They smoke "Pipe Weed" in Middle Earth, and the Hobbits grow the best pipe weed there is. The South Farthing pipe weed from the Shire is some kick-ass pipe weed --- even Saruman had it imported into Isengard all the way from the Shire.

In Middle Earth they are into all kinds of freaky psychotropic substances, even some we don't talk about here. One of my favorite scenes is when the hobbits are running away from a farmer hobbit, and they fall down a hill, and when they come to rest, one of them yells out, "Mushrooms!" I'm pretty sure he wouldn't have been so excited if they were just portabellas.