Welcome To The Smoking Lounge

(CBS) It looks like a bar.

The customers look like they're in a bar.

But technically speaking, it's not.

The sign hanging out front of this newcomer to Chicago reads "Smokers Welcome" and it's no joke: smokers are free to light up and puff away, despite being in a city which, like many others nowadays, has strict anti-smoking laws covering most public places.

Inside this storefront, not far from downtown, there is a wet bar and a coffee bar, but for some – that may not be the main event.

CBS News correspondent Cynthia Bowers says the establishment's operator has also put in what's called a "tobacco bar."

"We have got loose tobacco blends in nine different varieties," says R.J. Reynolds marketing director Brian Stebbens, "and it is here that the tobacconist can take those loose blends and... in a two or three minute period... create a pack of cigarettes to the customers' order."

A pack that sells for $9 doesn't seem to bother people who say it's good just to be able to exhale out in the open.

Chicago recently enacted its own version of the clean air act, more or less stamping out smoking in public, including bars. So how do you explain this place? Where's the loophole? Actually it's more of a smoke ring – gathering by the tobacco bar where custom cigarettes are being rolled.

The business isn't licensed as a restaurant or a bar, but as a tobacco manufacturer, where smoking is permitted. Which starts to make sense when you consider the owner is R.J. Reynolds, the second-largest tobacco company in the United States. And, as you might imagine, the cigarette maker is fuming over what it sees as a thinly veiled attempt to outlaw smoking.

"It is weird," says one happy customer, John Neiser. "This place is kinda like a speakeasy in a sense because the smokers all have no place to go."

Bars, says R.J. Reynolds vice president Tommy Payne, should not be subject to restrictions on smoking.

“When you are in an adult venue,” says Payne, “the government has really overstepped its bounds by saying it is okay to drink but it is not okay to smoke.”

The mission of the Chicago establishment, says Payne, isn’t simply to provide a place to light up in public. He says the idea is to build a premium line of cigarettes – at the tobacco bar.

While executives of the tobacco giant say the timing of all this is coincidental to Chicago's smoking ban, R.J. Reynolds’ anti-smoking grandson says he doubts that.

" It really is an in-your-face effort to say 'Hey, here is a bar where we found a loophole where you can still smoke.' It is a rebellion on the part of R.J. Reynolds,” says Patrick Reynolds.

It's also a bit of a risk. Because for R.J. Reynolds, it's not just about whether these these high-priced cigarettes will catch on; it's also about whether they can breathe new life into smoking, something even the tobacco companies now admit can be deadly.