He definitely did. He was a keen pipesmoker, and very definitely not a stoner. (edit: I think he even pins it to "a plant of the genus Nicotiana" or words to that effect in the LotR appendices)

Peter Jackson's presentation of it in the movies though... yeah. No ambiguity there. His hobbits were blazed 24/7.

Yes. "weed" was slang for tobacco in middle and early-modern English (shortly after it was introduced to England). This is where he got the term from.