This is a tear gas launcher I bought a few years ago. It is the same make/model used in Terminator 2. As it turns out it has a matching serial number on a similar stunt grenade launcher from a Profiles in History auction. The Profiles in History auction tear gas launch sold for $7,000.00 USD.
Both are made from rubber "Hyper firm rubber" on a metal internal support. Both came from Stembridge Armory.
It's officially called the Hawk engineering MM-1 and it's a 37mm flare launcher. If you watch the T2 scene in slow motion you will realize a few versions of the gun were used. And Arnold does not ever hold the real thing!