According to this forum post, he can:
"I was running around town after I saved and before I logged off just messing around as usual. Well around the second safe house area I found a guy in a parking lot, propped up against the wall. He seemed out of place so I was going to try and talk to him so I hit L1.

Well Niko didn't say anything but he did lean over pick up a smoke off the ground and started "puffing" on it. "

However, he doesn't smoke weed, according to this second post:
"Nah, Little Jacob offered him some weed to smoke, but he says all he ever takes is beer.
Source(s):
http://boardsus.playstation.com/playstation/board/message?board.id=gta&...

http://www.gamespot.com/xbox360/action/grandtheftauto4/show_msgs.php?topic_...

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