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Posted: 2/20/2001 4:55:17 PM EDT



Dealers Face Prosecution and Bankruptcy

The California Legislative Counsel's Office, which acts as the legal counsel to the State Legislature, just issued a formal Opinion (#21239) interpreting a new handgun law and condemning and contradicting a California Department of Justice (DOJ) policy interpreting the same provision.

As a result, gun dealers who, relying on the DOJ policy, facilitated private party "consignment" sales of handguns since the first of the year face possible prosecution. The registered handgun sales are subject to invalidation, and the registered guns may be confiscated. And most gun dealers, who relied on private party consignment sales for the majority of their profits, face insolvency.

The law at issue is Senate Bill 15 of 1999, the "unsafe" handgun bill that became fully effective on January 1, 2001. SB 15 requires that all handguns
pass a series of performance tests and be added to a DOJ list of guns approved for sale before a gun can be sold by a dealer in the state.  (All handgun sales are registered, pursuant to preexisting law.) SB 15 has an
exception allowing private parties (i.e., non dealers) to sell untested and unlisted handguns to other private parties. But, as has always been the case, that sale must be processed through a dealer and the handgun
registered to its new owner.  

Previously dealers could buy used handguns directly from private parties, transfer them into their inventory, and then put them up for sale - often at significant mark-up. The DOJ policy interpreted SB 15 as banning that practice, and prohibited dealers from buying untested / unlisted guns directly from, or selling untested / unlisted  guns directly to, private parties. But the DOJ policy does allow dealers to facilitate these private party sales by offering the guns on consignment.

Dealers had hoped to stay in business using that consignment process in lieu of simply buying and selling the handguns as they had before SB 15 went into effect. So in reliance on the DOJ policy, they have been facilitating thousands of these consignment sales since the first of the year. The DOJ policy was formally adopted through a DOJ "Information Bulletin" sent to all gun dealers on December 12, 2000 (#2000 FD-07) (caag.state.ca.us /firearms/ infobuls).

"If the Legislative Counsel opinion is adopted all these gun buyers, sellers, and dealers are in jeopardy of prosecution and of having their guns confiscated, because all the guns are registered," said civil rights
attorney Chuck Michel, who represents the CRPA and its membership. "These problems were pointed out, but ignored when this law was rammed through the
Legislature. We are deeply troubled by the position this puts CRPA members and gun owners in. We hope the DOJ will defend its position, but unfortunately in the past the DOJ has abandoned people who were prosecuted while complying with DOJ gun policies."

"This is terrible. The possibility of criminal repercussions is bad enough. On top of that the minimal mark-up on new handguns, and the relatively few manufacturers willing to pay DOJ's fees to have their new guns listed, makes it impossible for most dealers to stay in business without the revenue generated from private party consignment sales," said Geoff Barclay, President of the California Sporting Goods Association, which represents gun dealers t
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