(1) (a) Beginning July 1, 2025, every dealer must obtain a state permit in order to engage in the business of dealing in firearms other than destructive devices in this state. (b) A state permit issued pursuant to this section is not transferrable. (c) (I) A person who engages in the business of dealing in firearms other than destructive devices without a state permit is guilty of an unclassified felony and, upon conviction thereof, shall be punished by a fine of not more than two hundred fifty thousand dollars. (II) An employee of a dealer shall not be charged for committing the offense described in this subsection (1)(c) for conduct committed while the employee was acting within the scope of the employee's employment. (d) A dealer who only deals in destructive devices is not required to obtain a state permit to engage in the business of dealing in destructive devices. (2) (a) The department shall issue state permits pursuant to this section. (b) (I) The department shall promulgate rules necessary for the implementation of this section, including establishing the process for applying for and obtaining a state permit. The department shall not promulgate rules that alter the eligibility criteria for obtaining a permit, but the department may collect any information it deems necessary to verify an applicant's eligibility. The department may develop a simplified application for permit renewals. (II) (A) The department's initial rules promulgated pursuant to this subsection (2)(b) must be effective no later than February 1, 2025. (B) This subsection (2)(b)(II) is repealed, effective July 31, 2025. (c) (I) The fee for a state permit issued on or before June 30, 2026, is four hundred dollars. The department shall annually review the fee and, for permits issued on and after July 1, 2026, may annually adjust the fee based on the costs for administering this section. The department shall not adjust the fee more than once each year and shall not adjust the fee by more than twenty-five dollars each year. (II) The department shall transmit the fees collected pursuant to this subsection (2)(c) to the state treasurer, who shall deposit the money in the firearm dealer permit cash fund, created in subsection (2)(d) of this section. (d) The firearm dealer permit cash fund is created in the state treasury. The fund consists of money credited to the fund pursuant to subsection (2)(c) of this section and any other money that the general assembly may appropriate or transfer to the fund. The state treasurer shall credit all interest and income derived from the deposit and investment of money in the firearm dealer permit cash fund to the fund. Money in the fund is continuously appropriated to the department for the costs of issuing permits and conducting inspections pursuant to this section. (3) In order to be issued a state permit, a dealer must: (a) Hold a valid federal firearms license; (b) Not have had a license or permit to sell, lease, transfer, purchase, or possess a firearm or ammunition from the federal government, any state, or a subdivision of any state, revoked, suspended, or denied for good cause within three years before submitting an application; and (c) Not have been convicted for a violation of any provision of this article 12; any Colorado or any other state's law concerning the possession, purchase, or sale of firearms; or any federal law concerning the possession or sale of firearms in the three years before submitting an application for a state permit. (4) (a) A person applying for a state permit pursuant to this section must complete an application as provided by department rule and pay the application fee established by the department. (b) A person who has applied for a federal firearms license may apply for a state permit prior to being issued a federal firearms license. The department shall not issue a state permit to the person until the person holds a valid federal firearms license, as required pursuant to subsection (3)(a) of this section. (c) (I) The department shall act upon a state permit application made pursuant to this section no later than sixty days after the date the application is received; except that: (A) For good cause, the department may extend the deadline to act for an additional sixty days; and (B) If a person applies for a state permit while the person's application for a federal firearms license is pending, and in addition to any other deadline described in this subsection (4), the department may extend the deadline to act until fourteen days after the person notifies the department that the person has been issued and holds a valid federal firearms license. (II) (A) A dealer who submits a sufficient application on or before May 2, 2025, may continue to engage in the business of dealing in firearms pursuant to state law until the department has acted upon the application. For the purposes of this subsection (4)(c)(II), an application is sufficient if it includes on its face information necessary to show that the applicant is eligible for a state permit. (B) This subsection (4)(c)(II) is repealed, effective June 30, 2026. (d) The department shall issue a state permit unless the applicant does not meet the eligibility requirements described in subsection (3) of this section or the applicant has made a false statement on the application. (e) A state permit issued pursuant to this section is valid for three years. (5) (a) A dealer may apply for renewal of the dealer's state permit at any time in the ninety days prior to the expiration of the permit. The department shall not accept a renewal application submitted after the expiration of the dealer's permit. (b) Ninety days prior to the expiration of a state permit, the department shall notify the dealer of the permit expiration date. (c) A dealer who submits a timely and sufficient renewal application may continue to engage in the business of dealing in firearms pursuant to state law until the department has acted upon the renewal application. For the purposes of this subsection (5)(c), a renewal application is sufficient if it includes on its face information necessary to show that the applicant is eligible for state permit renewal. (d) The department shall act upon a renewal application made pursuant to this subsection (5) no later than sixty days after the date the application is received. (6) (a) Subject to available appropriations, the department shall conduct an on-site inspection of a random selection of ten percent of state permit holders each year, including inspecting a selected permit holder's place of business, to ensure that the permit holder is complying with the requirements to hold a state permit. (b) In addition to the inspections required in subsection (6)(a) of this section, the department may conduct periodic unannounced inspections of a dealer and the dealer's place of business during the dealer's regular business hours to ensure that the dealer is complying with the requirements to hold a state permit. (7) (a) Except as provided in subsection (8) of this section, if the department finds that a dealer failed to post the required notice or make a report concerning unlawful purchases in violation of section 18-12-111; failed to make a record required pursuant to section 18-12-402; transferred a firearm without a locking device or failed to post the required notice concerning locking devices, in violation of section 18-12-405; failed to comply with any of the requirements of section 18-12-406; violated any other provision of this article 12 or any other state or local law concerning the sale of firearms; or violated any federal law or rule concerning the sale of firearms or firearm components for which the penalty includes potential revocation of the person's federal firearms license, the department shall: (I) For a first offense, issue a warning to the dealer that includes a description of the offense and the possible penalties for subsequent offenses; and (II) For a second or subsequent offense: (A) Issue a warning to the dealer that includes a description of the offense and the penalty for subsequent offenses; (B) Suspend the dealer's state permit for a period of time determined by the department; or (C) Revoke the dealer's state permit. (b) A dealer who has had a state permit revoked pursuant to this subsection (7) may apply for a new permit no sooner than three years after the revocation. (8) (a) Notwithstanding subsection (7) of this section, the department shall revoke a state permit if the state permit holder: (I) No longer holds a valid federal firearms license; (II) Refuses to allow the department to conduct an on-site inspection pursuant to subsection (6) of this section; (III) Refuses to permit an officer to inspect a record as required in section 18-12-402; or (IV) Is convicted of any of the following: (A) Purchasing or otherwise obtaining a firearm on behalf of, or for transfer to, a person who is ineligible to possess a firearm pursuant to section 18-12-111 or 18 U.S.C. sec. 932; (B) Transferring a firearm prior to receiving the results of a background check pursuant to section 18-12-112.5; (C) Trafficking in firearms pursuant to 18 U.S.C. sec. 933, or aiding and abetting trafficking in firearms; (D) Selling or otherwise transferring a firearm to a person who is ineligible to possess the firearm pursuant to state or federal law; or (E) Selling or otherwise transferring a firearm component or accessory, as defined in section 29-11.7-101.5, to another person in violation of federal, state, or local law. (b) (I) A person whose state permit is revoked solely because the person no longer holds a valid federal firearms license, pursuant to subsection (8)(a)(I) of this section, may apply for a new state permit any time after the person obtains a valid federal firearms license. (II) A person whose state permit is revoked pursuant to subsections (8)(a)(II) to (8)(a)(IV) of this section may apply for a new permit no sooner than three years after the revocation. (9) If the department revokes a dealer's state permit, the department must notify the United States bureau of alcohol, tobacco, firearms, and explosives of the revocation and the reason for the revocation. (10) The denial or revocation of a state permit pursuant to this section is subject to the requirements described in sections 24-4-104 and 24-4-105, and judicial review pursuant to section 24-4-106. (11) A person who is a former state permit holder, including a person whose state permit was revoked or whose state permit renewal was denied, is subject to the prohibition on engaging in the business of dealing firearms without a state permit described in subsection (1)(c) of this section. A person who is a former state permit holder who wishes to dispose of inventory shall dispose of inventory in a manner that does not constitute being engaged in the business of dealing in firearms. (12) (a) No later than August 1, 2026, and no later than August 1 of each year thereafter, the department shall submit a report to the joint budget committee about firearm dealer permitting in the prior state fiscal year. The report must include, at a minimum, the number of permit applications received, granted, and denied; the number of permits revoked and the basis for the revocation; the number of dealer inspections conducted; the amount of fee money collected and deposited into the firearm dealer permit cash fund and the amount of money spent from the fund; and the total amounts spent on permitting costs and inspection costs. The next report made following an increase in the permit fee pursuant to subsection (2)(c)(I) of this section must include an explanation of the fee increase. The report may include information about the race, gender, and geographic location of persons who applied for a permit, including whether the application was granted or denied, and persons whose permits were revoked. (b) Notwithstanding section 24-1-136 (11)(a)(I), the requirement to submit the report described in this subsection (12) continues indefinitely.
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