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Bart didn't say that the sherriff's office reported the information to the NICS he said that the state of Washington did.
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Just to clarify, all I know is what is reported in the AP and Volokh articles. There are some important details missing as fiddletown noted.
However, last time I did NICS, it was a straight yes or no. There wasn't any interview or discussion of extentuating circumstances. You shot them the information on the Form 4473 and they approved it or didn't. The answer didn't come with legal advice about other possible prohibiting factors. So that is why the Sheriff's office response seems strange to me.
Also, it is worth remembering that Sarich is also under investigation for violating/abusing the state's medical marijuana laws to distribute over a wider basis than allowed. I suppose it is possible the King County Sheriff's office may have been looking for a way to deny him specifically and this sounded good to them.