Making The Jump To NFA Products


Mike Winkle has built a business around buying and selling (and, of course, shooting) machine guns.
He’s worked with gun stores around the country to help them profit in this category.

If you’re looking to expand your offerings and delve into an area generally left alone by the big-box retailers, it’s worth considering NFA guns and accessories.

Selling suppressors, short-barreled rifles (SBRs), short-barreled shotguns and machine guns isn’t for everyone. It’s certainly not something you should get into without a lot of thought and planning. But for the right store, the sector offers a pathway to set itself apart from competitors.

For insights into the NFA market, we turned to a pair of experienced shops — Hyatt Guns in Charlotte, N.C., and The Wichita Gun Club in Wichita, Kan. — and one of the largest Class 3 dealers in the U.S., Midwest Tactical in Jasper, Mo.

Plugging Holes In Inventory

Interestingly, the owners of both stores made the NFA jump at the urging of their employees.

“I brought some guys in who were like, man, you need to be doing this,” said Jess Hancock, whose Wichita shop has been in the NFA business for nearly a decade. “We had enough customers coming in and asking for things that we obviously had holes in our inventory.”

Today, the store does brisk business in suppressors and, somewhat to Hancock’s surprise, machine guns. The short-barrel rifle market remains depressed by the continued uncertainty surrounding the legality of pistol braces (more on this later).

Larry Hyatt, owner of Hyatt Guns, has a similar story. He entered the NFA market about eight years ago following lobbying by his employees.

“They know the trends. They know what’s popular. So, I listened to them,” shared Hyatt on overcoming his initial reluctance.

He did, however, make sure they understood what they were getting into regarding paperwork and ATF oversight. It’s something worth considering for anyone contemplating this market. 

“I told our guys it’s like we’re a pharmacy. Our [Title 1] guns are like aspirin and penicillin. Suppressors [and NFA guns] are like codeine. There’s a whole other level of control, scrutiny and responsibility,” Hyatt remarked.

“There’s a lot of record keeping, and it’s highly scrutinized during an ATF inspection — they really check and make sure it’s right.”

Jess Hancock, Owner
The Wichita Gun Club • Wichita, Kan.

Attention To Detail Matters

What this means in practical terms is you need a well-organized system for tracking paperwork for firearms and suppressors that need to be stored for long periods of time (8 to 10 months is common) while your customers await their tax stamps. You’ll also need extra storage safes.

Hyatt Guns, which sells two to three suppressors daily, has three large safes filled with them.

“Fortunately, suppressors aren’t very big, so you can put a lot of them in a safe,” Hyatt informed. “But you have to manage them and keep the paperwork with them.”

Things you might not even think about could wreak havoc. For example, maybe you’ll use a rubber band to wrap the ownership form around each suppressor box. What if that elastic snaps and the paperwork gets misplaced?

Hyatt stresses the importance of paying attention to detail.

“You’ve got to think ahead on this stuff. There are all kinds of little things you can mess up that can take a long time to fix,” he cautioned.

It’s difficult to overstate the importance of having a system for that paperwork — and making sure your staff is proficient at filling out the ATF forms, advises Hancock.

“You can’t mess around with it. You need to know it. I probably have 35 three-ring binders, with records for every single suppressor that’s come through here. I have to keep those for 25 years,” he said. “So, there’s a lot of record keeping, and it’s highly scrutinized during an ATF inspection — they really check and make sure it’s right.”

Another element to consider is your facility insurance and security system, suggests Mike Winkle, operations manager for Midwest Tactical. He explained this is particularly true if you delve into machine guns, where a single item can easily be worth $50,000+.

“You’ve got to make sure your insurance is going to be able to cover it in case of theft, break-in, fire or whatever,” he said. “This kind of stuff is really on another level when you’re talking about these rare, sometimes one-of-a-kind, transferable items.”

“We’re A One-Stop Shop”

It has become markedly easier over the past decade to buy NFA items. Rule changes (including the elimination of a required sign-off from a chief law enforcement officer) and technological advancements (including self-service NFA kiosks) have taken some of the confusion and mystery out of the process.

It doesn’t mean this isn’t intimidating for your customers — particularly those who have no idea what it takes to get approved for a suppressor or NFA firearm.

To make it as easy as possible, both stores offer NFA kiosks, which eliminate much of the paperwork confusion surrounding the ATF forms, and also provide an easy way to supply electronic fingerprints and photos.

The Wichita Gun Club was an early adopter of the Silencer Shop kiosk (the company says it has nearly 2,000 in stores around the nation), which also saves information to make subsequent NFA applications easier. 

With this tool and an in-house notary public, they can sell an NFA item in half an hour or less. There’s no need for the customer to leave the store to chase anything down or get anything notarized. 

“They’re pretty much a game changer, at least in my opinion on the NFA side of things,” Hancock said. “We’re a one-stop shop.”

What About Machine Guns?

Midwest Tactical has built a business around buying and selling machine guns. Most of it focuses on the roughly 186,000 transferable machine guns (those registered before May of 1986) still in circulation. The company also does some business in “post-sample guns” — those guns made after 1986 that can only be owned by dealers, police departments and manufacturers.

Winkle says it’s still a major challenge helping people understand the legality of owning a transferable machine gun. If you can legally buy a semi-auto rifle, you can meet the requirements for owning a machine gun, he points out.

“People just don’t know. And we can’t exactly advertise in magazines — unless they’re gun magazines. And we can’t post about buying guns on the internet,” he stated. “With these rules, it makes it really hard for us to educate the public.”

Still, he says there’s a strong market for these guns. Admittedly, this is the top end of the firearms market, with an entry point (now around $10,000 for an M50 Reising) that climbs higher every year. It’s not unusual for individual sales to top $50,000 or more.

The company also works as a partner with gun shops around the country, serving both as a resource for how to sell machine guns and as a supplier (with dealer pricing) of these hard-to-find guns. Among the shops they work with is Hancock’s Wichita Gun Club.

“We’re always glad to help. You’d be surprised at how many dealers have no idea about this,” he shared.

You may be wondering how many machine guns you’d need to sell to make it worthwhile. That’s a hard one to answer, Hancock admits.

“It really depends, just like anything,” he said. “If you buy them right and you sell them right, then the margins are certainly there.”

Selling suppressors, short-barreled rifles, short-barreled shotguns and machine guns isn’t for everyone. But for the right store, the sector offers a pathway to set itself apart from competitors.

Future Of The Market

The NFA market is like every other facet of the firearms industry. Demand goes up during times of turmoil or whenever there is a perceived threat to the public’s ability to buy a particular product. Likewise, things slow down when everyone is more comfortable.

This market, however, may be more vulnerable to economic downturns — particularly when you are talking about the higher-end stuff, including machine guns. 

“Obviously you have to be a top-end buyer, with a lot of expendable income, to afford them,” Winkle said. “Because the stock market has taken such a hit, their assets and their funds aren’t as available as they once were.”

Regardless, he said many of his customers appreciate the investment potential. He related a story about a customer eight years ago buying a drop-in auto sear for an AR-15 for $10,000. Late last year, that same customer sold it again for $50,000.

“If you buy an NFA item right now and sell it one or two years later, you’re going to make a profit off of it,” he stated. “The market goes up that quickly on these items.”

Hyatt sees no reason to think suppressor sales will change for the worse anytime soon. In fact, the market could really take off, he predicts, if the nation could get past the negative stereotype of suppressors being something villains use for assassinations. Lighter restrictions would do wonders.

“If they ever got the wait down to four or five weeks — rather than months — I think we’d have unbelievable growth,” he proposed.

The segment with the most uncertainty is short-barreled rifles. Those sales essentially dried up during the period when the ATF allowed the widespread use of pistol braces that increasingly mimicked the function and appearance of buttstocks. 

Now that the agency has revised its earlier rulings — effectively turning those guns into unregistered SBRs — there is turmoil. A grace period gave gun owners until May 31 to register their guns without having to pay the $200 tax stamp. What happens to the market after is anyone’s guess.

Hyatt won’t be surprised if there’s at least a modest increase in sales of SBRs, while Hancock thinks it’s likely the ATF decision — which affects potentially millions of gun owners — will be overturned in court.

Click To Read More Shooting Industry July 2023 Issue Now!