Coin dealers are confused and frustrated over a new Minnesota law requiring coin dealers with annual sales of $5,000 or more to register with the state.
“I think it impacted many more people than the law was designed to address,” said Greg Allen, owner of Greg Allen Coins, St. Paul, Minn. “It seems to focus on telemarketing. It touches on a lot of dealer activities though.”
It really hurts small dealers, he said, because it doesn’t take much to hit that threshold.
“If they crafted it so person-to-person transactions were exempt, that would have helped,” Allen said.
Gary Adkins, owner of Gary Adkins Associates, Minneapolis, Minn., said that although he was licensed, he felt that it was an overregulation of the industry.
“The intent was admirable,” Adkins said, “but when you regulate, you create a burdensome regulation for good businesses and don’t go after the bad businesses who will simply go out of state.”
And it’s likely to eliminate the people who buy and sell coins part-time and for fun, said Lee Orr, owner of Great Lakes Coins and Collectibles, Burnsville, Minn.,
“The origin of this law was a reaction by the Attorney General’s office to articles written in the Star Tribune,” Orr said. “The articles were about people being ripped off when looking to buy coins. The articles labeled them as bad coin dealers when they were telemarketers. Not one was a coin store or dealer who sold openly. If it wasn’t for the articles, there would be no legislation.”
Orr said this isn’t just a dealer issue, it’s a consumer issue as well by limiting their choices of who they can do business with.
“I do think it’s going to take and destroy the coin shows in Minnesota,” he said.
Scott Hage, President of Midwest Bullion Exchange, Minnetonka, Minn., felt the law was a step in the right direction.
“We like the law a lot. There needed to be some oversight. This law protects the consumer,” he said.
Unfortunately, there were a lot of people getting taken advantage of, Hage said.
“There’s a lot of people that are embarrassed to say they got took,” said Hage.
Hage thought the law would benefit the collectors in Minnesota.
“Let’s make it about the consumer,” he said. “I think there should be more disclosure. I think people should be aware of what they spend and what they are buying.”
It’s all about protecting the consumer, he said.
“If you’re the consumer, are you going to go with the bonded company or the person who treats it like the Wild West?” Hage said.
Hage said it would have a good effect on numismatic business in Minnesota.
“I think its going to keep people out of the business who probably shouldn’t be in the business in the first place,” Hage said.
A dealer who can’t afford to be bonded probably shouldn’t be in the business anyway, Hage said.
Some dealers questioned whether the law would benefit the numismatic business in Minnesota.
“The collectors in Minnesota kind of have this double whammy,” Adkins said, “as there will be a severely limited choice of dealers in Minnesota and those out of state who won’t do business in Minnesota.”
A lot of dealers affected are good dealers who follow the law, he said.
“There’s some misunderstanding,” Adkins said, “and most dealers will say I just won’t do business in Minnesota. I can’t blame them.”
He said that some support was needed from outside to change the law.
“I’m surprised some of the larger companies aren’t mounting a campaign against the law,” Adkins said.
Allen, who deals at coin shows, wondered what the law would do to coin show attendance.
“There’s concern if there will be enough dealers to sustain monthly coin shows,” Allen said.
“We have our first local coin show this Saturday. When I checked, with the Department of Commerce, many weren’t registered,” he said.
Kathy McFadden, Executive Director of the Industry Council for Tangible Assets (ICTA), said that she’s had some members call in and say that they want to do business in Minnesota, but the law is just too burdensome.
“We sent out a survey for members to report on. We received 50 responses in a 12-hour period,” McFadden said.
Fourteen percent of the respondents said they would do business in the state, and 86 percent said they would not.
McFadden said that ICTA was putting together a strategy to prevent the spread of the law to other states and challenge the Minnesota law.
Dealers have expressed concern over other wording in the law, which uses terms not used in the numismatic business.
“In talking with local dealers, particularly small dealers and some large dealers, I heard them repeat what they thought the law says and, compared to what I think the law says, there’s confusion,” Allen said.
The new definition of bullion coins under the law is too broad, he said.
“I recall a definition under the Patriot Act II that a coin with a value over 50 percent of the precious metals content was a rare coin,” Allen said, “Those under were considered bullion coins.”
Dealers have to provide a receipt labeling all the coins, their precious metals content, even when the content has nothing to do with the value, Allen said.
“In the sense of this law, every coin is a bullion coin,” he said
An 1804 silver dollar is now considered a bullion coin, Allen said.
Hage offered a different definition.
“The old school definition is if it has a 25 percent value over spot price, it has a numismatic value. Anything under is bullion,” Hage said.
He supports the new definition, as well as the requirement to provide a receipt detailing the precious metals content.
“I think it’s black and white,” Hage said, “if you’re selling something so the customer knows what you know. With a numismatic coin, you can easily hide those premiums.”