Here's something to consider: Nicotine alleviates the symptoms of schizophrenia which affects 1% of the population. https://www.brainfacts.org/archives/2008/smoking-and-schizop...
So put yourself in their shoes. They need financial aid because their mind is broken. One of the few things that calms the screaming voices is a cigarette. Nicotine acts on the brain in various ways and it literally alleviates the symptoms of a severe disease.
So yes they need financial aid but it's really arrogant that you're so sure you know better than them on how to spend it. You're also not giving them a learning experience. Remember that the goal is for them to dig themselves out of their hole. By not allowing them to succeed or fail you aren't setting them up for the day they are financially independent.