After colt made a HUGE fortune selling ARs to the goverment they went wacko in the late 1960s and ONE CRAZY thing they did was they invested in pyrodynamics. They made those pens from late 1960s till early 1970s. They fire flares,tear gas rounds of a few types and some other special use rounds.
These versions that do not fire "fixed ammo" like yours are legal to own without a tax stamp or any other aow type problems. They sell in the real world for 50.00 to 150.00 ....Depends a lot on knowledge of buyer.
Colt/pyrodynamics also made the CIA issue explosive .22lr ,teleshot and other odd items.
I have a pile of pics of these devices.