Oregon Need help with ammunition business.

[ma96782]

Who The F R U,

I'm glad it worked out for you.

+++++

Careful that the politicians don't find a tax in there somewhere. In the name of public safety or whatever B.S. reason(s). Rrrright.

The plaintiffs said Seattle officials are using the tax as a workaround to do something they have no authority to do. A state law prohibits cities from regulating firearms.

http://www.seattletimes.com/seattle-news/politics/gun-store-owner-moving-out-of-seattle-because-of-new-tax/

OK, Ok, ok.....WA is not OR. But, there you are. And, it's costly to litigate.

Aloha, Mark

 

[U8395279]

Who The F R U,

I'm glad it worked out for you.

+++++

Careful that the politicians don't find a tax in there somewhere. In the name of public safety or whatever B.S. reason(s). Rrrright.

The plaintiffs said Seattle officials are using the tax as a workaround to do something they have no authority to do. A state law prohibits cities from regulating firearms.

http://www.seattletimes.com/seattle-news/politics/gun-store-owner-moving-out-of-seattle-because-of-new-tax/

OK, Ok, ok.....WA is not OR. But, there you are. And, it's costly to litigate.

Aloha, Mark

Well, but you fail to point out that the city of Seattle won that court case. The judge dismissed the NRA's lawsuit, saying that taxation and regulation are two different things.

The exact same thing applies in this case. Cities can require a business license fee from any business. And they can regulate gun stores and ammo makers like any other business, with zoning restrictions and safety requirements. Just because one is in the ammo business, does not allow you to be able to ignore local rules that apply to all businesses.

.

 

[U8395279]

City's cant pass any ordnance or law against selling firearm's Ammo or components.
You don't need any city license's in Oregon. All you need is to register with the state and the fed's.


The City of Rainier's Clerk tried to tell me this wasn't valid in Rainier.
I had the Portland ATF call and correct her.

ORS 166.170 - State preemption - 2015 Oregon Revised Statutes

My goodness, it would appear that perhaps you are right about this, and the city cannot legally require him to get any license. If so, then the OP would be home free, as long as he can get licensed by both the state and ATF.

I did not know that this law existed here in Oregon.

An attorney should be able to figure this legal mess out, right? I wonder if there is a gun rights attorney somewhere in Oregon that he could check with.

.

 

[ma96782]

Lance Jacobs,

Thanks for the update. I didn't know that the City of Seattle won the case.

So....assuming......that the courts would probably rule the same way when the circumstances are essentially the same. Then....IF......Portland decided to follow Seattle's example and enact a tax on guns and bullets......then, Portland would also win (assuming).

That doesn't sound too good for the OP and his idea of a future ammo business. Ooops, the OP is in Newberg, OR not Portland, OR. But, I guess it could happen in any city. State preemption laws don't apply here, as it's about "TAXATION."

As an aside......YES......the NFA Tax Stamp scheme on F/A firearms, SBRs and suppressors, etc.... is also a "taxation issue." Not that I agree with it.

Aloha, Mark

 

[mcfoto]

, the OP is in Newberg, OR not Portland, OR. But, I guess it could happen in any city.

As a fellow Newberger, I would encourage the OP with the observation that most here, unlike PDX, are 2nd amendment and firearm friendly. I'm guessing the concern regarding hazmat materials is strictly safety related. Continue your research and reassure them that you know what you're doing and take proper precautions. Good Luck, I may be a future customer.

 

[U8395279]

Lance Jacobs,

Thanks for the update. I didn't know that the City of Seattle won the case.

The judge that heard that case was a liberal lesbian democrat, Palmer Robinson, who was appointed to office back in 1999 by Democratic Governor Gary Locke. And Locke is a personal friend of Obama, having served in his administration as both secretary of commerce, and later as ambassador to China.

This is the legacy now being brought to us by having had liberal governors in both WA and OR for so very long. The judges that they have been appointing to office for decades in our states are not friendly to gun rights. So anyone expecting judges in either of our states to be friendly to gun owners, is highly mistaken. They are instead going to be biased against gun rights.

.

 

[Who The F R U]

Lance Jacobs,

Thanks for the update. I didn't know that the City of Seattle won the case.

So....assuming......that the courts would probably rule the same way when the circumstances are essentially the same. Then....IF......Portland decided to follow Seattle's example and enact a tax on guns and bullets......then, Portland would also win (assuming).

That doesn't sound too good for the OP and his idea of a future ammo business. Ooops, the OP is in Newberg, OR not Portland, OR. But, I guess it could happen in any city. State preemption laws don't apply here, as it's about "TAXATION."

As an aside......YES......the NFA Tax Stamp scheme on F/A firearms, SBRs and suppressors, etc.... is also a "taxation issue." Not that I agree with it.

Aloha, Mark

No City in Oregon can do that.
The preemption clause is in the STATE Constitution.

 

[ma96782]

Who The F R U,

WA also has a preemption law.

RCW 9.41.290
State preemption.
The state of Washington hereby fully occupies and preempts the entire field of firearms regulation within the boundaries of the state, including the registration, licensing, possession, purchase, sale, acquisition, transfer, discharge, and transportation of firearms, or any other element relating to firearms or parts thereof, including ammunition and reloader components. Cities, towns, and counties or other municipalities may enact only those laws and ordinances relating to firearms that are specifically authorized by state law, as in RCW 9.41.300, and are consistent with this chapter. Such local ordinances shall have the same penalty as provided for by state law. Local laws and ordinances that are inconsistent with, more restrictive than, or exceed the requirements of state law shall not be enacted and are preempted and repealed, regardless of the nature of the code, charter, or home rule status of such city, town, county, or municipality.

BUT, as it's has been pointed out (and as ruled in the Seattle case)......the preemption law was useless in a TAXATION issue. So, all I can say is.....cross your fingers that your state and/or local politicians don't follow Seattle's example.

And, as I have mentioned, that the Federal NFA law is about a TAX ISSUE. Back then, the politicians also figured that they didn't want it to be an issue with respect to the 2A's ".....shall not be infringed" clause.

Constitution or not.....

Politicians will try anything. And, it won't be until the highest court (USSC) rules on something will we KNOW what is right and wrong. Example: Heller Case. I mean, how long was Washington DC residents denied ready access to handguns until the Heller case was decided? A challenge....waiting for the right case, then the lower court trials and it cost a lot of money to mount that challenge. All the while, the Govt took taxpayer's money and had Govt paid lawyers. All in the effort to stifle their own citizen's rights.

Aloha, Mark

 

[AMProducts]

Hey everyone,
So I am looking at starting a small ammunition business out of my home and so far everything is golden except for one thing the City of Newberg. The city code 10.40.404 states that in home business's of this nature may not use ''Highly'' flammable or combustible material in the process. So I must submit to them a case providing proof that there would be no explosive or fire hazard with the materials I would be using, so far upon inspection of some MSDS data I have found that Isopropyl alcohol presents the same fire rating as smokeless propellant with a rating of 3 (high) and nail polish remover has an even higher fire rating at 4 (extreme). The main issue I am having is smokeless propellant has a reactivity rating of 4 which means ''May detonate'' but this is only under highly controlled circumstances.
I have looked over State and Federal storage requirements and that is very easy to abide by but once you add manufacturing to the process is where the issue starts, Oregon fire code states that 50lbs of solid combustibles may be stored in the location that I am in (provided no containers are larger than 10lbs) so that would be easy to stay under and 10,000 primers may be stored in a private dwelling. So the overall allowable amount of components is sufficient to keep operations moving and I've called county, State, and ATF and they've said there's no problem except obtaining a permit through the city.
So with all that in mind if anyone can help with any data that supports that storage and use of smokeless propellant is safe to use for small manufacturing inside of a dwelling it would very much appreciated. On a side note if I could rent a section zoned for industrial there would be no issue but with fees, licensing, and insurance associated with this business adding rental fee on top is too much collateral for me to fund out of pocket.
Thanks for any helpful input/advice and hopefully I can get this up and running soon.

Smokeless powder is type classified by NFPA/DOT as either "Flammable Solid" or IIRC "Explosives 1.4" (propellant explosives). Generally, you're going to be going off NFPA 95 standards.

I'll tell you straight up, the easiest way to make a small fortune in the firearms business is to start with a large one. A hobby/home operation really isn't worth while. Go partner with an existing company who has excess capacity, and have them contract load your stuff. It costs less during startup as you're not making the capital expenditure in equipment, storage, extra licensing etc. Just get a regular 01/07 FFL and have someone else do the loading for you.

The procedure you're going to have to go through for your business: Find a location (don't do this at your house, you can do it if you have an outbuilding on your property, but do not use any structure physically connected to your house. ATF can come in at any time "during business hours" and inspect anything they want to inspect), get insurance (you will need product liability, you can call Joe Chiarello Welcome To Joseph Chiarello & Co., Inc of Summit, New Jersey and you will need a regular business policy that protects the property) The insurance is typically tiered based on how many rounds you make, and/or gross sales etc. You will need a type 06 at minimum, however the 07 has more flexibility, this is the license I recommend. On site, you will need a storage magazine, and some day-boxes. An easy way to get into a magazine is to get a tri-con and line it with wood. A day box is similar, however you just need a box with 1" hardwood walls (I used birch plywood).

After all this, you're going to need packaging, a method of cleaning brass (if you're reloading), machinery, a name, website, oh and you will owe federal excise tax of 10% of the gross value of all the ammunition you sell.

Generally, I wish to discourage people from jumping into the ammo biz without thinking it over. It is a highly regulated industry, some of that regulation works to keep people out, but more often it just bleeds you slowly from the second you decide "wow, those costs aren't too high, I could totally do that" and then another someone wants a check from you.

Before you go down this path, I would highly recommend answering these questions:

How is my business different?
* Can I be better than my competition?
* Can I be cheaper than my competition?
* Will I have a product no one else does?

If you are not at least one of these things, you have a problem, preferably you should be two of these things.

Right now the ammo market is highly in flux, a lot of big players expected Hillary to be in the white-house and M855 ball to be selling for $900/k. It didn't happen, and a lot of the logistical things they had to do to be ready to meet that demand required adding a lot of capacity, and now the prices of those commodities are not there to support that level of expenditure, these companies are failing, and will likely start dumping equipment on the market soon when balloon payments start coming due. .223/5.56 ammo should be <$300/k by now, but the prices are still well above that, and many of the bigger manufacturers are complaining that sales are slumping (this was the take-away from the NRA show), but the reason sales are slack is because of the high prices, and the fact that most people already have 8-years worth of panic bought ammo in their closet to shoot up.

I do consulting work, automation, and validation of ammunition and components, as well as small arms weapons design. The growth field at the moment is in police and military products. Sofic is this week, and already the SOF community is talking about purchasing a new LMMG, and GPMG, in addition to new pistols, and all kinds of other new toys.

In general, if you're going to be successful in the ammo biz, you need a high degree of vertical integration and automation, time, labor and middle-men are what will make you bankrupt. (speaking nothing of regulation)

 

[Who The F R U]

Washington's clause doesn't cover zoning.

Oregon is a different animal. And that is what the OP was asking about.
No home occupation permit is required in Oregon or a city license.
Just a State business lisc. And a FFL to MFG.

* If you are going to have alot of powder you will need an approved design magazine and keep the keg's at the 90lbs standard. No limit on the amount of keg's that can be stored.

*Small arms Powder is ( 1.3 flammable solid )
not an explosive if under 100lbs PER container.

*Loaded ammunition is 1.3c.
_____________________________________________________________________________________

USDOT Hazardous Materials Table 49CFR 172.101: Class 1 Explosives (EnvironmentalChemistry.com)

How many people giving advice on here have a FFL in Oregon ?

 

[Certaindeaf]

Smokeless powder is type classified by NFPA/DOT as either "Flammable Solid" or IIRC "Explosives 1.4" (propellant explosives). Generally, you're going to be going off NFPA 95 standards.

I'll tell you straight up, the easiest way to make a small fortune in the firearms business is to start with a large one. A hobby/home operation really isn't worth while. Go partner with an existing company who has excess capacity, and have them contract load your stuff. It costs less during startup as you're not making the capital expenditure in equipment, storage, extra licensing etc. Just get a regular 01/07 FFL and have someone else do the loading for you.

The procedure you're going to have to go through for your business: Find a location (don't do this at your house, you can do it if you have an outbuilding on your property, but do not use any structure physically connected to your house. ATF can come in at any time "during business hours" and inspect anything they want to inspect), get insurance (you will need product liability, you can call Joe Chiarello Welcome To Joseph Chiarello & Co., Inc of Summit, New Jersey and you will need a regular business policy that protects the property) The insurance is typically tiered based on how many rounds you make, and/or gross sales etc. You will need a type 06 at minimum, however the 07 has more flexibility, this is the license I recommend. On site, you will need a storage magazine, and some day-boxes. An easy way to get into a magazine is to get a tri-con and line it with wood. A day box is similar, however you just need a box with 1" hardwood walls (I used birch plywood).

After all this, you're going to need packaging, a method of cleaning brass (if you're reloading), machinery, a name, website, oh and you will owe federal excise tax of 10% of the gross value of all the ammunition you sell.

Generally, I wish to discourage people from jumping into the ammo biz without thinking it over. It is a highly regulated industry, some of that regulation works to keep people out, but more often it just bleeds you slowly from the second you decide "wow, those costs aren't too high, I could totally do that" and then another someone wants a check from you.

Before you go down this path, I would highly recommend answering these questions:

How is my business different?
* Can I be better than my competition?
* Can I be cheaper than my competition?
* Will I have a product no one else does?

If you are not at least one of these things, you have a problem, preferably you should be two of these things.

Right now the ammo market is highly in flux, a lot of big players expected Hillary to be in the white-house and M855 ball to be selling for $900/k. It didn't happen, and a lot of the logistical things they had to do to be ready to meet that demand required adding a lot of capacity, and now the prices of those commodities are not there to support that level of expenditure, these companies are failing, and will likely start dumping equipment on the market soon when balloon payments start coming due. .223/5.56 ammo should be <$300/k by now, but the prices are still well above that, and many of the bigger manufacturers are complaining that sales are slumping (this was the take-away from the NRA show), but the reason sales are slack is because of the high prices, and the fact that most people already have 8-years worth of panic bought ammo in their closet to shoot up.

I do consulting work, automation, and validation of ammunition and components, as well as small arms weapons design. The growth field at the moment is in police and military products. Sofic is this week, and already the SOF community is talking about purchasing a new LMMG, and GPMG, in addition to new pistols, and all kinds of other new toys.

In general, if you're going to be successful in the ammo biz, you need a high degree of vertical integration and automation, time, labor and middle-men are what will make you bankrupt. (speaking nothing of regulation)

I knew it was only a matter of time. What an awesome and valuable post.

 

[AMProducts]

I knew it was only a matter of time. What an awesome and valuable post.

Helps when you page me, otherwise I probably never would have seen it.

 

[Certaindeaf]

Helps when you page me, otherwise I probably never would have seen it.

Oh I know.. you're a busy man.
I was just thinking to myself, kinda going off of what you said and all too about specialization.. it seems some "premium" bullets/projectiles (Berger, Scenar, etc) cost an arm and a leg.. me personally, I'd look into that niche market.

 

[AMProducts]

Oh I know.. you're a busy man.
I was just thinking to myself, kinda going off of what you said and all too about specialization.. it seems some "premium" bullets/projectiles (Berger, Scenar, etc) cost an arm and a leg.. me personally, I'd look into that niche market.

Totally... it's not terribly expensive to have someone do swissturned bullets for you, I mean it's cheaper than buying them at retail anyways.

Here's some of my problems...

 

[Who The F R U]

I knew it was only a matter of time. What an awesome and valuable post.

FET is 11% buddy. if you have been paying 10 you are up the creek. ASK Heller what happen's when you dont pay.

IRS investigating manufacturing business in St. Helens

His 70+ year old mother bailed him paying out over 1 million dollars in back FET and taxes

And the FED's don't call you before 68 dudes with guns drawn show up.

 

[Certaindeaf]

FET is 11% buddy..

I'd imagine that if someone was in a position to actually owe a fee or tax they'd know the particulars one way or another by looking up the current applicable rate, as that is incumbent upon them. You have been a tremendous help.

 

[The Courier]

Thanks everyone, lots of good information. To lay out what I'am looking at doing is harder to find calibers 357 sig, 10mm, 45 colt as well as some 9 and 223 and staying away from 20 and 50 round boxes and stick to 250 count boxes. And I briefly looked at automatic loaders but those are way too expensive also according to DDTC if "Manual loading or Reloading" registration to DDTC is not required so that eliminates a decent percentage of cash owed to gov. And I'm looking at keeping this part time unless profits allowed fulltime so the stress of needing people to buy my product is reduced.
As far as the license goes it seems that a type 6 and 1 are my only avenue, after a lengthy phone call with ATF they have said that in order to apply for a type 7 license I am required to show "intent" to manf. firearms and that would be difficult with time constraints unless slappin an upper and lower together constitutes manufacturing.
Thanks again everyone for replying, it was very difficult to ask this question here but it became apparent that I needed some wisdom and as usually the members of NWFA have helped out a great deal.

 

[mkwerx]

Thanks everyone, lots of good information. To lay out what I'am looking at doing is harder to find calibers 357 sig, 10mm, 45 colt as well as some 9 and 223 and staying away from 20 and 50 round boxes and stick to 250 count boxes. And I briefly looked at automatic loaders but those are way too expensive also according to DDTC if "Manual loading or Reloading" registration to DDTC is not required so that eliminates a decent percentage of cash owed to gov. And I'm looking at keeping this part time unless profits allowed fulltime so the stress of needing people to buy my product is reduced.
As far as the license goes it seems that a type 6 and 1 are my only avenue, after a lengthy phone call with ATF they have said that in order to apply for a type 7 license I am required to show "intent" to manf. firearms and that would be difficult with time constraints unless slappin an upper and lower together constitutes manufacturing.
Thanks again everyone for replying, it was very difficult to ask this question here but it became apparent that I needed some wisdom and as usually the members of NWFA have helped out a great deal.

Putting uppers on lowers could very well constitute "manufacturing" - take this for what it's worth - but the last few gun shows I'd attended (been a number of years) there were guys selling AR kits/lowers/uppers. You could buy a stripped upper and they'd install the LPK, and things were fine. They would sell you an upper, things were fine. They all said that they could not mate the two for you- you had to do that after taking possession, as mating the two together constituted "manufacturing" and made the gun subject to the FET. I do not know how accurate that is - but seemed reasonable given how stupid laws/regulations/tax code is.

Ask the ATF to be sure.

 

[Who The F R U]

** Putting trigger parts in a lower is MFG **
Selling a lower and a upper separate doesn't mean you didn't MFG a firearm.
Again look at what happened to Heller when he tried those games.
____________________________________________________________________

Putting uppers and lowers together is MFG. and you need an 07.

If you sell a upper and someone bring's you the lower to fit it for them it's MFG.
ATF will grant you a 07 for those purpose's.

Nathan.

 

[AMProducts]

Thanks everyone, lots of good information. To lay out what I'am looking at doing is harder to find calibers 357 sig, 10mm, 45 colt as well as some 9 and 223 and staying away from 20 and 50 round boxes and stick to 250 count boxes. And I briefly looked at automatic loaders but those are way too expensive also according to DDTC if "Manual loading or Reloading" registration to DDTC is not required so that eliminates a decent percentage of cash owed to gov. And I'm looking at keeping this part time unless profits allowed fulltime so the stress of needing people to buy my product is reduced.
As far as the license goes it seems that a type 6 and 1 are my only avenue, after a lengthy phone call with ATF they have said that in order to apply for a type 7 license I am required to show "intent" to manf. firearms and that would be difficult with time constraints unless slappin an upper and lower together constitutes manufacturing.
Thanks again everyone for replying, it was very difficult to ask this question here but it became apparent that I needed some wisdom and as usually the members of NWFA have helped out a great deal.

Generally speaking, you can ignore the DDTC, information on it is not that great, but in general I don't know anyone who deals with it (except for type 08's that actually export).

The Type 07 is really the one you want, and the Type 01 doesn't cover your manufacturing of ammunition. The main reason you want the type 07: Research and development. To test your ammo, you may need to manufacture firearms, perform in-depth gunsmithing, and other operations that constitute manufacturing under existing interpretations.

What I would suggest... call starline, that's probably going to be where you're going to be getting your brass from, and add that to your spreadsheet. You're going to need to buy from them in quantity, usually 250k at a whack. You're going to pay more for shipping unless you have a forklift.

The only downside with 250ct is unless your per-round cost is low enough, most people will shy away from the price.

To put it bluntly, every round you produce is money in your pocket. The more rounds you can produce, the more money you will make. I like to make jokes about attaching a cash register bell to ammoload or camdex machines, because that's really how things work.

If you think there's a market you can corner on either quality, price, or availability, do it, if you can't rethink your decision.

Given that you simply can't produce much (what are you running a 1050?) you need to compete on the "something no one else has" load up some .450 rowland, or .460 smith. Use fancy machine turned bullets someone will pay a premium price for.

If you can produce say 500 rounds an hour with a 1050 (I know they say 1000, but that's a dream, even with an auto-drive) if every handle pull makes you $1, you're much better off and much easier to work part time than if you make $.005 per handle pull. Trust me, the math must pencil out, if it doesn't it's not worth doing.

I know it sounds like I'm maybe being a bit of a dick about this, but it's only because I care. The joke I started with about starting with a large fortune isn't a joke, it's the reality. If you're just looking for a way to make easy money, go buy houses and rent them out in places with high rents. It's much easier to do part time than being in the ammo biz.