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I was a home based FFL for close to 20 years in CA. When I moved to NV I gave it up because of local zoning restrictions. I now have a C&R license which suits me just fine.

The Fed defers to Local Ordinaces. If your local jurisidcition alllows a home FFl you can have one. Never heard anything about being a gunsmith???? I have a friend who still maintains his FFL and has a small office space in a commercial building that he owns. The BATF has come out twice around renewal time, the first about 10 years ago, in which they spent quiet a bit of time going over his books. The second visit was recently about 2 hours total. I was visited once at renemal time, the agent spent 20 minutes with me and was very pleasant. When i turned in my license I had basically the same experience. Generally if you are friendly and forthcoming you don't have a problem with them. The same was true of the CA DOJ. Their job is basically to help you comply with the law, at least that was my attitude towards them.

Yes the BATF can knock on your door and search the business premises. You have to state some business hours of operation on the form, mostly so they can come at that time. It is a good idea to have a GOOD safe anyway you wana cut it.

The reason why they can not exclude home FFL's is that many are located in rural areas, where a specific store front would not be practical.