Inside the Gun Shop: Firearms Dealers and Their Impact
A new report from Everytown Research.
By: Sarah Burd-Sharps and Andrew Edelman
Illegal guns don’t start out that way.
Most firearms are produced by a licensed manufacturer and shipped to a licensed dealer. Nevertheless, some very quickly end up trafficked, in the hands of prohibited individuals, or used in a crime. That means dealers play an important role in stopping the flow of guns from legal to illegal markets.
Understanding who is licensed to sell and manufacture guns is vital to ensuring licensed gun dealers play their part in building safe communities. A new report by Everytown Research sheds light on Federal Firearms Licenses (FFLs) and the role of licensed gun dealers in the U.S. gun industry.
Gun Dealers in the United States
In 2022, there were nearly 78,000 active gun dealers — more than all McDonald’s, Burger King, Subway, and Wendy’s locations combined, and twice the number of U.S. post offices.[1]
Licensed gun dealers are located in every state — in cities (12.3 percent), suburbs (55.3 percent), and rural areas (32.5 percent) alike.[2]
When people picture a gun dealer, they typically think of a small to mid-sized store with guns lining the walls behind a counter. But Everytown’s analysis revealed that in 2022, 57 percent of licensed gun dealers were located at residential addresses, some in private residences.[3]
These dealers are found in every region across the country; over half of gun dealer locations in the Northeast, South, Midwest, and West are in residential areas. Even in large and medium cities, the majority of gun dealers are at residential addresses.
The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) requires applicants for a license to comply with local zoning ordinances.[4] But these ordinances vary greatly across states and cities, which means gun dealers can be found in surprising places.
For instance, Everytown’s analysis found that more than one in five public elementary schools is within half a mile of a licensed gun dealer,[5] over half of which are within half a mile of a residentially-zoned dealer.[6] In Mesa, Arizona, there are 10 gun dealers within half a mile of Sequoia Elementary School.
One concern with this is the rate of crime around these stores. There are roughly five incidents per day where firearms go missing from gun dealers through robbery, burglary, larceny, or other loss. Too often these guns end up in the illegal market.[7]
Gun Dealer Sales
While the ATF issues nine types of firearms licenses, three types account for 99 percent of commercial firearm sales: Types 1, 2, and 7.[8]
License types 1 and 2 comprise over 73 percent of gun dealers, and allow individuals or companies to sell and pawn firearms. Large chains like Walmart, Dick’s Sporting Goods, Bass Pro Shops, and Big 5 hold Type 1 licenses. Pawn shop chains like Cash America and EZPawn hold Type 2 licenses. Finally, Type 7 licenses permit gun dealers to manufacture, repair, and sell firearms. These licenses are the fastest-growing segment of licenses, more than doubling from 2014 to 2022.[9]
Despite the large number of gun dealers, the majority of gun sales come from a very small proportion of those sellers. From 2017 to 2020, roughly 2.5 percent of gun dealers sold over half of the guns commercially sold in the United States.[10]
Connecting Gun Dealers to Gun Trafficking
States with the greatest number of gun dealers per capita have 10 times higher rates of guns trafficked to another state and subsequently used in a crime than states with the least.[11]
In fact, gun traffickers often take these guns to states with fewer gun dealers. States with the fewest FFLs per capita receive over twice as many trafficked guns per capita compared to states with the most FFLs per capita.
Furthermore, states with a higher density of gun dealers tend to recover crime guns closer to their purchase location. Nearly 40 percent of crime guns recovered in states with the most gun dealers per capita were bought at a dealer less than 10 miles from the crime. Less than 20 percent of crime guns in those states could be traced to gun shops over 300 miles away. On the other hand, nearly 36 percent of crime guns in states with the fewest gun dealers per capita were purchased over 300 miles from where the crime occurred.[12]
These analyses connect the number of gun dealers per person in a state to the prevalence of crime guns coming from that state.
The more gun dealers a state has, the more likely that state is to be a source of crime guns, both for itself and for other states around the country.
ATF Oversight
The ATF is the federal agency charged with regulating licensed dealers and inspecting them for compliance with federal law. They aim to inspect each licensed dealer every three years, but in 2022, the ATF only inspected about 9 percent of FFLs, leaving the agency well short of its stated goal.[13]
At this rate, a gun dealer could expect to be inspected once every 10 years, and in some cases, gun dealers have not been inspected for longer.[14]
Federal regulators of elevators and restaurants require inspections five to 10 times more frequently. The U.S. Department of Labor requires inspection for elevators annually.[15] The FDA Food Code recommends restaurants generally be inspected at least once every six months.[16]
ATF data reveals that, when they occur, dealer inspections generally yield a large number of violations. Violations range from improper record-keeping to failure to report sales and not properly checking buyers’ identification. In fiscal year 2020, ATF inspectors found violations in just under half of inspections[17] and frequently found multiple violations during a single inspection.[18]
In sum, the frequency of violations and the rarity of inspections allow the possibility that thousands of dealers are violating federal gun regulations each year without any corrective action by the ATF.
And the lack of inspections of scofflaw dealers may explain the correlation between the number of gun dealers in a state and the likelihood that guns will be trafficked from that state.
Policy Solutions
The laws that govern how licensed gun dealers conduct their business have not been updated since the 1960s and do not provide strong oversight today. Higher safety standards for gun dealers could reduce rates of gun violence across the country by helping to hold bad dealers accountable for actions that contribute to gun crimes. Key legislative measures have the potential to bridge these gaps.
The federal government should update and modernize standards for licensed gun dealers and provide ATF and law enforcement with better tools to identify dealers who fail to meet those standards by passing the Federal Firearm Licensee Act (FFLA) [H.R. 1478].
This bill would increase ATF inspection frequency, require universal background checks, close the indicted dealer loophole (so that gun dealers under indictment cannot buy or sell firearms), and more.
In addition, the ATF should use the authority Congress has already provided to conduct more inspections, modernize record-keeping practices, enforce new gun trafficking prevention laws under the Bipartisan Safer Communities Act, and share data with local law enforcement.
States can also play an important role in gun dealer safety. They should adopt legislation that requires state licenses, as is done in Hawaii and Pennsylvania. States should also require regular transaction reporting, like Maryland does, and require all gun dealer employees to pass background checks, as in Virginia.
Finally, states should pass nuisance statutes — such as those in California, Delaware, New Jersey, and New York — that enable lawsuits against gun dealers who knowingly violate state gun sale and marketing laws.
Local law enforcement offices can contribute to safer licensed gun dealership practices primarily through publishing gun tracing reports and prosecuting rogue dealers. Local gun tracing reports should feature data on the number and location of recovered firearms, plus the dealer and state from which they originated.
Conclusion
Nearly every gun in the United States begins as a legal gun, purchased by a consumer from a licensed gun dealer. While much research follows what happens to a gun after it has been purchased, it is equally important to look upstream at the places these guns are sold, the role the federal law enforcement agency responsible for issuing firearms licenses plays in making sure these guns get and stay in the hands of legal owners, and the actions necessary to stem the tide of gun violence in our country and to build safer communities.
Sarah Burd-Sharps is Senior Director of Research, Everytown For Gun Safety Support Fund; Andrew Edelman is Research Manager, Everytown For Gun Safety Support Fund.
Image of gun shop wall courtesy of The Trace; Big 5 store image courtesy of Everytown