I have encountered versions of this issue many times over the years in my editing work. The most common instance involves "Washington DC based" (rather than "Denver, Colorado based," as in the posted question) used as a phrasal adjective, but the underlying issue is the same. An Ngram chart for "Washington DC based" over the period 1950–2019 yields the following curve:

As you can see, there has been something of a rise and fall of the usage over the past half century, from virtually 0% in 1970 to a height of 0.0000001423% in 1997 to roughly one-third that figure in 3018. Although some of the underlying matches are false positives (instances where "Washington DC based" does not function as an adjective phrase), the majority are indeed instance of "Washington DC based [noun]." The issue comes up fairly frequently because "Washington based" by itself is ambiguous as to whether it refers to the city in the District of Columbia or the State in the Pacific Northwest.

So how do published writers handle the punctuation of "Washington DC based"? Let's count the ways.

From Sci-Tech News, volumes 23–25 (1969–1971):

Information Resources Press, a division of Herner and Company, Washington, D.C.—based library and information consulting firm, has announced the availability of the College Suggestor, a manual desk-top information retrieval system for selecting colleges and universities on the basis of combinations of desired attributes or characteristics, is being marketed by Information Resources Press, 2100 M St., N.W., Washington, D.C.

This form includes a comma after "Washington," two periods in "D.C." and what appears to be an em dash between "D.C." and "based." I suspect that the phenomenon of using an em dash rather than an en dash in this setting reflects the limited type character options at some publishing houses in the very early 1970s. The same source also offers this form:

Information Resources Press, a division of Herner and Company, Washington, D. C.-based library and information consulting firm, today announced the publication of its latest book, Exhibits of Sources of Scientific and Technical Information by Saul Herner and Jeanne C. Moody.

with a letter space between "D." and "C." and a hyphen rather than an em dash between "C." and "based."

The Food Institute's Weekly Digest, volume 79 (1972) punctuates the phrase at least two different ways in the same volume:

Emersons, Ltd., (formerly General Restaurants, Inc.), nine-unit, Washington D.C.-based restaurant chain, plans to add three new eating facilities in Washington, Baltimore, and Princeton, N.J., according to a recently issued prospectus.

and

An experimental program which labeled each variety of ground beef by percentage of fat content was tried by Giant Good, Inc., Washington, D.C.-based chain.

Both instances put two periods in "D.C." and a hyphen between "D.C." and "based"—but the first has no comma after "Washington" and the second one includes a comma there. (Having lived in D.C. for a couple of years, I believe that "Giant Good, Inc." is a typo for "Giant Food, Inc."—but that is a separate issue.)

From Black Business Digest, volume 3 (1973):

The McLean brothers, Alphonso S., left, and Edward B., 3rd from left, president and executive vice president, A. E. McLean Co., Inc., Washington, D. C. — based office furniture, supplies and interior design firm, flank Burkeley G. Burrell, 2nd from left, president of the National Business League, as H. Naulor Fitzhugh, vice president, Pepsico, Inc., New York City, looks on.

The clear winner for profligate space occupancy, this format features a comma after "Washington," a letter space between "D." and "C." (with periods after each), and an em dash with letter spaces on either side of it between "C." and "based."

From Black Times, issue 8 (1975):

The architect for the renovation of the famed 63-year old historic landmark is Luther Bruner Jr, principal in the Washington DC-based firm, Hawkins and Bruner.

This publisher omitted the comma after Washington and the periods from "DC," but included the hyphen between "DC" and "based." There is also no comma before "Jr," no period after "Jr," and (least excusably) no hyphen between "63-year" and "old."

From Manpower Information Service, volume 7 (1975):

Presently three full time and a number of part time researchers are working on the project. SER has opened up a Washington, D.C., based office at 224 East Capitol St., N.E., in order to maintain closer touch with the Labor Department and the National Research Council.

Here we have commas after 'Washington" and "D.C." (and periods in "D.C.") but no hyphens.

From Adult and Continuing Education Today, volumes 7-8 (1977–1978):

The contract with the Washington, DC, based association is funded under Title III of the Comprehensive Employment and Training Act (CETA) administered by the Department's Employment and Training Administration (ETA).

Two commas, no periods, no hyphen.

From Videodisc/Teletext, volume 1 (1981):

The Washington (DC)-based Information Industry Association, representing the business organizations that package and sell information content through new technologies, announced and approved a new schedule of dues rates at its Annual Meeting in Boston, held in November, 1981.

This is an unusual option, with no commas and no periods, but a hyphen between the parenthetical "(DC)" and "based."

From CQ: The Radio Amateurs' Journal (1984):

The National Cable TV Association, a Washington, DC based association of cable television (CATV) operators, has requested that the FCC dismiss RM-4040.

This style has a comma after "Washington," no periods in "DC," and no hyphen anywhere.

From Nuclear Times, volume 3 (1984):

The commercial id one of three television ads created for the Committee for a Strong Peaceful America (formerly known as the Peace Media Project), by Peter Fenn and Associates, Inc., a Washington, D.C.–based advertising company.

Here we finally see someone using an en dash where most publishers put a hyphen (or nothing at all).

Assessment

Of the four options for "Denver Colorado based" that the poster suggests, only one receives any support from the eleven different punctuated forms of "Washington DC based" that I found in my examination of Google Books matches: "Denver, Colorado-based"—with a comma after "Denver" and a hyphen between "Colorado" and "based." This is, I believe, the most common form among the many matches I looked at. Other contenders that seem to me to be both simple and reasonable would translate as "Denver Colorado-based" (hyphen, no comma), and "Denver, Colorado–based" (en dash, comma).

Not one of the matches I found supports the equivalent of "Denver-Colorado-based" or "Denver-, Colorado-, based" or "Denver-based, Colorado-based."

Although the specific punctuation used to demarcate "Washington DC based" (and similar "[city state/district] based" phrases varies all over the map, suggesting that no unified guidance for handling constructions of this type exists, it is evident that the wording itself is by no means rare or unacceptable in many publications. At both the computer magazines that I used to work for and the business consultancy that I currently work for, the preferred form is "Washington, D.C.-based" (comma after city name, hyphen between district/state name and "based"), but other options are certainly defensible.