Colorado Legislative Proposal Undercuts Innovation and Impedes Small Business Use of AI Tools that Save Time and Money

By SBE Council at 25 August, 2025, 6:25 pm

FOR IMMEDIATE RELEASE

Washington, D.C. - Fragmented and excessive artificial intelligence (AI) regulation is a threat to U.S. competitiveness, innovation, and access to critical tools used by small businesses that help them save significant money and compete with larger businesses. A legislative proposal being considered in Colorado (proposed changes to CO SB004) would put the state's small businesses at a competitive disadvantage, as they would be dis-incentivized from using AI tools given the proposal imposes joint and several liability on developers and deployers of AI. According to the Small Business & Entrepreneurship Council (SBE Council), this shortsighted and harmful legislative proposal would be a severe setback for Colorado's innovators and small business owners and make the state inhospitable to tech innovation and investment.

SBE Council President & CEO Karen Kerrigan said:

"AI is being rapidly embraced by small business owners and their employees due to the significant time and money they are saving from a range of affordable AI tools. Their positive experience with AI has allowed them to unlock innovation and new revenues, compete against bigger businesses, strengthen customer engagement, and keep prices steady for customers. In our recent AI-use survey, 96% of small business owners who deployed AI in their businesses plan to continue investments this year - 70% plan to increase these investments. But if Colorado law exposes small businesses to lawsuits via unclear or overly broad liability this could force the state's entrepreneurs to shun AI altogether. How could this possibly be good for Colorado's economy, its workers, and small business ecosystem? Colorado will be branded as anti-innovation. This is an outcome policymakers should be avoiding at all costs, not pursuing."

As part of a two-year survey and report series about AI adoption, SBE Council's recent Small Business Technology Use 2025 Survey (April 2025) found that 58% of small businesses are actively deploying AI tools, with a large percentage (82%) reporting they have adopted AI within the past two years and 35% in the past six to twelve months. Moreover, 82% of small business owners said that "winning the global AI race" is essential to the future of the U.S. economy.

"State laws that discourage AI innovation and adoption undermine American AI leadership. Small businesses and industries across all sectors in Colorado will be damaged by the backward move to discourage innovation and AI use. The U.S. economy will be harmed as well," added Kerrigan.

An October 2023 report by SBE Council found that small businesses saved more than $273.5 billion annually through cost-saving and productivity-enhancing AI tools. That same survey noted that 85% of small business owners wanted government and government policies to balance AI regulation and innovation. Kerrigan concluded:

"The Colorado proposal is far from being balanced. A balanced policy approach would encourage innovation and adoption, not foil this critical activity. For the sake of Colorado's competitiveness and the health of its nearly 731,000 small businesses, smarter heads must prevail on this critical policy matter."

CONTACT:

KAREN KERRIGAN, [email protected]

SBE Council is a nonpartisan advocacy, research and education organization dedicated to protecting small business and promoting entrepreneurship. For more than 30 years, SBE Council has advanced a range of private sector and public policy initiatives to strengthen the ecosystem for strong startup activity and small business growth.

Visit www.sbecouncil.orgfor additional information. X: @SBECouncil

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