I know there are punitive taxes ( punitive to discourage people ) on tobacco products in store hence the high price tag. The reason I would still prefer to restrict it to the crown monopolies is to restrict commercial entities from profiting at all from it.

We are going the opposite way for alcohol (https://www.cbc.ca/news/canada/toronto/ontario-beer-wine-convenience-corner-stores-doug-ford-1.7055737 ). We already have LCBO, we have OLG, we have OCS ( though it was purposely nerfed).

Why is there a need for private entities to distribute it? The LCBO model works, why not use the same for tobacco. Does LBCO push people to black market alcohol?

Not very familiar with First Nations' jurisdiction on this. But from your comment that there are people who would still skirt the law even if it legal. Well it is their problem, and when they break the law, they should face the consequences. We do not need to make every black market activity legal. What I find reasonable is to provide a pathway for these substances to be bought with large disincentives to heavy discourage it.

What is your line between heavy discouragement and the black market? There is already a black market for pirated software and copyrighted material. Many justified and many others unjustified. The existence of a black market, in and of itself, does not justify the need to relax or remove regulation or legislation.