The gun lighter was a gift that the Sacramento Mob gave to the Tannen Crime Family sometime between 1931 and 1986 in an alternate timeline. It appeared as a golden pistol, but was simply a lighter for cigarettes or cigars. It was personally inscribed with the name of J. J. Valenti and the inscription "To your family from mine, in gratitude for your continued service."
Marty McFly obtained this item upon escaping from the Tannen mob in the DeLorean time machine. While in 1931, Marty used it to prove to Kid Tannen he was a member of Valenti's gang to access El Kid. Tannen's goons Matches, Zane, and Cue Ball wielded actual pistols resembling the lighter inside the speakeasy. Marty later used the lighter to stop Kid Tannen from murdering Edna Strickland by setting a stream of hooch on fire with it.
If Marty equips the gun lighter and interacts with Tannen after proving himself to be a part of the Sacramento Mob, he will jokingly offer Tannen a light; in response to this, Tannen says that, while he has a lot of respect for Don Valenti, he's only going to let Marty get away with the joke twice.