In Colorado, the entity that practices medicine in your med spa must be a professional service corporation, or a professional LLC or LLP, organized under C.R.S. § 12-240-138. Its shareholders must be Colorado-licensed physicians. Physician assistants may hold shares only as a minority. A lay investor, registered nurse, nurse practitioner or esthetician cannot own it.
That is the answer as of October 2026. The legislature had a chance to change it this year and declined.
Colorado put the doctrine in the statute
Many states leave corporate practice of medicine to old case law and board opinion. Colorado wrote it down in three places.
Section 12-240-121(1)(g)(I) makes it unprofessional conduct for a physician to practice medicine as the partner, agent or employee of, or in joint venture with, a person who does not hold a Colorado medical license. The same clause covers practicing as an employee of, or in joint venture with, any corporation other than a professional service corporation described in § 12-240-138. The clause lists three statutory exceptions: § 12-240-138 itself and two sections of Title 25.
Section 12-240-121(1)(g)(II)(B) then says nothing in that paragraph creates an exception to “the corporate practice of medicine doctrine.” The statute uses the phrase by name.
Section 12-240-138(6)(a) is one sentence long: “Corporations shall not practice medicine.”
Read together, the rule is about the physician’s license. If your LLC employs the physician who examines patients and orders treatment, the physician is the one committing unprofessional conduct.
What § 12-240-138 requires of the medical entity
The articles of incorporation, or the operating agreement for an LLC, must contain every item below. Subsection (7) extends the section to limited liability companies and registered limited liability partnerships.
| Requirement | Subsection | What it means for you |
|---|---|---|
| Name contains “professional company” or “professional corporation,” or for an LLC or LLP the word “professional” or “prof.” | (1)(a), (7)(b) | “Glow Aesthetics LLC” cannot be the medical entity |
| Organized solely to conduct the practice of medicine through actively licensed physicians or physician assistants | (1)(b) | Retail, memberships and marketing belong in a different company |
| All shareholders are licensed by the Colorado Medical Board to practice medicine and own their shares in their own right | (1)(d)(I) | No lay, RN, NP or esthetician shareholders |
| Physician assistants may be shareholders if physicians keep majority ownership | (1)(d)(I); § 12-240-107(6)(l) | A PA cannot be your majority owner |
| Shareholders are actively engaged in practice in the offices of the corporation, with listed exceptions for illness, accident, military service, vacation and leave up to one year | (1)(d)(I) | See the next section |
| An heir of a deceased physician shareholder may hold shares for up to two years, nonvoting unless the deceased was the sole shareholder | (1)(d)(II) | A short bridge, nothing more |
| An ineligible shareholder must dispose of the shares forthwith, to the corporation or to a qualified person | (1)(e) | Your documents need a transfer mechanism |
| The president is a shareholder and a director; lay directors and officers exercise no authority over independent medical judgment | (1)(f) | A lay manager can run operations and cannot direct care |
| Shareholders are jointly and severally liable for employees’ acts unless the professional liability coverage the statute describes is in place | (1)(h) | Confirm the policy meets the statutory minimums |
The clause national templates miss
Most friendly PC templates are written for states that ask only whether the owner holds a license. Colorado asks one more thing. Under (1)(d)(I), shareholders “shall be individuals who” are “actively engaged in the practice of medicine or as a physician assistant in the offices of the corporation,” apart from the listed absences.
A physician who holds the shares, lives elsewhere and never practices through the entity does not fit that sentence. The statute also requires that shareholders own their shares “in their own right.”
We did not locate a Board policy or reported decision that says how these two clauses apply to a succession agreement or to an owner who practices by telehealth. Treat that as an open question for Colorado counsel and get the answer in writing before you fund the build.
MDside’s position is simple. The physician who owns the Colorado entity should be the physician who does the work in it: exams, orders, protocols, chart review. A name on the articles and nothing else does not match the words of (1)(d)(I). Our Colorado medical director page describes what that role covers.
What a non-physician may own
Section 12-240-138 says nothing about management companies. It restricts who owns and controls the entity that practices medicine. It does not prohibit that entity from buying space, staff, software, billing and marketing from a company you own. That is the PC-MSO structure, and how it works walks through the two entities.
Three limits on the management side come straight from the text:
- No clinical control. Lay directors and officers “shall not exercise any authority whatsoever over the independent medical judgment” of the physicians (§ 12-240-138(1)(f)). Your management agreement cannot give the manager a say in who is treated, with what, or by whom.
- No joint venture with the physician. Section 12-240-121(1)(g)(I) reaches practice “in joint venture with” a non-licensee. A deal that reads like a partnership in the medical practice itself is the fact pattern the clause names.
- No fee sharing through benefit plans. A professional service corporation may fund pension, profit-sharing and welfare plans that include lay employees only if the plan does not “require or result in the sharing of specific or identifiable fees with lay employees” (§ 12-240-138(5)).
If you are a nurse practitioner, the question is different, because your license is not issued under the Medical Practice Act. See nurse practitioner vs. physician.
The 2026 session left the rule where it was
Two bills aimed at med spas were introduced in 2026. Both failed.
HB26-1249, Medical-Aesthetics Corporation Ownership. As introduced, it would have let physician assistants own a majority of a corporation organized solely to provide medical-aesthetic services, and would have let estheticians, cosmetologists, practical nurses, registered nurses, advanced practice registered nurses and physician assistants hold shares. The House Health & Human Services Committee postponed it indefinitely on March 25, 2026.
SB26-130, Medical Spas Deceptive Trade Practices. It would have made improper acquisition, storage and administration of prescription drugs by a med spa a deceptive trade practice, and would have required a designated prescriber for clinical oversight. The Senate Health & Human Services Committee postponed it indefinitely on April 23, 2026.
The Medical Practice Act itself was up for sunset review. HB26-1307, signed May 29, 2026, continued the Colorado Medical Board to September 1, 2035. Its summary lists no change to the ownership section.
Enforcement lands on the license
Section 12-240-138(2) says a violation of the section by the corporation is grounds for the Board to revoke or suspend the license of the person or persons responsible. Subsection (3) makes each licensee personally responsible for causing the corporation to act in violation.
What this means for you
Form two entities. The professional entity carries the word “professional” in its name, is owned by a Colorado-licensed physician who practices through it, and employs or contracts the clinicians. Your management company owns the brand, the lease and the equipment, and is paid for services under a written agreement that leaves clinical judgment alone. Before signing, ask the physician where and how often they will practice in the entity, and ask Colorado counsel how your succession documents square with (1)(d)(I). If you run a med spa today under a single lay-owned LLC, fix it before a complaint does. Unfamiliar terms are defined in the glossary.
Frequently asked questions
Can a non-physician own a med spa in Colorado?
A non-physician can own the management company: the brand, lease, equipment and business operations. The entity that practices medicine must be a professional service corporation, LLC or LLP under C.R.S. § 12-240-138, and all of its shareholders must be Colorado-licensed physicians, with physician assistants permitted only as minority shareholders.
Can a nurse or esthetician be a shareholder in a Colorado medical-aesthetics corporation?
No, as of October 2026. Section 12-240-138 limits shareholders to physicians licensed by the Colorado Medical Board, plus physician assistants in the minority. HB26-1249 would have allowed estheticians, cosmetologists, LPNs, RNs and APRNs to hold shares in a medical-aesthetics corporation. It was postponed indefinitely on March 25, 2026.
Can a physician assistant own a Colorado med spa?
A physician assistant may be a shareholder in a professional service corporation for the practice of medicine only if physician shareholders keep majority ownership. Section 12-240-107(6)(l) states that a physician assistant is not authorized to own a majority of a medical practice. HB26-1249 would have changed that for medical-aesthetic corporations and failed.
Does Colorado have a corporate practice of medicine doctrine?
Yes, and it is statutory. Section 12-240-138(6)(a) says corporations shall not practice medicine. Section 12-240-121(1)(g) makes it unprofessional conduct for a physician to practice as an employee of, or in joint venture with, a non-licensee or a corporation other than a professional service corporation, and refers to the doctrine by name.
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This is general information, not legal advice. Rules vary by state and change. Confirm your own facts with counsel.