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Recently ATF issued ATF Ruling 95-3, holding that 37/38 mm gas/flare guns possessed with "anti-personnel" ammunition, consisting of cartridges containing wood pellets, rubber pellets or balls, or bean bags are destructive devices as degined in the Gun Control Act and the National Firearms Act and require registration to be lawfully possessed.
Devices designed for expelling tear gas or pyrotechnic signals have been held to be exempt from the destructive device definition. However, when a gas/flare gun is possessed with "anti-personnel" ammunition, it is then capable of use as a weapon. Thus, it becomes a firearm and is no longer exempt from the destructive device definition.

Any person who will possess a gas/flare gun in combination with "anti-personnel" ammunition must register the making of a destructive device prior to the acquistion of both the gun and the "anti-personnel" ammunition. The gas/flare gun must be indentified must be identified with the required markings, including serial number. Any person engaged in the business of buying or selling the combination of the gas/flare gun and "anti-personnel" ammunition must have the appropriate Federal firearms license and/or have paid the appropriate special (occupational) tax.

If you have any questions regarding this matter, the entire text of the ruling is available in the ATF Quarterly Bulletin, Volume 3, 1995, or you may contact the National Firearms Act Branch at (202) 927-8330.