You're misunderstanding this concept I think. The STATE will allow the sale, but the Federal government can also fine and or sue the dealership for the same process. In Florida, for example, we are a no inspection state. Even when registering a new car in the state from out of state, the DMV doesn't inspect the vehicle. They ask questions and you have to swear or affirm to the truthfulness, but if you in fact don't have cats, you can still register the car and transfer title. Dealers can even get away with selling them.
All it takes is for one person to report the transaction to the EPA. If it's a big dealership, they almost always elect to investigate. They don't spend time tracking down individual citizens who sold a car in a private sale. But, if it's a multi-million dollar car dealership that's been caught trading illegally modified cars, you can almost certainly bet that they'll follow up on that report and use that dealership to make a high profile example. As the saying goes, if they've done it once, they've done it 20 times... and this holds true for a lot of car dealerships that try and skirt EPA tampering laws. They'll investigate that dealership and pull all their sales and maintenance records for a two-year period and fine them $25,000 for every car they sold that had a non-standard emissions system, and $25,000 for every car they worked on that had a non-standard emissions system (it's not only illegal to remove cats, but it is illegal to perform even routine work on a vehicle's emissions system that previously had illegal tampering performed on the vehicle).
So, while the state law may allow the transfer of a vehicle without catalytic converters, the Federal law trumps it and any dealership with any common sense just doesn't play around with running afoul of Federal EPA codes. If they elect to investigate, it's not 1-2 agents sitting around looking through paperwork. These investigations can involve 50 or more people rifling through every aspect of the business from its filing system, cloud storage, IT systems, financial records, and so on. It practically shuts the dealership down for weeks. If it's a small dealership, the investigation, even if they don't find anything actionable, is often enough to put them out of business due to how onerous it can get. Then, once that dealership is on their radar, they'll be routinely re-inspected periodically.
In the end, you have to be a really dumb license holder to try and sell cars with tampered systems, even in states like Florida that has practically no emissions laws. As I've said before on this topic, the Feds don't give two shits about how much harm they cause. I've seen it go down dozens of times. The Feds get involved and they freeze out all the state agencies... torch a fire on the business and walk away when they're done.