For Release: Thursday, May 16, 2024
Holders of a Federal Gun Manufacturing License Can Use It to Undercut Federal Gun Laws, Buy Guns in Quantity and at Wholesale Prices
New VPC Online Tool Allows Users to Answer the Question, “Is my next-door neighbor a federally licensed gun manufacturer?”
Washington, DC — Thousands of Americans possess a federal license to manufacture firearms, yet relatively few actually produce any guns according to America’s Hidden Gun Manufacturers, a new study from the Violence Policy Center (VPC) and part of its ongoing Campaign for Gun Industry Accountability. Instead, the license can be used to bypass requirements that apply to unlicensed individuals buying a gun, such as background checks. In addition, license holders can purchase firearms interstate from wholesalers at discount and in unlimited quantities and, by paying additional fees to the government, undercut the tight restrictions on the sale and possession of new fully automatic machine guns and firearm silencers.
The license, known as a Type 07 Federal Firearms License (FFL), is issued by the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). While in 1975 ATF issued only 364 Type 07 FFLs, by 2022 this number soared to 18,784 — an increase of more than 5,000 percent. To put this number into perspective, there are almost five times as many licensed gun manufacturers as there are colleges in the United States. The most dramatic increase began in 2010, when the total number of licenses issued swelled from 4,293 in 2010 to 18,784 in 2022 — an increase of 338 percent. This increase is fed in part by commercial sites that sell online kits catering to private citizens who want to obtain the federal license for personal use, usually operating out of their homes. The study also contains state-by-state data on Type 07 FFLs.
Analyzing ATF firearm production data for 2021 and comparing it to Type 07 license holders for that year:
- Eighty-one percent (13,765 of 16,997) of Type 07 license holders did not report producing any guns that year.
- Of the Type 07 license holders who did report producing guns that year, 51 percent (1,644 of 3,232) produced 10 or fewer firearms.
- Combined, Type 07 license holders who did not report producing any guns and Type 07 license holders who produced 10 guns or fewer that year represented 91 percent of all Type 07 license holders.
Despite the questions raised by these numbers, ATF rarely inspects Federal Firearms License holders. For fiscal year 2021, only five percent of all types of FFL holders including the Type 07 (6,643 out of 134,516) were subject to ATF firearm compliance inspections.
Using ATF’s FFL database and Google Earth, the VPC reviewed the “place of business” for Type 07 license holders in Arizona, New Mexico, and Texas (chosen for their historic role in illegal cross-border gun trafficking to Mexico) manufacturing fewer than 10 guns in 2020. This snapshot found that for a significant number of these Type 07 license holders the “place of business” was a residential property, in a residential neighborhood, with no easily discernable signage. It is unlikely that the presence of the manufacturer would be easily recognized by sight by local residents or state and local authorities in charge of zoning, business, or licensing regulations or laws. The VPC also found examples of Type 07 license holders that were near schools or other public sites.
VPC Executive Director Josh Sugarmann states, “Across our nation, nearly 20,000 Americans possess a federal license to manufacture firearms. Yet little is known about how these license holders are actually using the powers associated with the license. We know the vast majority aren’t actually manufacturing guns, so what are they doing? It’s long past time for the federal government, local communities, and their fellow citizens to find out.”
To aid in this process, the VPC has created a new online tool that allows the user to identify holders of Type 07 FFLs (as well as Type 01 gun dealer license holders) near any location, or by zip code or state, and actually see the license holder’s “place of business” as revealed by Google Earth.
The current dramatic increase in Type 07 manufacturer license holders mirrors a similar increase in Type 01 dealer license holders that occurred in the 1990s as revealed by the 1992 Violence Policy Center study More Gun Dealers Than Gas Stations. As a result of heightened ATF enforcement during the Clinton Administration, application of relevant business, zoning, and firearms laws by local communities, and changes in federal law spurred by the VPC report’s findings, the number of Type 01 FFLs dropped dramatically: from 213,734 in 1994 to 51,855 in 2022. It is not unlikely that the increase in Type 07 license holders is linked to heightened enforcement of the possession of Type 01 FFLs during this period.
The study contains policy recommendations on the federal, state, and local levels.
For the VPC study America’s Hidden Gun Manufacturers, see https://gunindustryaccountability.org/issue/americas-hidden-gun-manufacturers/.
For the VPC online tool to identify Type 07 FFLs near you, see https://gunindustryaccountability.org/map/.
For the VPC’s new Campaign for Gun Industry Accountability website, see https://gunindustryaccountability.org/.
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The Violence Policy Center is a national educational organization working to stop gun death and injury. Follow the VPC on X/Twitter, Facebook, and Instagram.
