporting discrimination findings within 90 days.

Why Act Now?

• Penalties: Up to $20,000 per violation, enforced by the Colorado Attorney General.
• Affirmative Defense: Avoid penalties by proactively catching and fixing biases (e.g., “red teaming”) and demonstrating compliance with an approved AI governance framework.

Risk Mitigation: Early preparation reduces legal, financial, and reputational exposure, reinforcing your overall regulatory risk management posture.

Next Steps

Schedule a demo of RadarFirst’s one-of-a-kind regulatory risk management and AI compliance solutions to streamline your documentation, disclosures, and impact assessments, ensuring full compliance with Colorado’s laws, rules, and regulations well before February 1, 2026.