Hi Jessica, if they ban smoking, I believe it will be legal and life for the smoking tenant will quickly become unbearable.

Quote from @Micheal Smoke: Hi, my name is Mike Smoke, and I'm an aspiring real estate investor focusing on multifamily and Section 8 properties in the U.S. as the barrier to entry is much much lower in terms of price compared to Canada and Funding options. 

There's currently a tenant in the house (who I presume caused the smoke damage), but the seller promises that this tenant will be gone before closing.

Tenants must receive; signed Certificate of Rental Suitability no more than 60 days before move-in, Partners in Good Housing Pamphlet, Lead Free/Safe Cert (if built before 1978), smoking policy for multi-unit properties, Bed Bug notice as you describe above.For Pennsylvania: It's also best practice for property owners to include a lease provision that waives the Notice to Quit requirement of the PA Landlord Tenant Act.

Inspect appliances for age and condition,and look over the flooring for any damage.For tenant considerations, evaluate the unit layout for functionality and storage, and check for safety features like smoke detectors and secure locks.

Depending on the severity of smoke damage and structural issues, it could be a huge challenge for first time flip.

City recently did a building inspection and we noticed the tenant is smoking in the unit (cigarettes and marijuana), food waste everywhere leading to building pest issues, and there are 5 people living there now (3 adults and 2 kids).

Tenant lit candle and burned bed, lots of smoke damage.

Similarly if you currently allow smoking you cannot change the least to prohibit smoking. 

I do feel like anyone serious enough will just take the two minutes to answer the seven questions, which basically just establish if they meet the minimum requirements (3x the income, Credit Score, No Pets/Smoking, etc).