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Many jurisdictions are in a bit of a quandary concerning the use of tobacco....
On the one hand, it clearly is unhealthy even dangerous, it adds to health care costs (sometimes paid by the government) and to loss productivity. On the other hand, these same jurisdictions are unwilling to simply outlaw it - either because they conclude that's impossible or because they fear the tobacco industry (and votes of smokers) or like the taxes it provides or simply view this as beyond the realms of proper authority and exercise of power (tobacco being under permitted liberty).
That quandary often results in several actions:
1. Taxing the ___ out of it in hopes that increased cost will decrease use (this seems to work - to a limit and gets the government money, always seem as a beautiful, wonderful thing to government)
2. Limit or prohibit promoting (such as ads, naming rights, etc.)
3. Placing warnings on the product and/or in other ways to inform and dissuade.
4. Place age restrictions
5. Place restrictions on when and where it may be purchased.
6. Restrict locations where smoking is permitted.
All these things work - to a certain extent. But it does create a bit of a "mixed message" - legal but discouraged.
Of course, the same quandary exists for alcohol use. And in some jurisdictions, for pot. Even plastic bags!
This raises all sorts of problems with the fundamental interactions between the people and the government.
There's the fundamental question of what gives the government the right to increase the price of a product by a huge margin just because it feels like targeting taxation. With socialised healthcare there is an argument to be made that, since the government has to pay the price of treating smoking-related illnesses it's only fair that the smokers should pay towards them through the price of tobacco, but if anything that turns into more of an argument against socialised healthcare at all given the exact same reasoning gives the government justification to clamp down on everything from smoking tobacco to rock climbing to mountain biking to scuba diving and indeed anything else that carries some form of danger.
Limiting the promotion of a product is all well and good but, as you say, it creates the rather bizarre situation where the government says that a product is legal to use and consume but not legal to advertise. It turns legislation from something that makes sense into something that makes no sense. While some would say tobacco should be banned, that in turn feeds into the question of why a substance that grows naturally should be outlawed (a very similar argument comes into play where marijuana is concerned - it's called "weed" for a reason).
There's a related issue in countries where nearby countries have very different tax regimes that's very similar to the concept behind the Laffer curve. As I've mentioned before, in the UK tobacco taxes are very high and it's pretty well known that people buy cigarettes from bootleggers. Typically a bootlegger will drive their van to France, load up on duty-paid cigarettes, then bring them back into the UK. The declaration they are for personal use means no further taxes are due, and the bootlegger can then sell them at a tidy profit. It's illegal but unless the taxman can prove the bootlegger was selling the tobacco a prosecution can't take place because the tobacco is legal to import, legal to own, legal to consume and (I believe) legal to share socially in the sense that if I've got 25,000 cigarettes that came from France and you come to visit me it's legal for you to smoke my cigarettes while you're visiting. So an increase in the taxes keeps anti-smoking pressure groups happy but achieves little other than driving more people into the hands of the bootleggers. And of course while some bootleggers are little more than the entrepreneurial types who see the chances to make an easy profit, it's inconceivable that there aren't some bootleggers out there who are into a lot more shady activity alongside selling foreign cigarettes. So on that regard every increase in tobacco taxes applied by the UK government means the UK taxman gets less money while foreign governments and criminal enterprises get more.
A large part of the problem comes down to the situation in which I choose to take an entirely voluntary risk while someone else gets stuck with the bill to put me back together again if it all goes wrong, and on that basis the someone else can reasonably expect to either control the risks I take or charge me in some way to cover the increased risk. The primary government concern is the cost of treating smoking-related illnesses, which in turn throws the whole question back to the issue of why the government pays to put me back together again if a risk I took voluntarily turns and bites me.
