There are NO places left where it is legal to smoke, thanks to AmeriKKKa's
insane Drug War and International laws and condemnations. It is even illegal in Holland, but tolerated there.
That's the key, where is it tolerated (where you won't get busted)? The
answer is many places! There are places in Australia, India, Nepal,
Afghanistan, Morocco, etc. In the U.S. I understand California is very laid
back about it, especially SF, and places north (the Emerald Triangle, where
they grow most of America's best sinsemilla). I'm told Humbolt county is
the "phrendliest" place to smokers. The cops there look the other way
because without the green economy, the area would be in a bad depression.
So there's lots of places where smoking is tolerated, sounds like you're
livin' in the wrong neck of the woods!
By the way if you can make it to Amsterdam, it will be the "high" point of
your life!
As far as friendly people goes, they seem to be everywhere except big cities. But I've always found that the poorest people are usually friendliest cause as Janis sang "When you ain't got nothing, you ain't got nothing to lose." I guess most hippies qualify.
Of the places I've traveled, I'd have to say that the New Zealanders and Balinese are the most friendly people I've met. They go way out of their way for strangers.
-The Old Hippy
2002 Update!
Things are changing at last in Europe! Several countries have decriminalized possession and use of cannabis including the UK, Portugal and Belgium. In fact in most of western Europe you're only likely to get your stash confiscated or a small fine (as long as you don't have a large quantity). Of course selling cannabis is still very illegal. Just another hypocrisy due to be changed.
2008 Update:
Things are still changing. California's prop 215 has allowed hundreds of cannabis dispensaries to open around the state, selling marijuana over the counter to medical patients. The dispensary business sells more than one billion $ a year of high quality cannabis.
Spain has become the new haven for Europeans fleeing their own countries harsh drug laws. The socialist gov't of Zapatero has loosened up laws and enforcement against those who use cannabis.
Meanwhile the Netherland's conservative gov't continues to crack down on growers and coffeeshops, sending chills through the cannabis business community there. Coffeeshops can no longer sell marijuana alongside alcohol. So many have started to open up straight restaurants/cafes alongside their coffeeshops, where they can sell alcohol and people can smoke the cannabis they just purchased next door.
The UK lowered the classification of cannabis one category, but now they're reconsidering thanks to pressure for anti-drug forces. The UK is awash in contaminated cannabis thanks to Dutch drug gangs adding glass beads to pot to increase the weight and make it look resinous. Nobody is sure of the health consequences of such contamination, and the British gov't is only now thinking about doing something.