The only issue with a 37mm flare gun that I can think of would be if you are using bean bag, wood baton, or rubber shot through it. Something meant to be used directly on a person makes it a Destructive Device. Smoke, flares, star cluster flares are ok.
Are you thinking of the smoke grenade issue from like 2008? The fuses used made them destructive devices, then many of the later ones were made difficult to ship because of the extra hazmat fees.
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