I haven't heard anything about states banning the use or sale of it, however, I used to use alot of Vermiculite when packaging hazardous chemicals for shipping. It is true that it can cause cancern if particulates are inhaled for a very extended period of time. I attached a link to an MSDS for Vermiculite. It does recommend using a respirator fitted with a particulates filter when using the product. The MSDS does not make mention of it potentially being a Carcinogen, but I have read about it elsewhere. Just take precautions when using it. I typically do not wear a respirator, but I do mix it outdoors instead of in my facility, to mitigate the amount of particulates I am exposed to in a confined area.
http://www.schundler.com/msdsverm.htm