I was wondering that myself...anyone have any answers as to why it is illegal???
It's the Jenkins Act. Now, you're probably asking yourself 'what the hay is the Jenkins Act?' And I'd love to be able to tell you, but the file that contains that information is corrupted, so I'll have to get back to you on the details.
The anti-smoker ordinances are not federal, only some of the taxes are. A few states, like Kookiefornia, have statewide bans, but most of the ordinances are local. The antis like it that way: it's far easier to hoodwink a few local yokels on the council than an entire state legislature.