Hand grenades are regulated under the National Firearms Act ("NFA"), a federal law first passed in 1934 and amended by the Crime Control Act of 1968. The 1968 amendments made it illegal to possess "destructive devices," which includes grenades. (26 U.S.C. § 5801.) There's no doubt that a live hand grenade designed for military combat fits within the law's provisions—non-military people may not possess them.
While it's obvious that military-style grenades are illegal to possess, it's not so obvious when dealing with other items that could, under the law's definition, be classified as a grenade. What about a training device, or a smoke bomb, or even a firecracker? When faced with these questions, courts have come to inconsistent conclusions.
Under the NFA, the term "destructive device" includes three types of explosives or weapons:
The problematic part of the "destructive device" definition is the third definition. While it's clear that a person's state of mind is not relevant when dealing with devices that fall into one of the first two categories, that's not the case with the third. Courts have come to inconsistent conclusions when considering whether the state of mind of the person charged matters, when caught with a combination of components, or an assembled device, that could be used either innocently or for destructive purposes.
Courts have adopted three approaches to deciding whether an item, or collection of items, constitutes a destructive device, which would include a hand grenade. Whether a non-military "grenade" is actually a grenade for purposes of the NFA will depend on the court's choice.
Under one approach, some courts insist that prosecutors prove that the defendant intended to use the device for illegal purposes. Under this approach, someone who created the device, or assembled the components, would escape conviction unless the government proved that he intended to use the device for nefarious ends.
For example, imagine a car that is pulled over and found to contain bottles of gasoline and torn-up clothing. The driver says he's intending to recycle the gas; the clothing is just trash. Although the circumstances are suspicious, the prosecutor probably could not prove, without more evidence, that these items are components that will be converted to a destructive device (a Molotov cocktail).
Most courts have not adopted the approach described above—the "subjective approach." Instead, they focus on the language "may be readily assembled." That is, if the items could be put together to create a destructive device, the offense is complete, regardless of the defendant's protestations that he had legal uses in mind.
For instance, imagine a student who assembles the items needed for a home-made grenade, but has no intent on using it—he's doing this for a science project. As long as all of the parts are there to make a complete grenade, his benign plans will give him no defense. This "objective" standard turns the "combination of parts" theory into one of strict liability, as is the case with possessing military weapons (category 1) and weapons expelling a projectile (category 2).
The objective standard, while seemingly harsh, can have some surprising results, letting defendants off the hook even when they intended to make a weapon. The objective approach won't count unattached commercial blasting dynamite as a component part, because it is specifically excluded from the definition of a destructive device. Unless the defendant has used the dynamite and actually assembled the weapon, there's no destructive device, and no conviction.
So, for example, a person caught with many sticks of dynamite, unattached fuses and caps, and who states that he intends to help terrorists, will not be convicted under the "objective" approach.
As you can see, each approach explained above has its drawbacks. The subjective approach requires prosecutors to delve into the mind of the defendant, even when the circumstances are overwhelmingly suspicious. The objective approach can result in harsh outcomes (the student and his ill-advised homemade grenade will be convicted), as well as disquieting escapes from liability based on a technicality (the dynamite possessor described above). Some courts take a different tack.
The common sense approach works like this: The judge asks whether the device, in pieces or as assembled, possesses any innocent value—whether it's anything but a weapon. If the answer is no, then that's the end of it—the subjective intent of the defendant isn't important. But if an innocent or legal use is possible, the subjective intent of the defendant is examined. His statements and the circumstances surrounding the event can be used to prove an illegal motive or plan, or an innocent one.
This mixed approach results in more satisfying outcomes for our scenarios noted above. The science student, convicted under the objective approach, would have a chance to prove that he had no intent to use the device or components in an illegal manner. And the terrorist helper would probably be convicted, for although his assemblage of dynamite, fuses, and caps could be used for benign projects, his stated purpose makes it clear that he had no such plans in mind.
The short answer is yes, when that's a military style, live grenade. But people who build devices themselves, or simply gather together the components of what could become a grenade, cannot know for sure whether their items, even assembled, will land them in legal hot water. The answer will depend on the approach of the federal court in the area where any prosecution might be brought.