If it is so bad then why not ban tobacco? The problem with tobacco is that it is so widely available, making getting off the stuff so hard. I certainly would not visit a dealer to get illegal baccy.
The reality is that governments are addicted to the tax income. 11 billion a year in Australia.
Yes the tax take is attractive to governments. Unfortunately the tax take doesn't offset completely the cost to the system of illnesses caused by Tobacco.
Banning Tobacco outright would have to get past the lobby groups, a problem in Australia and apparently a bigger problem in the US, as well as the likelihood it would just spawn an unregulated black market. Differing Tax regimes in Australia has already spawned a black market moving tobacco products from a lower taxed state to a higher taxed state.
It may be the increasing tax cost on tobacco along with other measures are more effective in control than outright banning would ever be.