NY Dealer License Thoughts

When it comes to dealers in firearms, the immediate conversation is whether to close, entirely, given the current situation.  This blog touches on four points that you may want to include in your thought process.  As always, it is advisable that your conversation include an attorney, hired to consider your best interests and preserve your confidences.

 1.  The relationship between the federal and the state license. 

In sum, you must first have your federal license, and then procure your NYS license.  As with yoga: the way you go into a pose is the way you come out of a pose.  If you surrender or do not renew your NY dealer’s license, you preserve your federal license.  You cannot, however, do business in New York with only your federal license, but you can relocate and do business in many other states using only an ATF license, or, in other states with your ATF license and the different state license.

 If you’re daydreaming, the sweet spot is thus a different state on a full NICS system with no state license requirement, so that you have little to no state-level involvement and full access to and support of the feds and NICS.

 The ATF publishes up-to-date charts of NICS states.  The National Shooting Sports Foundation (“NSSF”) is another resource for information on operations in other states.  You can also look up the NRA-affiliate group in a state you are considering.  Or attend an industry conference, like the Shot Show put on by the NSSF or the annual Orchid Advisors compliance conference.  Any of these and other sources could provide data, if you are considering relocating out of New York and want to remain in the firearms industry.

2.  A conviction or a plea forecloses the ATF license and, thus, an out-of-state relocation to continue to work in the industry as an FFL. 

Just a few days ago, I published the new NYS Police 4-page, 31 question checklist for dealer compliance inspections being used by their “Joint Terrorism Task Force” officers.  Those inspections began July 25, 2023.  It is unknown – either by statute or by agent comments – how the results of the new NYSP-JTTF compliance inspections will be analyzed, communicated to dealers, or prosecuted.  At some point, we’ll hear from a dealer who finds out.  We are, unfortunately, at the mercy of dealers sharing information because neither Governor Hochul, nor Acting Superintendent Nigrelli, have done the proper agency leadership role by making any public announcements or by notifying dealers in writing of anything having to do with this roll-out.

A conviction or a plea to felony E charges for compliance inadequacies to any charge carrying a prison term of one or more years, even if not one day in prison is part of the sentence, terminates your Second Amendment rights in all fifty states and U.S. territories.  There is no judicial obligation to inform a defendant of this information.  It happens by operation of law.  The legal cascade includes also the revocation of any concealed carry permit.

This is the checkmate sought by Governor Hochul through her 2022 laws, including, but not limited to, NY General Business Law s.875, which houses the new compliance mandates.  It puts the dealer in firearms and the pawnbroker between a rock and a hard place.  It’s not the ATF remedial approach to compliance inspections, which is a federal-dealer partnership to elevate all dealers to a gold standard – a gold standard, I might add, which has organically evolved across more than fifty years.  No, this is a targeted operation by Governor Hochul to shut down dealers through threat of and/or through actual criminal prosecution.

3.  Where and who will bring these charges? 

Now there’s the interesting question.  FFLs with NY dealer licenses get that state license because of a state law.  But (as many of you have been emphasizing to me), those licenses are issued by counties.  True, and I’m with you on the paperwork, payment of fees, and judicial sign-off.  However, the statute is a state mandate and that will allow state prosecution on state-level criminal charges.

I would love to think, despite their shameful silence for the past year, that the NYS Association of County Clerks will rise up and issue a statement of refusal to pull a dealer permit, but, their silence and their excuse that the bigger, Progressive Democratically-controlled counties keeps the entire organization on mute, is the answer there.  This ain’t no Texas, where the county clerks, themselves, take active roles in refusing to file and/or insisting on filing certain documents, which result in constitutional litigation.

NYS Attorney General Letticia James and her once-primary-rival-now-Governor Hochul have already served up the media drama through lawsuits against distributors on complaints involving “ghost guns” and gun parts, and most of those defendants promptly collapsed into signed stipulations abandoning the legal issues.

4.  Where will a dealer appeal a license revocation? 

Also a problem.  As you know, the federal civil rights lawsuit of Gazzola v. Hochul is pending, and the plaintiffs are FFLs.  We’re fighting against the very issues NYSP-JTTF has started enforcing.  Here’s the Second Circuit Brief and the Reply that we filed (oral arguments were March 20 and we’re still awaiting decision on the requested preliminary injunction).

Which leads to the two questions.  If a NYS dealer license is revoked, where is that appeal taken?  If the state revocation is based upon one or more of the statutes challenged in Gazzola v. Hochul, can you at least appeal the cascade of loss of your federal FFL through the ATF channels and into federal court?

I do think that the latter strategy bears merit and, in a worst-case scenario that license revocations start, be welcomed to contact me, or have your attorney contact me or do reach out to groups like the NSSF and Orchid Advisors. There are at least a few federal court cases challenging ATF dealer license revocations. The twist here will be that it’s a state statute under civil litigation challenge that will serve as the state basis. If the statute provision fails and is declared unconstitutional, it “should” serve as a solid legal argument that any state (and thus federal) license revocation would be reversed.

Let’s try to boil down a complex subject into some take-away points:

1.  Make an actual decision whether to stay in business or not.  If you are staying in business, document absolutely everything.  And do get up close and personal with at least a compliance consulting firm, if not an attorney, to go over what you think are your compliance shortfalls.  This is not a time for wait-and-see.  If it were simply administrative penalties, such as $500 per violation, then we’re talking about “risk mitigation.”  Here, the risk is a criminal charge(s).  It’s a higher magnitude of analysis.

2.  You need added resources – now.  The inspections began.  There are a multitude of problems with the new laws impacting dealers.  Dealers are great at reading the law, discussing it, asking questions, going to seminars, going to shows, etc.  Include consultants and attorneys in this conversation.  You may see something as “vague” that is not.  You may  not see something as available to plead the Fifth Amendment, where you were intending to say “yes” or “no.” Don’t underestimate the value of a licensed professional, especially one who can represent you in administrative or criminal proceedings. An hour or two now of billable time is a solid investment in protecting your future.

3.  Share, share, share.  There has been no point in this cycle where Governor Hochul and others were up-front with us.  There were no printed bills published for public comment.  There were no committee hearings.  There is no pre-existing relationship of the NYSP with our industry, even though they required a state license and payment of fees and additional mandates. 

The first inspections went down quietly…until the NYSP-JTTF hit one of my clients.  Now, we have a conversation going, especially among our industry members.  Do not allow the NYSP-JTTF to isolate you or cause you to feel fear or stall you in your tracks.  This is not the Patriot Act “Security Letter” (assuming you know that reference).  Even ATF agents are walking into dealers trying to figure out what’s happening in New York.  When I went to an industry conference in April, I went because I needed to talk face-to-face with leaders within the FBI and the ATF so that I could assess whether they had any idea what we were facing in New York, whether they were aware of our lawsuit, and whether they could do anything to block the NYSP conversion to NY-POC. Knowledge is power is not a cliche; it is a fact.

Finally…

Please join us on Wednesday, September 13, 2023 by going on strike and closing your shop.  Conduct no sales of firearms or ammunition that involves a background check, whether or not the NYSP make good on their “target” to take over the system on that date.  Help us to raise public awareness of the plight we face.  Use your First Amendment rights to protect your Second Amendment rights, including your right to choose to be a federally-licensed dealer in firearms or pawnbroker located in New York. Click here to learn about “Strike + Shoot” and please share this information, too.