From the Super Mario Wiki
The Banana Shot is a lock-on item which takes the form of a metal bazooka loaded with a special Banana known as a Poison Banana. When fired, the Tox-Banana Shot will launch its ammunition toward the racer it is locked on to, causing them to spin out upon a successful hit. The racer that got hit will also be poisoned, causing their steering wheel to shake for a short period of time. If the Tox-Banana Shot is fired at a wall, the Poison Banana will drop to the ground and be left on the track for racers to run over.