Artificial scarcity cannot last: a black market of RYO tobacco, and home-made cigarettes of dubious origin is always ready to serve customer demands.

True, but if it's less than the total market that existed before hand, that's still a public health gain

In the end, the health effects of nationalizing the tobacco industry, and winding down operations, can easily be negative.

It can be, but that's just not the best supported hypothesis. The weight of evidence best demonstrates that control measures have thus far been quite uniformly positive.