I'm genuinely not sure how I feel about this. It will certainly save lives and save public hospital money, however, it would come at the cost of:
1) freedom to choose
Thats the whole idea of living in a society, you give up certain freedoms for the greater good and to allow society to function - 
https://en.wikipedia.org/wiki/Social_contract 2) bottom line of many retailers (would certainly close many tobacconists)
Oh, boohoo. You can't stand in the way of progress to save a few jobs. There's a reason we don't have blacksmiths or farriers anymore as large professions, society progressed and advanced. 
They're doing something inherently harmful as well, their whole line of business is based on selling a product that does real harm. How would you feel if your local crack dealer or sex trafficker went out of business? 
I thought about this, and sure, that will be true from say 2018 to maybe say 2050, but the point is that by roughly 2080, the ENTIRE Tasmanian populace will be smoke free. Also, say you're a smoke from qld, and you wanna visit tassie. If you can't buy cigarettes, you won't visit. It would damage tourism as well..
It's one concern but its a short term one. Some kind of illegal sales ring might pop up. 
Another concern is people simply go to another state and load up on the ciggies. When gambling was banned in Victoria, people often went to casino's or pokies just over the border. We have to face the fact, no matter what we think, plenty of people will keep doing shit that bad for them.
If you calculate how much they're contributing to society by taxes and other things like that as compared to what the sale of cigarettes is costing society, i'm sure you'd hit a negative. It's not like they can't get other jobs either. Almost all of the workers in Australia don't sell cigarettes. 
Freedom of choice shouldn't include doing things that are batshit stupid, like not wearing your seatbelt. I don't hear the freedom of choice crowd complain about that one... i guess they're thinking one step at a time?
It's nice to have principals and believe in something but its even better to be pragmatic and realistic, while i think this is a decent idea in some idealistic theory, i doubt it'll work that well in real life. I'm in favour of more regulation and other things like that but this way wont work. 
It's quite clear they're addictive. According to a study in the lancet, they're much closer to Cocaine than Marujiana or Meth in addictivity potential. I don't smoke so i don't know how pleasurable it is in the same way a few drinks are, i'm sure thats one factor. Lets not forget though, if you smoke on a regular basis, a lot of the supposed "pleasure" is just feeding your addiction, getting that next hit rather than simply enjoying it. 

I think Alcohol is a much more pressing problem though. Smokers aren't usually violent or smoke so many packs a day on the same level an alcoholic might. A mate works at IGA and plenty of people come back 3 or 4 times a day to buy booze, they dont even buy a 6 pack or in bulk. I guess its to maintain some illusion that they're "not that bad" then later come back for more. I know the kids of alcoholics, it sounds like hell. Smokers aren't nearly as bad on that level. As far as i know, considering the most recent legislation too, we probably have the highest regulation on it already out of any nation on earth. I don't see nearly as many of you crusading against obesity or ultra-bad foods. Obesity certainly causes a lot of problems, i dont know if its on par with smoking but its pretty bad. I'm happy with how we have it now.
This is a silly plan and it won't work. Rates are already declining. I think we should just keep up our current efforts and wait for natural attrition of smokers. We'll never get it down to 0.00% but we can certainly chip away at it.