The song was written after Nelson learned about the death of a former high school teacher who was survived by his wife and two daughters. "Alright Mike," Nelson mutters on the intro, "this one's for you, bud." Nelson wrote the song the same day he learned the news, an example of his usual honest, heart-on-his-sleeve songwriting technique.
The track is a bittersweet elegy, just Nelson crooning over an acoustic guitar. It's written from the perspective of the deceased teacher, and mourns all the things he'll be leaving in the world. This is punctuated with the short, melancholy chorus: "Colorado," Nelson croons, "let me stay." It's a quiet expression of frustration with the pointlessness and inevitability of death.
Wasted is mostly filled with crunchy full-band songs written while on the road. "Colorado," however, is a stripped down number. This reflects the fact that it was written separately from most of the rest of the album and only added in on a rerelease. The album initially dropped in April 2012; the expanded addition that included "Colorado" came out in August.
The song was originally was released via the band's Facebook page.