“Smoking areas are permitted in non-public areas of hotels (i.e., smoking floors or smoking rooms) at the discretion of the patron.”
The Holy See banned selling tobacco, but not smoking it. Considering the countries size it had minimal impact. The odd situation was prior to this it had much lower prices so people where buying them inside the Vatican for others. Which created something of a moral hazard.
Bhutan, and the Holy See, not that the latter counts for much besides PR.