The 2026 Colorado General Assembly is a testament to governance under fiscal pressure.
Faced with a $1.2 billion budget shortfall, legislators tested novel funding mechanisms, explored unconventional policy structures and, occasionally, compromised.
Sarah Mercer, a shareholder and co-chair of the State Attorneys General practice group at Brownstein Hyatt Farber Schreck LLP, said, “The challenge with the budget has forced some really interesting creative ideas.”
She pointed to proposals that look beyond taxes or fee increases, including efforts to use investment income or reimagine existing state funds to support Medicaid and childcare, even if they did not ultimately pass.
At the same time, “there were a lot of painful cuts that had to be made,” Mercer said.
Legal Services and Consumer Protection
Many attorneys were watching SB 26-174, which targets legal lead generation practices.
Mercer was struck by the profession’s response. “The legal profession seems to be pretty comfortable with handing over regulation to the legislature,” she said, noting oversight has traditionally come from the judiciary and professional rules.
“I wonder what lawyers 20 years from now are going to think about that,” she added.
Innovative Criminal Justice Reform
A major structural achievement is HB 26-1020, concerning the use of colorimetric drug test kits in law enforcement. The legislation is the culmination of a multiyear effort that began with HB 25-1183, which established a bipartisan working group to investigate the accuracy of field drug tests.
Jeanne Segil, assistant director at the Korey Wise Innocence Project, helped bring together diverse stakeholders to reach a consensus on two reforms:
- Summons over Detention: Individuals accused of low-level drug possession based solely on a color-based presumptive test receive a summons rather than being booked into detention while awaiting confirmatory laboratory results.
- Mandatory Disclosure: Courts are required to inform defendants of the known error rates of these tests and their right to request confirmatory testing before a plea can be entered.
Segil said she hopes Colorado’s reforms “pave the way for others to follow.”
Labor Rights: Dismantling a ‘Barrier to Union Organizing’
The debate over labor rights was more contentious.
At the center was HB 26-1005, a bill modernizing the state’s Labor Peace Act.
Jonathon Booth, associate professor of law at the University of Colorado Law School, said the Labor Peace Act was passed during World War II, following decades of violent labor conflict in Colorado, and has continued to function as a “significant barrier to union organizing.”
HB 26-1005 moved through the legislature largely on party-line votes and was opposed by business groups and Republican lawmakers.
Housing, Data Centers and the Cost of Innovation
Several proposals reflect the legislature’s effort to regulate emerging industries without stifling innovation.
HB 26-1007 limits the discretion of landlords, homeowners’ associations and condominium associations to restrict the installation and use of balcony solar devices, explained Mark Bell, partner at Stinson LLP. “This shifts a measure of control over portions of a building’s exterior envelope, balcony areas, electrical interfaces and energy-related infrastructure from centralized property ownership or association governance toward individual occupants or unit owners.”
The bill raises legal and operational questions. “The control shift creates conflict with existing lease covenants, rules and regulations, architectural-control provisions, condominium declarations, common-interest community covenants, lender requirements and insurance underwriting standards,” he said.
Two competing data center bills, one focused on regulation and the other on incentives, “died in the final days of the 2026 legislative session,” said Gabe Racz, member of Clark Hill PLC.
SB 26-102 “would have imposed regulatory requirements on large load data centers, focusing on costs to serve data centers with electricity, greenhouse gas emissions and water use,” he said. HB 26-1030 “would have created an incentive program for large load data centers, with eligibility only for commitments related to investment level, energy efficiency, water stewardship and backup power generation.”
Failure to pass reflected political tensions: “Business and labor leadership supported an incentive program to encourage more development, while environmental and community groups supported regulation to address concerns about increasing residential electrical bills, air pollution and water use,” Racz said.
As 30 other states have incentive programs for data centers, making them more attractive for investment, Colorado lawmakers are expected to revisit the issue.
The AI Frontier: Regulation Versus Innovation
As with data centers, artificial intelligence was a major focus. SB 26-189 represents Colorado’s latest attempt to define AI governance, replacing an earlier risk-based framework with a disclosure-driven model that requires transparency when AI is used in decision-making.
Mercer cautioned the compromise “is the first step in regulating AI.” With federal policy still evolving, she said, “There is still quite a bit of apprehension in the business community.”
Healthcare: A Patchwork of AI Rules
In healthcare, multiple AI-related bills created overlapping compliance obligations. The result, Mercer said, is a “spaghetti-against-the-wall approach,” with policymakers addressing issues piecemeal.
As for healthcare policy itself, legislatures passed reforms to the state’s Medicaid nonemergency medical transportation system. Henry Baskerville, a partner with Fox Rothschild LLP, said HB 26-1328 strengthens oversight and accountability within Colorado’s nonemergency medical transportation (NEMT) services through auditing, electronic trip verification, GPS tracking and eligibility standards.
Its bipartisan support reflects shared priorities. “This is fundamentally a healthcare access issue. Reliable transportation directly impacts whether vulnerable populations can attend medical appointments and receive care,” he said. “The bill also focuses heavily on accountability and protecting taxpayer dollars, which tends to create bipartisan alignment.”
Administrative Relief in Education
In education, lawmakers provided administrative relief through HB 26-1299.
Lindsay Brown, of the Brown Education Law Group, said, “The bill takes aim at several discrete compliance tasks,” including consolidating reporting, eliminating outdated requirements and allowing smaller districts to streamline planning.
She continued, “For a small rural district where one administrator wears five hats, the cumulative effect is meaningful.” For larger districts, “the savings are smaller in relative terms but still free up capacity for higher-value work.”
Brown highlighted a narrow transparency tradeoff, with districts now free to reduce voluntary data collection. “The countervailing point is that parents and the public rely most on assessment results, graduation rates, accountability ratings and discipline data, none of which are affected,” she said.
The Small Business Perspective: A Mixed Reality
Small businesses experienced a rare win in SB 26-175, said Michael Smith, Colorado state director for the National Federation of Independent Business.
The bill adjusts the workers’ compensation experience modification factor, which Smith believes will stabilize insurance rates for construction firms and other high-risk industries.
“Despite some progress on pro-small business bills,” Smith said, “there continue to be several concerning anti-business bills,” including bills around regulatory compliance, litigation risk and administrative burdens.
Law Enforcement and Federal Friction
HB 26-1275, which would have imposed stricter identification and immigration training requirements on law enforcement, was shelved.
Booth, the University of Colorado Law School professor, attributed its failure to the complexity of state-federal dynamics involving Immigration and Customs Enforcement and the Department of Homeland Security. He said the “pressure to combat abuses” declined after ICE reduced its presence in Minneapolis earlier this year.
Looking Ahead
As larger questions about the state’s fiscal future and regulatory direction remain unresolved, adjournment marks a pause rather than a conclusion.
“We are not done with these issues,” Mercer said.