Can the Colorado State Treasurer invest state funds directly in corporate stock?

Plain-English summary

The Colorado State Treasurer asked Attorney General Phil Weiser whether the state could invest in financial instruments that would make Colorado a shareholder in a corporation. The answer: no, not directly, and not as a voluntary investment.

Article XI, section 2 of the Colorado Constitution says neither the state nor any local government "shall become a subscriber to, or shareholder in any corporation or company or a joint owner with any person, company, or corporation, public or private." The AG read that text the way the words read on the page. Buying corporate stock would make the state a shareholder, and that is what the constitution forbids.

The clause has narrow exceptions. If stock comes to the state by escheat, by forfeiture, by donation or devise for public use, or as part of a sale or execution to satisfy fines, penalties, or breach of an official bond, that ownership is allowed. None of those exceptions cover the situation the Treasurer described, which was a deliberate decision to put state money into corporate equity.

The opinion limits its reach to direct stock ownership. It does not try to draw a line through every modern financial instrument (mutual funds, ETFs, derivatives, structured products), saying instead that each one would need its own fact-specific analysis to see whether it crosses into prohibited shareholder territory.

What this means for you

If you work in the State Treasurer's office or manage state investments

Direct corporate stock purchases for state-owned investment portfolios are off the table under current law. If you are reviewing investment strategies that include equity exposure, you need a structure that does not make the state a "subscriber, shareholder, or joint owner" of a corporation. The opinion expressly does not analyze whether vehicles like mutual funds, index funds, or other pooled equity instruments fall on the permitted side of the line. That is not a green light. Treat each instrument as needing its own legal review before you acquire it.

The historical context matters: Colorado's framers added this clause to stop the state from bankrolling private railroads in the 1870s. Courts have read it broadly, citing concern about depleting the public treasury through speculative investment in private enterprises.

If you are a state legislator

Two states with nearly identical constitutional provisions (Arizona and Montana) have amended their constitutions to expressly authorize state investment in corporate stock. The opinion notes this without recommending it. If the legislature wants the State Treasurer to have direct equity investment authority, the path is a constitutional amendment, not a statute. A statute purporting to authorize stock ownership would still be subject to the constitutional prohibition.

The opinion also flags that Colorado courts have recognized a "public purpose exception" to other clauses in Article XI, section 2 (the anti-donation clause), but no Colorado appellate court has held that exception applies to the anti-ownership prohibition. That remains an open question.

If you are an attorney advising the state on investments

The reporters in the citations matter here: Markwell v. Cooke, the Southeastern decision, McNichols, and Romer are all Colorado Supreme Court cases. Almond, Gainer, and Sprague are persuasive authority from other state supreme courts (Virginia, West Virginia, and Oregon respectively). The Arizona case (Northwest Mutual) is also a state supreme court decision, not federal.

When advising on a structured product or pooled vehicle, look at whether the state ends up holding an enforceable equity interest in the underlying corporation, or holds only a contractual claim against an intermediary. The Southeastern court's analysis of mutual ditch companies (treating ditch-company shares as a real-property interest, not a personal property interest in stock) gives you a template for the kind of fact-specific argument that can keep an arrangement on the permitted side.

If you are a Colorado citizen or taxpayer

Colorado does not, and under current law cannot, directly own stock in private corporations using state funds. That is by constitutional design. If you have ever wondered why Colorado does not run a state pension fund the way some other states or sovereign wealth funds do (with direct equity stakes in named companies), this is part of the answer. Indirect arrangements may exist, but they are constrained by this prohibition.

Common questions

Q: Does this stop Colorado pension funds (PERA) from owning stock?
A: The opinion does not address PERA or other public pension trusts. It analyzes the State as the entity holding stock, in response to a question from the State Treasurer about state investments. PERA is a separate trust with its own statutory structure. Whether and how the constitutional prohibition reaches into trust structures Colorado administers is not analyzed in this opinion.

Q: What about owning stock in a mutual fund?
A: The opinion expressly declines to decide. It says the variety of modern financial instruments means each one needs its own fact-specific analysis. So mutual funds, ETFs, and similar pooled vehicles are not blanket-approved or blanket-prohibited by this opinion.

Q: What are the exceptions to the prohibition?
A: The constitution itself lists them. Stock can come to the state by (1) escheat, (2) forfeiture by operation of law, (3) forfeiture or sale of real estate for nonpayment of taxes, (4) donation or devise for public use, or (5) purchase under execution in cases of fines, penalties, forfeiture of recognizance, or breach of an official bond or bond securing public moneys. None of those exceptions covers a voluntary investment.

Q: Is there a "public purpose" exception?
A: Maybe, but no Colorado appellate court has decided. Colorado courts have recognized a public-purpose exception to the anti-donation clause in Article XI, section 2 (Romer, City of Aurora), but no court has held that the same exception applies to the anti-ownership clause. The opinion calls this an open question.

Q: Why does Colorado have this rule at all?
A: It traces to the 1870s. The clause was originally enacted to prevent the state from buying stock in private railroads to fund their construction. The Arizona Supreme Court, interpreting an analogous provision, summarized the concern as preventing "depletion of the public treasury or inflation of public debt by engagement in non-public enterprises."

Q: Could the legislature fix this?
A: Not by statute. Article XI, section 2 is in the constitution. To authorize direct state stock ownership, Colorado would need to amend the constitution, the way Arizona and Montana have done.

Background and statutory framework

The Colorado Constitution's Article XI, section 2 contains several distinct prohibitions, often grouped under the headings "anti-donation" and "anti-ownership." This opinion deals with the anti-ownership clause: the rule that the state, counties, cities, towns, townships, and school districts cannot become subscribers, shareholders, or joint owners of corporations or companies, public or private, in or out of the state.

The clause was enacted in 1876, the year Colorado became a state, against the backdrop of a national wave of public investment in private railroads that had bankrupted many state and local governments in the decades before. Colorado's framers, like those of many western states, wrote the prohibition into the founding document to prevent the same outcome.

Colorado courts have addressed the clause sparingly. The leading case is Southeastern Colorado Water Conservancy District v. Fort Lyon Canal Co. (1986), where the Colorado Supreme Court analyzed whether the state's purchase of stock in a mutual ditch company violated the prohibition. The court held it did not, but only because mutual ditch companies are not "true" corporations in the constitutional sense; their shares represent a real property interest in water rights, not a personal property interest in corporate stock. That narrow holding does not generalize to ordinary corporate stock.

The opinion places significant weight on persuasive authority from West Virginia (Gainer) and Oregon (Sprague), where state supreme courts interpreting similar constitutional provisions held that the prohibition bars direct state stock ownership. Virginia's Supreme Court (Almond v. Day) has read its provision more narrowly, but the Colorado AG sides with the West Virginia and Oregon view.

The opinion's narrow scope (direct stock ownership only) reflects appropriate caution. Modern financial markets offer instruments the framers could not have imagined. A formal opinion that tried to classify each one would either overshoot or undershoot. The Treasurer's office now has a clear answer on the core question and a framework (fact-specific analysis under the constitutional text) for working through novel instruments as they arise.

Citations and references

Constitutional and statutory authority:
- Colo. Const. art. XI, § 2 (anti-ownership clause)
- § 24-31-101(1)(a) & (d), C.R.S. (Attorney General authority to issue formal opinions)

Colorado Supreme Court cases:
- Markwell v. Cooke, 2021 CO 17 (rules of constitutional interpretation)
- Se. Colo. Water Conservancy Dist. v. Fort Lyon Canal Co., 720 P.2d 133 (Colo. 1986) (mutual ditch company stock not within prohibition)
- Colo. Cent. R.R. Co. v. Lea, 5 Colo. 192 (1879) (historical context, anti-railroad-investment purpose)
- McNichols v. City & Cnty. of Denver, 74 P.2d 99 (Colo. 1937) (joint-owner prohibition)
- In re Interrogatory Propounded by Governor Roy Romer on House Bill 91S-1005, 814 P.2d 875 (Colo. 1991) (public purpose exception to anti-donation clause)
- City of Aurora v. Pub. Util. Comm'n., 785 P.2d 1280 (Colo. 1990)

Out-of-state persuasive authority:
- State v. Nw. Mut. Ins. Co., 340 P.2d 200 (Ariz. 1959)
- State ex rel. Gainer v. W. Va. Bd. of Invests., 459 S.E.2d 531 (W. Va. 1995)
- Sprague v. Straub, 451 P.2d 49 (Or. 1969)
- Almond v. Day, 91 S.E.2d 660 (Va. 1956) (contrary view, narrower reading)

Comparative constitutional provisions:
- Ariz. Const. art. IX, § 7 (amended to permit state stock investment)
- Mont. Const. art. VIII, § 13 (amended to permit state stock investment)

Source

• Landing page: https://coag.gov/attorney-general-opinions/
• Original PDF: https://coag.gov/app/uploads/2026/04/AG-Formal-Opinion-No-26-001.pdf

Original opinion text

PHIL WEISER
Attorney General

RALPH L. CARR
COLORADO JUDICIAL CENTER
1300 Broadway, 10th Floor
Denver, Colorado 80203
Phone (720) 508-6000

NATALIE HANLON LEH
Chief Deputy Attorney General
SHANNON STEVENSON
Solicitor General
TANJA WHEELER
Associate Chief Deputy Attorney
General

STATE OF COLORADO

Office of the Attorney General

DEPARTMENT OF LAW

FORMAL
OPINION
of
PHILIP J. WEISER
Attorney General

No. 26-001
4/13/2026

Philip J. Weiser, Attorney General of the State of Colorado, as chief legal representative for the State, issues this Formal Opinion pursuant to his authority under § 24-31-101(1)(a) & (d), C.R.S. (2025), following a request from the State Treasurer.

QUESTION PRESENTED AND SHORT ANSWER

Question Presented.
(1) Does article XI, section 2 of the Colorado Constitution limit the State from investing in financial instruments that would make the State a subscriber to or a shareholder in a corporation, or a joint owner with any person, company, or corporation, public or private, in or out of the state?

Short Answer.
(1) Yes. Although article XI, section 2 does not directly address the State's investment authority, it generally prohibits state ownership of stock in a corporation, subject to recognized exceptions. Whether an investment in a particular type of financial instrument other than direct ownership of stock in a corporation would violate the prohibition requires a fact-specific analysis that is beyond the scope of this Opinion.

ANALYSIS

Article XI, section 2 of the Colorado Constitution prohibits state ownership of stock in a corporation. While this prohibition has recognized exceptions, none of those exceptions apply to the situation described in the question presented.

I. Article XI, section 2 prohibits state ownership of stock in a corporation.

The answer to the question presented hinges on the meaning of the "anti-ownership clause" of article XI, section 2 of the constitution. Interpreting a Colorado constitutional provision is guided by a dual-pronged obligation: to prevent an evasion of the constitution's legitimate operation and to effectuate the intentions of the constitution's framers and the people of the State of Colorado. Markwell v. Cooke, 2021 CO 17, ¶ 33. To determine the framers' intent, the words are given their "ordinary and popular meaning." Id.

The anti-ownership clause provides in relevant part:

Neither the state, nor any county, city, town, township, or school district shall . . . become a subscriber to, or shareholder in any corporation or company or a joint owner with any person, company, or corporation, public or private, in or out of the state. . . .

COLO. CONST. art. XI, § 2. This text is unambiguous: the State may not become a subscriber, shareholder, or joint owner of a corporation. Id. As relevant here, a "shareholder" is "one that holds or owns a share in property; especially: stockholder." Shareholder, MERRIAM-WEBSTER DICTIONARY, https://www.merriam-webster.com/dictionary/shareholder. Plainly, the State is prohibited from directly owning stock in a corporation.

Consistent with this plain meaning, the Colorado Supreme Court has summarily observed that this provision "prohibits state ownership of corporate stock." Se. Colo. Water Conservancy Dist. v. Fort Lyon Canal Co., 720 P.2d 133, 142 (Colo. 1986). In Southeastern, the Colorado Supreme Court analyzed whether the State was prohibited by article XI, section 2 from purchasing stock in a mutual ditch company. Id. at 136. In doing so, the Colorado Supreme Court noted the long line of Colorado cases holding that mutual ditch companies (i) are not "true" corporations in a legal sense but merely vehicles for individual ownership of water rights, (ii) are incorporated and operated under different statutory provisions than corporations, and (iii) receive different constitutional and statutory protections. Based on these considerations, the Court concluded that stock ownership in a mutual ditch company constituted ownership of a real property interest (which did not violate the constitutional prohibition), rather than a personal property interest in stock. Id. at 141–42.

This interpretation aligns with the framers' intent. "The provision was originally enacted to prevent state ownership of, and financial support for, new railroads within the state." Id. at 141 (citing Colo. Cent. R.R. Co. v. Lea, 5 Colo. 192 (1879)); accord McNichols v. City & Cnty. of Denver, 74 P.2d 99, 106 (Colo. 1937) ("Section 2 prohibits the state from becoming a joint owner with any private person or corporation." (citation omitted)); cf. State v. Nw. Mut. Ins. Co., 340 P.2d 200, 201 (Ariz. 1959) (interpreting nearly identical provision in the Arizona Constitution adopted for the same reason and remarking that "the evil to be avoided was the depletion of the public treasury or inflation of public debt by engagement in non-public enterprises").

That article XI, section 2 prohibits stock ownership in a corporation by the State is bolstered by persuasive authority from other jurisdictions with analogous constitutional provisions. Those courts largely conclude that, unless the ban against the State being a shareholder or stockholder is textually limited to ownership that aids the corporation, such ownership is plainly prohibited. Compare State ex rel. Gainer v. W. Va. Bd. of Invests., 459 S.E.2d 531, 533–34 (W. Va. 1995) & Sprague v. Straub, 451 P.2d 49, 52–55 (Or. 1969), with Almond v. Day, 91 S.E.2d 660, 667–68 (Va. 1956). To this end, several states with provisions nearly identical to Colorado's have since amended their constitutions to expressly permit state investments in corporate stock. See ARIZ. CONST. art. IX, § 7; see also MONT. CONST. art. VIII, § 13.

Taken together, by its plain text, article XI, section 2 prohibits the State from directly owning stock in a corporation.

II. The recognized exceptions to article XI, section 2 do not apply to the purchase of stock in a corporation when motivated by the State's voluntary investment decisions.

The constitutional prohibition, however, is not absolute. Baked into article XI, section 2 itself are two enumerated exceptions for state ownership of a corporation or company:

• if the ownership accrues "to the state by escheat, or by forfeiture, by operation or provision of law"; or
• if the ownership accrues to the state "by forfeiture or sale of real estate for nonpayment of taxes, or by donation or devise for public use, or by purchase . . . under execution in cases of fines, penalties, or forfeiture of recognizance, breach of condition of official bond, or of bond to secure public moneys, or the performance of any contract in which . . . [the state] may be jointly or severally interested."

The question presented, however, appears to assume that the State would voluntarily engage in investments resulting in State ownership of stock in a corporation. Neither exception would apply to that situation.

CONCLUSION

Article XI, section 2 does not expressly address the State's investment authority. But, by its plain text and as interpreted by the Colorado Supreme Court, it generally prohibits the State from directly owning stock in a corporation. Further, none of the recognized exceptions to that prohibition would apply to the circumstances at issue in the question presented.

Issued this 13th day of April, 2026.

/s/ Philip J. Weiser
PHILIP J. WEISER
Colorado Attorney General

Footnotes:

1 While the question presented uses the term "financial instruments," that term is not part of the constitutional text. Instead, article XI, section 2 addresses situations where the State becomes a subscriber, shareholder, or joint owner of a company or corporation. Modern financial markets provide a broad range of financial instruments with their own terms and conditions, each of which would need to be analyzed on its own merits to determine if it falls within the constitutional prohibition. Given that variety, this Opinion addresses only the direct ownership of stock in a corporation, which is most clearly within article XI, section 2's scope.

2 The Colorado Supreme Court has recognized a public purpose exception to other prohibitions contained in article XI, section 2. In re Interrogatory Propounded by Governor Roy Romer on House Bill 91S-1005, 814 P.2d 875, 882–83 (Colo. 1991) (regarding the public purpose exception to the anti-donation clause in article XI, section 2); City of Aurora v. Pub. Util. Comm'n., 785 P.2d 1280, 1289 (Colo. 1990). Colorado appellate courts have yet to consider whether that exception similarly applies to the anti-ownership provision at issue here, and it remains an open question.