2026 State Policy Outlook

Statehouses will set the pace in 2026. With federal policymaking stalled, narrowed or focused on a few priorities, governors and legislators are stepping in to regulate fast-moving technologies, rising environmental risks and shifting healthcare economics.

Three themes are likely to dominate next year:

1. The tension between innovation and protection in AI and data privacy
2. The acceleration of extended producer responsibility (EPR) and related environmental mandates
3. Growing state control over healthcare, private equity and cost pressures

This report outlines the key issues, the states to watch and what government affairs teams can do now to get ahead of 2026 sessions.

Theme 1: Artificial Intelligence and the Innovation-protection Divide

No policy area shows the contrast between states more clearly than AI. Some legislatures are prioritizing innovation and economic competitiveness, while others are advancing guardrails for high-risk systems, algorithmic harm and consumer safety. Several states are also revisiting their first attempts at AI oversight, signaling that policy direction remains fluid.

Innovation-first states: Protecting the “right to compute”

A growing group of states argues that heavy AI regulation could slow economic growth or drive emerging companies elsewhere. Their focus is on expanding access to computational tools and minimizing early guardrails.

Montana is the clearest example. 

In 2025, the Right to Compute Act (SB 212, 2025) created broad protections for individuals and businesses to use computational tools—from GPUs to large language models—without state interference unless a restriction is:

• demonstrably necessary to serve a compelling public interest, and
• narrowly tailored to that interest

The law aims to attract AI firms and research institutions while limiting the state’s flexibility to respond to safety concerns.

New Hampshire and Idaho introduced similar “right to compute” bills in 2025, signaling a competitive strategy built on regulatory restraint.

Protection-first states: Guardrails for high-risk models

Several states, especially those with large tech sectors, are building detailed oversight structures to manage AI risks.

California leads this group.

Its Foundational Model Law (SB 53, 2025) requires developers of certain advanced AI systems to submit recurring safety plans and risk assessments to the Office of Emergency Services. The assessments must include:

• known or plausible failure modes
• documented mitigation strategies
• quarterly reporting

The law also includes strong whistleblower protections.

At the same time, California has shown some caution to over regulate.  Gov. Gavin Newsom vetoed:

• AB 1064, a bill regulating sexually explicit chatbot interactions for minors
• SB 7, which required employers to disclose all uses of automated decision-making tools

Both vetoes cited overly broad compliance burdens. 

This combination—ambitious but selective regulation—makes California a high-impact state to watch in 2026. 

Balanced states: Regulate without slowing innovation

Texas is positioning itself between innovation-first and protection-first approaches. In 2025, it introduced a scaled-down version of a high-risk AI bill modeled on Colorado’s and launched an AI regulatory sandbox, allowing companies to test emerging systems under supervision with temporary exemptions.

States in AI flux: Colorado and Virginia

Two states are actively rethinking their AI frameworks, making them important for government affairs teams to monitor closely.

Colorado: Amending its high-risk AI law

Colorado held a special session in 2025 to revise its landmark 2024 high-risk AI bill. Four competing proposals emerged:

SB 4 sought to narrow the law by:

• tightening disclosure requirements
• clarifying when developers, not deployers, must document risks and safeguards

HB 8 reinforced the idea that existing civil rights and consumer protection laws already cover AI by:

• clarifying that current statutes apply
• giving the attorney general authority to sue violators under the Colorado Consumer Protection Act
• allowing individuals to file discrimination complaints when AI influences a decision

Two Republican proposals also surfaced, including HB 9, which would:

• narrow “consequential decisions” to employment and public safety
• exempt small businesses and local governments

With no agreement reached, lawmakers extended the law’s effective date into 2026. The next session will likely determine whether Colorado adopts a narrower or broader version.

Virginia: Direction hinges on the governor’s office

Gov. Glenn Youngkin vetoed key AI bills in 2025, including HB 2094, arguing they would slow innovation and harm job creation.

If Abigail Spanberger wins the governorship, Virginia may shift course. She has supported federal AI legislation — such as the AI PLANT Act — and expressed interest in requiring data centers to cover more of their electricity costs. A Democratic administration could significantly shift Virginia’s AI and data-infrastructure policy direction.

Theme 2: Extended Producer Responsibility

States are shifting recycling and waste-management obligations upstream — from municipalities to producers. EPR policies require companies to help fund or manage the end-of-life impacts of packaging and materials.

Early EPR adopters: Washington and Maryland

Washington’s Recycling Reform Act (2025) creates one of the country’s most comprehensive EPR frameworks. It requires producers to join a producer responsibility organization (PRO) that:

• funds statewide recycling improvements
• supports infrastructure upgrades
• standardizes inconsistent local systems

Maryland’s SB 901 (2025) creates a similar structure, requiring producers to:

• register with the state
• pay material-based fees
• submit plans to improve recyclability and reduce landfill use

These states represent two emerging national models: infrastructure-first (Washington) and compliance-first (Maryland).

States preparing through studies

Several states are laying groundwork for major EPR proposals by analyzing their waste streams and recycling systems:

• Hawaii (HB 750) — statewide packaging and EPR needs assessment
• Rhode Island (HB 6207) — recycling study and advisory council
• Maine (LD 1541, 2021) — early adopter refining rules through public comment

These studies often precede major legislation—and 2026 could be the pivot point.

States likely to revive EPR bills in 2026

Several states advanced EPR proposals in 2025 but did not pass them, including:

• New York (S 1464) — included aggressive reuse and recycling targets
• Connecticut (HB 6917) — feasibility study underway
• Massachusetts — considering a PRO-led system
• New Jersey — proposed recyclable/compostable packaging requirement by 2034
• Illinois (SB 1531) — would ban disposable food service containers by 2030

Expect these states to revive — and potentially strengthen — their proposals in 2026.

Theme 3: Healthcare — AI, Private Equity and Cost Pressures

From AI in clinical workflows to private equity oversight to Medicaid funding pressures, 2026 will bring more state-driven change than at any point in the past decade. 

Key states to watch include California, whose size and population give it outsized market influence; Massachusetts, a long-time leader in progressive healthcare legislation; and Colorado, which consistently moves more bills across the finish line than many other states.

AI in clinical and insurance settings

Lawmakers are examining how AI affects diagnoses, treatment decisions and insurance determinations, including:

• transparency when AI assists in clinical decisions
• guardrails for AI-driven prior authorization
• audit requirements for algorithms used in patient care

States like California, Colorado and Virginia are positioned to lead these efforts, given their recent activity and influence in shaping healthcare and technology policy.

Private equity oversight

Concern over private equity ownership in healthcare is now bipartisan. Legislators are questioning whether financial structures interfere with clinical decision-making.

California recently enacted protections ensuring physicians retain control over clinical matters. Oregon and others are considering similar models.

Preparing for federal funding shifts

Changes tied to a major federal package will push states to revisit Medicaid eligibility, work requirements and funding formulas.

New Mexico has already taken steps to offset the expiration of Affordable Care Act premium tax credits. More states may do the same to stabilize coverage.

Expect significant decisions in 2026 related to:

• eligibility redeterminations
• administrative capacity
• coverage continuity
• state-funded premium supports

Antitrust and PBM reform

States are becoming more assertive in healthcare markets.

Colorado and Washington enacted “mini Hart–Scott–Rodino” laws requiring federal merger notifications to also be sent to the state attorney general, giving states earlier insight into consolidation involving hospitals, insurers, and provider groups.

Pharmacy Benefit Managers also remain a major focus. States regularly copy each other’s PBM reforms, and momentum is building. Expect more legislation modeled on Arkansas’ HB150, which prohibits PBMs from owning pharmacies—a trend likely to appear in larger PBM reform packages.