Chester gave up his handgun dealer's license, years ago, as a result of what I understood to be a paperwork snafu and/or some unaccounted for handguns. It was required that he have a handgun dealer's license, to legally possess "assault" rifles, "assault" shotguns and "high capacity" magazines, as an FFL. That, from what I understand, is the crux of the situation.
He had this stuff on his dealer's books, after the implementation of the SAFE Act, without the proper license. I don't know if he simply forgot they were on his books, from long ago but, once the SAFE Act became effective, he also could not legally sell or otherwise legally transfer them, even out of state, since he didn't any longer possess the proper dealer's license.