The law in Colorado and many other states classifies any explicit photos of minors as child pornography, and requires school employees to bring in police the moment they learn of it.
Prosecutors are looking for evidence of coercion and to see if any adults were involved, saying they don't intend to file criminal charges against everyone.
Meanwhile, the teachers can't even counsel the students involved, because doing so would require their confidential conversations to be reported to police as well.
"You see the mess we're in, you know?" Canon City Schools Superintendent George Welsh said. "We have to watch out for the mental health needs of our children, yet we've kind of got a structure whereby they would be nuts to come and talk to us about it."
This kind of bind is increasingly common across the country as laws from the pre-smartphone era that were intended to protect children from sexual predators collide with the digitally saturated reality of today's teens.
Last year in Fayetteville, North Carolina, a boyfriend and girlfriend who exchanged nude selfies at 16 were charged as adults, with felony sexual exploitation of a minor. Their charges were reduced to misdemeanors following an uproar.
This week, two 14-year-old boys on New York's Long Island were arrested on felony child porn charges after one was accused of recording the other having sex with a girl. As many as 20 students at another school were suspended for either sending or watching the video.
And last week, 16 students in Greenbrier, Tennessee, were charged with sexual exploitation of a minor after exchanging explicit photos on their cellphones.
Canon City, a town of 16,000 in southern Colorado, is home to several state and federal prisons. Many of its students are children of prison guards.
Authorities say the students involved hid the photos in an application that appears to be a calculator, punching in a sequence of numbers to reveal them.
The case became a national story after the school forfeited the final game of its football season, saying too many players had violated ethical standards for athletes.
Some students think the school overreacted, since older teens can legally have sex in many circumstances, even if sending and receiving explicit photos is illegal.
More than a dozen states have reduced the penalties for sexting teens in recent years, but most still treat teens as adults when it comes to possessing child pornography, possibly even labeling them as sex offenders.
Teens will continue to share explicit images on their smart phones no matter what authorities do, said Canon City High School student Elizabeth Ellis, 18.
"We're not the only high school that does it and we're not going to be the only one that gets found out," she said.
Indeed, in Denver's western suburbs, District Attorney Pete Weir's office has handled more than 100 sexting cases in the past two years, most of them referred by schools or parents, usually after the images are shared beyond the intended recipient.
Even if it turns out that teens sent the images consensually, Weir's office requires them to take self-esteem and relationship classes to avoid prosecution. Parents must attend the first and last session, and are coached on monitoring their children's phones.
This strategy can backfire: In Pennsylvania, the ACLU won a $33,000 settlement in 2010 against a school district for violating the privacy of a girl whose principal confiscated her phone, found nude photos she had taken of herself, and alerted authorities. That prosecutor required sexting girls to attend his "re-education" program to avoid prosecution on child porn charges until an appellate court ruled it unconstitutional.
Some teens, parents and legal experts say law enforcement should adapt to the reality that sexting is increasingly common among teens — about 28 percent, according to a recent study.
Jeff Temple, an associate professor and psychologist at the University of Texas Medical Branch at Galveston who did the study, sees sexting as a new form of flirting and said it mostly happens between teens who are in a relationship or want to be. This behavior is best addressed by parents talking to their children about healthy relationships and boundaries, he said.
Distributing photographs to others or coercing people to share explicit photos of themselves is more serious and could merit a tougher response, he said.
Potentially allowing the entire world to see your most intimate photos is a real danger, but not one that should be punished criminally, said Marsha Levick, deputy director and chief counsel for the Juvenile Law Center in Philadelphia.
"Sexting is a pretty dumb thing to do, but so is having sex at 14 in your parents' basement," she said.