This paper explores the regulatory sandbox regime under the EU’s draft Artificial Intelligence (AI) Act. It investigates how useful the sandbox regime is for testing an AI-based skin cancer detection systems in an EU member state. The paper focuses on whether the proposed AI regulatory sandbox regime can resolve tensions between innovation and safety. Although we find considerable potential for the sandbox regime, the proposal also creates several legal issues. It blurs jurisdictional boundaries between the EU and member states, raises concerns of legality and equal treatment, creates liability risks for innovators, and fails to require informed consent from testing subjects. To address these problems, the paper suggests adopting a more targeted legal basis for the sandbox regime that takes inspiration from conventional testing mechanisms such as clinical investigations for medical devices.