I am making a wedding cake for a friend. She is not paying anything except for materials. Do I have to make her wedding cake in a commercial kitchen? No money is changing hands but I don't know if I have to in Colorado.

Technically if you accept any compensation (in the form of cash, goods, or services) you would need a licensed and inspected commercial kitchen, since CO does not have a cottage food law. This seems like a relatively low-risk situation though, as long as you aren't advertising that you are running a business.

You may want to check with the venue to see if they will allow a cake made by an unlicensed baker, some venues require vendors to be licensed and carry liability insurance.

Definitely check with the venue. I'm strictly a hobbyist and have only done a few wedding cakes. Two of the weddings were at high end venues. One couldn't have cared less where the cake came from, the other made the bride and groom sign a waiver. Another friend had her wedding at a venue that wouldn't allow me to make her cake, gift or not. She had to use their in house decorator.