California requires firearms dealers to hold three separate authorizations: a Federal Firearms License (FFL) from the ATF, a Certificate of Eligibility (COE) from the California DOJ, and a local business license or permit. Dealers must also comply with extensive state record-keeping requirements including DROS submissions, facility inspections, and safe storage obligations.
Operating as a firearms dealer in California requires compliance with overlapping federal, state, and local licensing requirements. The state requirements are primarily codified in Penal Code Sections 26700 through 26915[1], which impose obligations well beyond the federal FFL framework.
Federal Firearms License (FFL)
The first step is obtaining a Federal Firearms License from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF)[2]. The most common license types for retail dealers are Type 01 (dealer in firearms) and Type 02 (pawnbroker in firearms). The FFL application requires a background check, compliance inspection, and payment of a $200 fee for a three-year license.
Certificate of Eligibility (COE)
California requires all firearms dealers, and their employees who handle firearms, to obtain a Certificate of Eligibility from the DOJ[3]. The COE verifies that the individual is not prohibited from possessing firearms. To obtain a COE:
- Submit a completed application to the DOJ Bureau of Firearms
- Provide Live Scan fingerprints for the background check
- Pay the application fee (approximately $22 plus Live Scan fees)
- Maintain active enrollment in the DOJ's ongoing monitoring program
The COE must be renewed annually. The DOJ's monitoring program provides continuous background checks, meaning any disqualifying event after issuance will trigger automatic notification and potential revocation.
Local Business License
In addition to federal and state credentials, dealers must obtain a local business license or permit from the city or county where the business will operate. Many municipalities impose zoning restrictions on firearms dealers, including minimum distance requirements from schools, parks, and residential areas. Some cities, such as Los Angeles, have imposed additional local requirements beyond state law.
DROS and Record-Keeping
California dealers must process all firearm transfers through the Dealer Record of Sale (DROS) system maintained by the DOJ. Each transaction requires a $37.19 DROS fee (subject to adjustment). Dealers must:
- Submit DROS electronically for every transfer, including private party transfers conducted through the dealer
- Maintain a bound book (A&D record) of all acquisitions and dispositions per ATF requirements
- Report all firearm transactions to the DOJ within the required timeframe
- Retain transaction records for the period required by both state and federal law
Barrel Transaction Requirements (SB 704, Effective January 1, 2026)
SB 704[5] imposes new obligations on licensed dealers related to standalone firearm barrel sales. The law defines "firearm barrel" broadly to include partially finished barrels that can be "readily completed," and it creates new transaction requirements that dealers must incorporate into their operations.
Phase 1 (January 1, 2026): All standalone firearm barrel sales must be conducted in person through a licensed FFL. Out-of-state vendors and online retailers must ship barrels to a California-licensed FFL rather than directly to the purchaser. Dealers are responsible for verifying that the recipient is not a prohibited person and for completing the in-person transfer. Violations are misdemeanors.
Phase 2 (July 1, 2027): Beginning July 1, 2027, SB 704 adds a DOJ-prescribed background check and electronic reporting requirement for all barrel transactions. Dealers must submit purchaser information and barrel details electronically to the DOJ and collect a fee of up to $5 per transaction for the eligibility check. This creates a barrel transaction record parallel to the DROS system for firearms.
Dealers should prepare for these requirements by updating their in-store procedures to accommodate barrel transfers and by coordinating with online vendors who ship to California customers.
Machinegun-Convertible Pistol Restrictions (AB 1127, Effective July 1, 2026)
AB 1127[6], signed by Governor Newsom on October 10, 2025, prohibits licensed firearms dealers from selling, offering for sale, exchanging, giving, transferring, or delivering any semiautomatic machinegun-convertible pistol, effective July 1, 2026.
Definitions: A "machinegun-convertible pistol" is defined under new Penal Code Section 16885 as any semiautomatic pistol with a cruciform trigger bar that can be readily converted by hand or with common household tools into a machinegun by the installation or attachment of a "pistol converter" -- a device that replaces the slide's backplate and interferes with the trigger mechanism to enable automatic fire from a single trigger function. The definition primarily targets Glock-pattern striker-fired pistols. It does not include hammer-fired semiautomatic pistols or striker-fired semiautomatic pistols that lack a cruciform trigger bar (i.e., pistols whose trigger bar is shielded from interference by a pistol converter).
Penalty structure: AB 1127 imposes an escalating penalty framework on dealers:
- First violation: A fine of up to $1,000
- Second violation: A fine of up to $5,000, and the DOJ may suspend or revoke the dealer's license and remove the dealer from the centralized list of firearms dealers
- Third or subsequent violation: A misdemeanor, and the DOJ shall revoke the dealer's license and remove the dealer from the centralized list
Exemptions: The dealer prohibition does not apply to sales or transfers to law enforcement agencies, active peace officers, gunsmiths receiving a pistol for service or repair, dealers receiving a pistol as inventory, private party transfers conducted through a dealer, firearms returned to an owner after temporary storage for safekeeping, and transfers to forensic laboratories. Pistols already delivered to the dealer before January 1, 2026 may still be sold.
Effect on current owners: AB 1127 does not require existing owners to dispose of machinegun-convertible pistols they already possess. The prohibition applies only to dealer sales and transfers after July 1, 2026.
Dealers who currently stock Glock-pattern or similar striker-fired pistols with cruciform trigger bars should review their inventory and prepare for the July 1, 2026 effective date. Consult the DOJ Bureau of Firearms for specific model determinations.
Facility and Inspection Requirements
Licensed premises must comply with physical security requirements under Penal Code Section 26890[4], including approved security systems, safe or vault storage for firearms during non-business hours, and display case security. The DOJ may conduct compliance inspections of dealer premises. Failure to comply with inspection or record-keeping requirements may result in license revocation.