"The number of gun dealers in the United States has plummeted 78 percent in the past 10 years as tens of thousands of home-based dealers surrendered their federal licenses."
http://www.startribune.com/484/story/322320.html
IMHO, the single major reason for the hugh drop in the 1990's was the clarified and more objective definition of "dealer" in the NRA-backed 1986 Volkmer-McClure Act. Prior to that, ATF had great success in convicting (and/or threatening) people who sold any more than two (2) firearms in a year. Any gun seller might fit under the "loose" definition in the 1968 Gun Control Act.
ATF's advice to anyone who inquired was "get an FFL, it's only $5" and a hugh number of persons who never were "real" dealers got a FFL (and had to keep records, etc.). So pre-1993, the vast majority of FFL's were held by ordinary non-dealers. When the fee increased by 40
times AND there was no further threat that a few sales from a personal collection would lead to a federal felony conviction, most FFL holders saw no need to continue their licenses.
They never really needed one and they certainly didn't now. So they dropped out of the system. That probably accounts for over 95% of the non-renewals.
I do not believe that. I, for one, enjoyed holding an FFL, I enjoyed the catalogs I got, and I enjoyed being able to buy a gun for myself, here and there, at a good price with no hassle. I enjoyed doing it for friends once in awhile, too. I did not get my FFL for the reasons identified above nor did I give it up for that reason, either.
Don't forget the 1994 changes, to include ATF insistence on compliance with local zoning regulations (a 10th Amendment violation?) and more detailed descriptions of the business premises. There was a concerted campaign under the Clinton administration to discourage or drive out of business so-called kitchen-table FFLs and anyone else they could intimidate into
dropping their license.
That is entirely correct. I was warned by the ATF that the definition of being "in the business" required certain affirmative acts and I was warned to anticipate an inspection of my business premises. A I was never going to permit ATF to willy-nilly search my home I surrendered my licence and bound books to remove the threat.
The biggest drop was 1994-1997, IIRC, the three year licensing cycle after the new requirements and fee increase.
The fee increase certainly added fuel to the fire.
IMHO that also lead to many of the former FFLs doing the gun show circuit. Had the ATF let them retain their FFLs, the record-keeping requirement (and NICS checks) would cover a significantly higher percentage of gun show transfers.
I was disinclined to do that, it was far more of a hobby than a business. I am certain I was not alone in that respect.
Another factor would be the requirement (inserted, as I recall, in a 1994 statute) that dealers be in compliance with local zoning laws. Most of the home dealers are of course zoned residential, and thus couldn't qualify even if they wanted to pay the higher fees.
As I recall, that was a possible issue but I did not push it because there were stronger reasons to abandon the "business".
What's interesting is that the original GCA 68 made getting an FFL very easy and cheap, on a theory that since a licensed dealer has to keep records, and a nonlicensee does not, it was wise to encourage people to have licenses. Thus the definition of what it took to become a dealer (and of who could be punished for not getting a license) were kept very broad, and the price of the license was kept very low. The reduction in licensed dealers is nothing any antigun organization should boast about! The only real beneficiaries are the storefront dealers, who found their competition reduced.
Likely, that's true in all respects.
As a matter of fact, my first FFL was obtained when I lived in a jurisdiction where I could not really deal in guns or even own firearms easily. I obtained a Curio license to avoid the local gendarmes from annoying me. Years later, I moved to a far better jurisdiction, applied for a new license with a change of address, and the licence ATF sent me was a full blown dealer's license. I was stunned. I had not asked for it. Until the rein of the Clintonistas it was never a problem.
***GRJ***
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