Yes, COLONY is a Scrabble word!

Letter values in Scrabble US: C 3, O 1, L 1, O 1, N 1, Y 4.

Is it a valid word?

COLONY is a valid word in the official Scrabble dictionary (US), the UK Scrabble Dictionary and Words with Friends (ENABLE).

a body of people who settle far from home but maintain ties with their homeland; inhabitants remain nationals of their home state but are not literally under the home state's system of government
a group of organisms of the same type living or growing together
one of the 13 British colonies that formed the original states of the United States
a place where a group of people with the same interest or occupation are concentrated
a geographical area politically controlled by a distant country
(microbiology) a group of organisms grown from a single parent cell