Can You Deny Renting to Smokers?

Yes.

Smokers are not federally protected under the Fair Housing act. There are two caveats, however:

1. If you have federally subsidized housing; you cannot disallow tenancy based on smoking
2. You must apply the ban to every applicant, do not make an exception for someone who appears to be the perfect tenant on paper but smokes - either you allow it or you don't.